11 times
, increasing their exposure to price changes. This is possible because TSD can be borrowed against AVAX, sold on the open market to purchase more AVAX — rinse and repeat.*110%
. A minimum debt of 2,000 TSD
is required.0.5%
under normal operation. The fee is 0%
during Recovery Mode. A 200 TSD
Liquidation Reserve charge will be applied as well, but returned to you upon repayment of debt.baseRate
. The fee rate is confined to a range between 0.5%
and 5%
and is multiplied by the amount of liquidity drawn by the borrower.0.5%
and the borrower draws 4,000 TSD
from his open Trove. Being charged a fee of 18.91 TSD
, the borrower will obtain 3,781.09 TSD
after the Liquidation Reserve and issuance fee are deducted.110%
.$3,000
and you decide to deposit 10 AVAX
. If you borrow 10,000 TSD
, then the collateral ratio for your Trove would be 300%
.25,000 TSD
that would put your ratio at 120%
.110%
. So if your Trove has a debt 10,000 TSD
, you would need at least $11,000
worth of AVAX posted as collateral to avoid being liquidated.150%
(e.g. 200%
or better 250%
).9.09% (= 100% * 10 / 110)
of your collateral’s Dollar value.200 TSD
is set aside as a way to compensate gas costs for the transaction sender in the event your Trove being liquidated. The Liquidation Reserve is fully refundable if your Trove is not liquidated, and is given back to you when you close your Trove by repaying your debt. The Liquidation Reserve counts as debt and is taken into account for the calculation of a Trove's collateral ratio, slightly increasing the actual collateral requirements.110%
). If at the time of redemption you have the Trove with the lowest ratio, you will give up some of your collateral, but your debt will be reduced accordingly.2 AVAX
collateralized and a debt of 3,200 TSD
. The current price of AVAX is $2,000
. This puts your collateral ratio (CR) at 125% (= 100% * (2 * 2,000) / 3,200)
. Let’s imagine this is the lowest CR in the Teddy Cash system and look at two examples of a partial redemption and a full redemption:1,200 TSD
for 0.6 AVAX
and thus repays 1,200 TSD
of your debt, reducing it from 3,200 TSD
to 2,000 TSD
. In return, 0.6 AVAX,
worth $1,200
, is transferred from your Trove to the redeemer. Your collateral goes down from 2 to 1.4 AVAX
, while your collateral ratio goes up from 125%
to 140% (= 100% * (1.4 * 2,000) / 2,000)
.6,000 TSD
for 3 AVAX
. Given that the redeemed amount is larger than your debt minus 200 TSD
(set aside as a Liquidation Reserve), your debt of 3,200 TSD
is entirely cleared and your collateral gets reduced by $3,000
of AVAX, leaving you with a collateral of0.5 AVAX (= 2 - 3,000 / 2,000)
.AVAX
and use the latter to top up the collateral of your Trove. That allows you to draw and sell more TSD, and by repeating the process you can reach the desired leverage ratio.1 TSD = $1
), the maximum achievable leverage ratio is 11x
. It is given by the formula: