Payment of Hourly Fees
To maintain a loan, borrowers must ensure they have sufficient funds in their wallet (stablecoins) to cover hourly fees. These fees accumulate over time and are tracked by the system.
If a borrower fails to repay them, and the unpaid fees reach 90% of the current USD value of the collateral, the platform will automatically sell the collateral to recover the outstanding amount.
How it Works?
Hourly fees are charged on all active loans.
These fees accumulate if not paid directly from the user’s wallet.
Once unpaid fees = 90% of the current market value (USD) of the collateral, the collateral is sold entirely to cover the outstanding balance.
The borrower keeps the full USDT loan, but forfeits the collateral.
Example:
A user deposits 1 BTC as collateral when BTC = $100,000 and borrows the full amount.
If BTC later drops to $50,000, then 90% of $50,000 = $45,000 becomes the threshold.
If unpaid hourly fees reach $45,000, the platform will sell the BTC, even though the user borrowed $100,000.
The borrower still keeps the $100,000 (minus entry fee), but loses the BTC.
How to Avoid Automatic Collateral Sale
Users can always prevent liquidation by:
Adding more collateral to increase the buffer.
Repaying accumulated fees to reduce the fee-to-collateral ratio.
This model prioritizes borrower flexibility and provides a more predictable and user-friendly experience than traditional platforms, which may instantly liquidate positions during market swings. With Liqfinity, borrowers have clear thresholds and the ability to act in advance.
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