Base Hourly Fee
The Base Hourly Fee is the core cost of maintaining a loan on Liqfinity and is AI-calculated to ensure fairness and protection from market volatility. Unlike traditional platforms, Liqfinity uses advanced algorithms, integrating models like Black-Scholes and American options, to adjust these fees dynamically based on current market conditions.
Key Features of the Base Hourly Fee:
AI-Driven and Market-Responsive: The Base Hourly Fee fluctuates according to market volatility. During periods of extreme price swings, fees may increase to protect the platform and users from liquidation risks. In calmer or upward-trending markets, fees will be lower, offering more favorable borrowing conditions.
Variable Rate Estimate: While exact future fees cannot be provided, loans may cost between 5% to 50% per month in highly volatile conditions. The AI system ensures that, even in challenging markets, users benefit from adaptive rates compared to traditional lending protocols.
Tier Benefits: Though the Base Hourly Fee applies universally, liquidity rewards and Hourly Fee Taxes are structured differently across tiers. This ensures that active and higher-tier users have additional advantages.
User Flexibility in Market Downturns:
In case a user borrows at a market high and experiences a downturn, Liqfinity provides two strategic options:
Hold the Position: Users can wait for market recovery without fear of forced liquidation, thanks to Liqfinity’s adaptive fee structure.
Exit the Position: Users can choose to walk away with the borrowed funds, effectively "selling" the asset to the platform. This option provides a level of financial flexibility that traditional protocols lack.
This adaptive system ensures that even in worst-case scenarios, Liqfinity borrowers have strategic choices and protection from sudden liquidations, giving them greater control over their assets.
This fee is dynamically calculated using a proprietary AI algorithm, developed with input from advanced mathematical and financial models, including the Black-Scholes Model and American options.
The AI system adapts to market conditions to ensure fair and efficient fee adjustments, protecting users from liquidation risks while maintaining platform sustainability.
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