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Why would I use Meta for minting (borrowing)?
Meta Protocol offers negative-interest loans. The protocol enables you to borrow mUSD using your GLP as collateral, earn a steady income, and repay your debt later. This eliminates the need to trade your GLP to access liquid funds while your held mUSD 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. Meta supports GLP as collateral.
What's the logic behind negative interest loans?
There are no borrowing (minting) costs or interest charges in the Meta Protocol. However, the protocol exchanges the WETH revenue generated by GLP tokens into mUSD and airdrops it proportionally to mUSD holders, allowing users to make more the longer they borrow (mint/hold).
GLP average APR is 20%+, of which, 1.5% will be distributed to esMETA holders (which can be revised by the META Community DAO) and 0.5% will be distributed to rebase provider.
What is the timeline for repayment?
There is no set payback period for loans issued by Meta 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 Meta Protocol Vault and your loans in mUSD. The collateral rate fluctuates over time as the price of underlying staked GLP changes. You can influence the rate by adjusting your collateral and/or debt — i.e., adding more collateral or paying off some of your debt.
For Example, let's say the current price of GLP is $1 when you deposit 100,000 GLP. If you mint (borrow) 50,000 mUSD, 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 Meta Protocol.
i.e., if you have a loan of 50,000 mUSD, you would need at least $75,000 worth of 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%.