Lybra Protocol offers negative-interest loans. The protocol enables you to borrow eUSD using your ETH as collateral, earn a steady income, and repay your debt later. This eliminates the need to trade your ETH to access liquid funds while your held eUSD also earns a stable interest rate over time.
What are the Minting Requirements?
The user's collateral rate should be above the safe collateral rate, which is 160%.
What is collateral?
Collateral is any asset that a borrower must provide to take out a loan, acting as security for the debt. Currently, Lybra only supports ETH and stETH as collateral.
Lybra Protocol automatically converts any ETH deposits to stETH. The protocol treats 1 ETH as 1 stETH, so all references to stETH below are to ETH.
What's the logic behind 0-interest loans?
There are no borrowing (minting) costs or interest charges in the Lybra Protocol. However, the protocol exchanges the LSD (Liquidity Staking Derivatives) revenue generated by stETH into eUSD and airdrops it proportionally to eUSD holders, allowing users to make more the longer they borrow (mint/hold).
stETH LSD APY is ~5%, of which, 1.5% will be distributed to esLBR holders (which can be revised by the Lybra Community DAO).
What is the timeline for repayment?
There is no set payback period for loans issued by Lybra Protocol. As long as you maintain a collateral ratio of at least 150%, you are allowed to keep the loan open and pay off your debt whenever you want.
What is the Collateral Rate?
The collateral rate is the ratio between the dollar value of your collateral in the Lybra Protocol Vault and your loans in eUSD. The collateral rate fluctuates over time as the price of ETH changes. You can influence the rate by adjusting your collateral and/or debt — i.e., adding more ETH collateral or paying off some of your debt.
Let's say the current price of ETH is $2,000 when you deposit 10 ETH. If you mint (borrow) 10,000 eUSD, then your current collateral rate is 200%.
What is the minimum collateral rate (MCR) and the "recommended" collateral ratio?
The minimum collateral rate (or MCR) is the lowest ratio of loan to collateral that will not trigger a liquidation under normal operations (AKA Normal Mode). This parameter is set to 150% on Lybra Protocol.
i.e., if you have a loan of 10,000 eUSD, you would need at least $15,000 worth of ETH as collateral to avoid the risk of being liquidated.
To keep your funds safe and avoid getting liquidated, it's highly recommended you maintain a collateral rate higher than 200%.