200 MAHAcollateralized with a debt of
3,200 ARTHand the current price of MAHA is
(= 100% * (20 * 200) / 3,200). Let’s imagine this is the lowest CR in the protocol and look at two examples of a partial redemption and a full redemption:
60 MAHAand thus repays
1,200 ARTHof your debt, reducing it from
1,200 $GMU, is transferred from your loan to the redeemer. Your collateral goes down from
200 MAHA to 140 MAHA, while your collateral ratio goes up from
140% (= 100% * (20 * 140) / 2,000).
300 MAHA. Given that the redeemed amount is larger than your debt minus
5 ARTH(set aside as a Liquidation Reserve), your debt of
3,200 ARTHis entirely cleared and your collateral gets reduced by
3,195 $GMUof MAHA, leaving you with a collateral of
40 MAHA (= 200 - 3,200 / 20).
(baseRate + 0.5%) * collateral redeemed
baseRatestate variable, which is dynamically updated. The
baseRateincreases with each redemption, and decays according to time passed since the last fee event - i.e. the last redemption or issuance of ARTH.
baseRateis decayed based on time passed since the last fee event
baseRateis incremented by an amount proportional to the fraction of the total ARTH supply that was redeemed
(baseRate + 0.5%) * ETHdrawn