Decentralised synthetic assets

ETH and renBTC loans are now on Staking!

ETH and renBTC loans are now on Staking!

We’ve expanded the Synthetix loans feature and integrated it into the Staking dApp! Previously, loans were housed on Synthetix.Exchange, and were limited to using ETH as collateral, and you could only borrow sETH and sUSD. Now, we’ve added renBTC as collateral, and you can also borrow sBTC!

Loans are important as an onboarding option for Synth traders, as well as being a convenient source of extra sUSD for SNX stakers to manage their staking positions, since sUSD can be in high demand across the DeFi ecosystem, particularly around the fee period snapshots.

Interest rates and fees

You can find the new interface at https://staking.synthetix.io/loans. To borrow against ETH or renBTC, there is an interest rate that must be paid upon closing the loan. This interest rate is determined by the sum of two rates: firstly, a flat fee (0.50% annually, as per SCCP-67), and secondly, a variable rate that increases as the proportion of non-SNX loans increases against staked SNX loans. At the time of writing, the interest rate was 2.54%. It’s also limited by the maxDebt ceiling (also configurable by SCCP), which theoretically limits the amount of non-SNX loans that can be issued (including shorts). As per SCCP-94, this is currently 75 million.

There is also an issuance fee paid at the time of taking out the loan, which is currently 0.10%.

There is no time limit for paying back a loan.

For information on how loans work in more granular detail, check out SIP-97.

Liquidation risk

When loans are taken out in a different asset type to its collateral (e.g. sUSD against ETH), there is a partial liquidation mechanism for loans that fall below the liquidation ratio (currently 130%). Liquidators (i.e. any person or bot paying attention) can liquidate a loan when the collateral value drops below the liquidation ratio, incurring a 10% fee from the liquidated amount that goes to the liquidator as reward.

If you have any questions on how any of this works, come join us in Discord!