# Table of Contents - [Collateral Whitelisting | Vaultedge docs](#collateral-whitelisting-vaultedge-docs) - [VE tokens management | Vaultedge docs](#ve-tokens-management-vaultedge-docs) - [Fees | Vaultedge docs](#fees-vaultedge-docs) - [General | Vaultedge docs](#general-vaultedge-docs) - [Whitelisted assets | Vaultedge docs](#whitelisted-assets-vaultedge-docs) - [Introduction | Vaultedge docs](#introduction-vaultedge-docs) - [Price stability | Vaultedge docs](#price-stability-vaultedge-docs) - [Vaults | Vaultedge docs](#vaults-vaultedge-docs) - [Maintaining the peg | Vaultedge docs](#maintaining-the-peg-vaultedge-docs) - [Stability pool | Vaultedge docs](#stability-pool-vaultedge-docs) - [Risk methodology | Vaultedge docs](#risk-methodology-vaultedge-docs) - [Soft liquidations | Vaultedge docs](#soft-liquidations-vaultedge-docs) - [Borrowing | Vaultedge docs](#borrowing-vaultedge-docs) - [The flywheel | Vaultedge docs](#the-flywheel-vaultedge-docs) - [veUSD | Vaultedge docs](#veusd-vaultedge-docs) - [Recovery mode | Vaultedge docs](#recovery-mode-vaultedge-docs) - [Terminology | Vaultedge docs](#terminology-vaultedge-docs) - [Terms and Conditions | Vaultedge docs](#terms-and-conditions-vaultedge-docs) --- # Collateral Whitelisting | Vaultedge docs Vaultedge has designed a rigorous framework for evaluating and whitelisting collateral assets, ensuring that only those meeting the highest standards of liquidity, stability, and risk tolerance are accepted. This framework establishes key parameters for evaluating and managing collateral within Vaultedge: * **Eligible Collateral** – Assets that meet the protocol’s security, liquidity, and stability standards. * **Risk-Adjusted Value (RAV)** – The true effective value of each asset within Vaultedge, factoring in liquidity, volatility, and systemic risk. * **Critical Collateralization Ratio (CCR)** – The protocol-wide risk threshold that triggers Recovery Mode. * **Risk Parameters** – Defines essential risk controls, including: * **Debt Ceilings** – Maximum borrowing limits per asset. * **Soft Liquidation Thresholds** – The point at which vaults enter partial liquidation. * **Issuance Fees** – Dynamic fees based on collateral risk and market conditions. This methodology ensures a balanced and data-driven approach to collateral risk management, enhancing protocol security and capital efficiency. ### [](#risk-scoring-methodology) **Risk Scoring Methodology** Our risk scoring framework evaluates assets based on key quantitative and qualitative metrics to ensure they meet our protocol’s security, liquidity, and stability standards. Each asset is assessed across the following criteria: * **Token Age** – Measures maturity and historical performance. * **Team Credibility** – Assesses the reputation, track record, and transparency of the asset’s team. * **Peg Stability** – Evaluates the stability of RWAs, LRTs, LSTs, and Stablecoins. * **Audit Quality** – Reviews smart contract audits for thoroughness and reliability. * **Historical Performance** – Analyzes average returns over a defined period (XYZ months) for veTokens. * **Underlying Asset Risk** – Assesses the safety ratio, liquidity, and volatility of LP tokens. * **On-Chain Liquidity** – Measures the extractable liquidity available on-chain. * **Off-Chain Volume** – Evaluates trading activity and market presence beyond on-chain metrics. * **Secondary Market Liquidity** – Analyzes liquidity and trading volume for veNFTs. * **Liquid Derivative Stability** – Assesses liquidity and peg stability of veNFT derivatives. * **Decentralization** – Measures governance distribution and systemic risk. * **Sharpe Ratio** – Quantifies risk-adjusted returns for veNFTs. ### [](#instant-disqualification-criteria) **Instant Disqualification Criteria** Assets that fail to meet baseline requirements in the following areas will be immediately disqualified from the whitelisting process: * **Team Credibility** – Lack of transparency, poor track record, or questionable governance. * **Peg Stability** – Significant de-pegging risks for LRTs, LSTs, or stablecoins. * **Audit Quality** – Absence of credible smart contract audits or unresolved security vulnerabilities. * **On-Chain Liquidity** – Insufficient extractable liquidity, making the asset impractical as collateral. This rigorous scoring methodology ensures only high-quality assets are whitelisted, maintaining protocol security and capital efficiency while minimizing systemic risks. [PreviousRecovery mode](/the-protocol/borrowing/recovery-mode) [NextWhitelisted assets](/the-protocol/borrowing/whitelisted-assets) Last updated 2 months ago 🏭 --- # VE tokens management | Vaultedge docs **VE tokens can be highly profitable if managed correctly.** An optimized voting strategy can make a significant difference in the rewards these assets generate each epoch. However, manual voting often leaves yield potential untapped due to inefficiencies and missed opportunities. Vaultedge ensures users not only maximize their rewards but also achieve yields higher than manual voting through sophisticated algorithms and dynamic optimization. Our platform takes the complexity out of managing VE tokens by automating the voting process with precision and efficiency. Users can rely on Vaultedge to run strategies on autopilot, unlocking the full earning potential of their assets without the hassle of manual intervention. At launch, users will have two distinct strategies to choose from, each designed to optimize yield based on their goals: 1. **Optimizing yield for faster repayments**: This strategy focuses on maximizing liquid rewards, enabling users to repay their veUSD loan more quickly and reduce their debt obligations in a cautious, risk-averse manner. 2. **Optimizing yield to compound VE tokens**: This approach reinvests yield into VE token collateral, growing the user’s VE token exposure over time to build a larger collateral base and unlock higher future rewards. Both strategies provide unique benefits. The first prioritizes efficient loan repayment, ideal for those seeking a safer, more conservative approach. The second focuses on compounding and long-term growth, suited for users aiming to expand their collateral and increase future yield potential. With Vaultedge, users can seamlessly align their strategy with their financial objectives, ensuring maximum efficiency and reward optimization. [PreviousFees](/the-protocol/borrowing/fees) [NextveUSD](/the-protocol/veusd) Last updated 3 months ago 🏭 --- # Fees | Vaultedge docs The fee will depend on the collateral assets. Issuance fees will be prorated according to the collateral weights. Vaultedge charges borrowing fees. There are two types of fees for borrowers. First, there is a issuance fee when you mint your veUSD loan. Second, is a vault management fee depending on your collateral type. Issuance fees depend on the type of collateral you are adding. If you are adding a "risky" collateral type which is already starting to back a significant amount of veUSD, the deposit fee will be higher. Under normal conditions, the one-time issuance fee is confined to a range between `0.5%` and `3%`. If Soft liquidations are occurring, this suggests `veUSD Price < $1`, so fees are higher to disincentivize borrowing and de-incentivize more veUSD from entering the market. However, the borrow fee is`0%` during Recovery Mode. Type Description Amount Origination fee For ERC-20 tokens charged in veUSD once the loan is originated 0.5% Origination fee For LP tokens charged in veUSD once the loan is originated 2% Origination fee For veTokens tokens charged in veUSD once the loan is originated 3% Vault management fee Charged on the yield generated by the asset 15% [PreviousWhitelisted assets](/the-protocol/borrowing/whitelisted-assets) [NextVE tokens management](/the-protocol/borrowing/ve-tokens-management) Last updated 2 months ago 🏭 --- # General | Vaultedge docs [PreviousIntroduction](/) [NextTerminology](/the-protocol/terminology) Last updated 12 days ago ### [](#what-is-vaultedge) What is Vaultedge? Vaultedge is a decentralized borrowing protocol that enables users to borrow against their entire portfolio of assets. Loans are paid out in , a USD-pegged stablecoin, and require a minimum , which varies per asset but can be as low as 100.5%. Vaultedge will support borrowing against: * Blue-chip assets (e.g., WETH, WBTC, USDC, USDT, LYNX) * Staked assets (e.g., wsETH) * Liquidity Provider (LP) tokens * Voting Escrow (VE) tokens * Real world assets (RWAs) The veUSD stablecoin is decentralized, over-collateralized, and backed by the value of users' collateral positions. The only way to mint veUSD is by depositing collateral into the Vaultedge protocol. Vaultedge is decentralized and completely non-custodial. [](#how-does-vaultedge-work) How does Vaultedge work? ---------------------------------------------------------- Users deposit whitelisted crypto-assets (e.g., veLYNX) as collateral into a smart contract called , allowing them to mint veUSD stablecoin. In order to avoid liquidation, vaults must maintain a required Health factor (HF) determined by the Vaultedge data-driven . In addition to the collateral, the loans are secured by the , which contains veUSD tokens staked by fellow borrowers who act as guarantors. ### [](#why-should-i-use-vaultedge) Why should i use Vaultedge? The Vaultedge protocol solves critical problems for users and protocols : * **On-demand, low-cost liquidity** by borrowing against a wide range of tokens at zero interest rate * **Unlock liquidity on your illiquid assets** by borrowing against locked or illiquid tokens * **Deep liquidity on DEXs** without the need to incentivize or pay the other side of the liquidity pools * **Treasuries management** with smart capital allocation * **Earn yield on your veUSD by** depositing in the stability pool and earn a share of the liquidations [veUSD](/the-protocol/veusd) [Health Factor](/the-protocol/terminology) [Vault](/the-protocol/borrowing/vaults) [risk methodology](/the-protocol/borrowing/risk-methodology) [Stability pool](/the-protocol/borrowing/stability-pool) 🏭 ![Page cover image](https://docs.vaultedge.fi/~gitbook/image?url=https%3A%2F%2F1618996297-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FDFiAgxHY26De1v29C6ap%252Fuploads%252Fo2eWhoPRxiB6QfTNX1Vk%252FGeneral.png%3Falt%3Dmedia%26token%3D03485dd0-670e-4545-bdd2-9be4a5e4150a&width=1248&dpr=4&quality=100&sign=d34f63fd&sv=2) --- # Whitelisted assets | Vaultedge docs Token Safety ratio Issuance fee Chain USDT 1.1 0.5% Linea USDC 1.1 0.5% Linea wETH 1 0.5% Linea wsETH 0.98 1% Linea weETH 0.98 1% Linea wBTC 1 0.5% Linea USDC/USDT Steer stable \[Lynex LP\] 1 2% Linea USDC/USDT Clip Tight \[Lynex LP\] 0.96 2% Linea weETH/WETH Gamma Correlated \[Lynex LP\] 0.93 2% Linea ezETH/WETH Gamma Correlated \[Lynex LP\] 0.93 2% Linea USDC/WETH Gamma Narrow \[Lynex LP\] 0.94 2% Linea WBTC/WETH Gamma Narrow \[Lynex LP\] 0.94 2% Linea veLYNX 0.45 3% Linea [PreviousCollateral Whitelisting](/the-protocol/borrowing/collateral-whitelisting) [NextFees](/the-protocol/borrowing/fees) Last updated 2 months ago 🏭 --- # Introduction | Vaultedge docs [NextGeneral](/the-protocol/general) Last updated 3 months ago **Vaultedge is a decentralized borrowing protocol that enables users to borrow against a wide range of assets, including blue-chip tokens, staked assets such as Liquid Staked ETH, LP tokens, and VE Tokens.** When users deposit assets into Vaultedge, they continue to earn the rewards they would normally receive, without needing to actively manage their position. Users borrow (an over-collateralized USD stablecoin). They can use the veUSD to purchase additional assets, hedge their position, or provide liquidity for additional rewards. Vaultedge also supports borrowing against multiple assets, rather than limiting users to a single asset. This multi-collateral approach allows users to mitigate the risks associated with volatile assets by enabling multiple assets to serve as collateral, significantly reducing the likelihood of liquidations caused by asset volatility or flash crashes. The multi-collateral mechanism also opens up various yield strategies that can be built on top of the Vaultedge borrowing protocol. [veUSD](/the-protocol/veusd) ![Page cover image](https://docs.vaultedge.fi/~gitbook/image?url=https%3A%2F%2F1618996297-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FDFiAgxHY26De1v29C6ap%252Fuploads%252FxCdPBGifPxIPfm4dJNCJ%252FGeneral.png%3Falt%3Dmedia%26token%3Dc8a2d706-0da1-4cdf-bf1b-6a5abfced154&width=1248&dpr=4&quality=100&sign=c46dbdc3&sv=2) --- # Price stability | Vaultedge docs veUSD is designed to be a low-volatility payment coin soft-pegged to the USD. There are several mechanisms embedded into the platform to ensure a low price deviation in both directions under normal market conditions. * **Debt Issuance and Repayment**: If the price of veUSD falls below parity by more than the issuance fee, (veUSD < USD) then users of the platform are incentivized to buy veUSD in order to repay their debt. In the opposite direction, when the price of veUSD goes above parity (veUSD > USD) by more than the issuance fee, users are incentivized to borrow more in order to purchase assets at a discount. * **Issuance fees**: Those fees have an immediate short-term effect on the veUSD monetary policy as the supply is impacted right away. Higher fees make new loans less attractive, decreasing the new generation of veUSD if there is not enough demand to keep up with the supply. * **Soft liquidations mechanism**: Arbitrageurs can make instant gains whenever the collateral asset they get in return is worth more than the current value of the soft liquidated veUSD. * **Market arbitrage**: Arbitrage bots run on exchanges to stabilize the veUSD price. [PreviousveUSD](/the-protocol/veusd) [NextMaintaining the peg](/the-protocol/veusd/maintaining-the-peg) Last updated 2 months ago 🏭 --- # Vaults | Vaultedge docs [PreviousBorrowing](/the-protocol/borrowing) [NextRisk methodology](/the-protocol/borrowing/risk-methodology) Last updated 2 months ago The Vaultedge protocol supports **multi-collateral Vaults**, allowing users to utilize _**up to 10 distinct tokens**_ _as collateral_. Vaults maintain two balances: one is an asset (tokens) acting as collateral and the other is a debt denominated in veUSD. Modifying those balances by adding collateral or repaying debt changes the Vault’s health factor accordingly. _**Vaults can be closed at any time by fully paying off the debt**_ ### [](#what-is-the-collateral-ratio) What is your Vault's ICR (individual collateral ratio)? This is the ratio between the "risk-adjusted value" in your vault and its debt in veUSD. The risk-adjusted value (RAV) takes into account the dollar value of your collateral, as well as a safety ratio to account for how risky the collateral is. Higher risk collateral has a lower safety ratio, meaning a lower RAV. Risk−AdjustedValue\=Safety Ratio×Price×Collateral Amount{Risk-Adjusted Value} = \\text{Safety Ratio} \\times \\text{Price} \\times \\text{Collateral Amount}Risk−AdjustedValue\=Safety Ratio×Price×Collateral Amount There are multiple classes of collateral, with highly liquid and trusted collateral having a safety ratio of 1.0 and more risky collateral having a safety ratio of 0.8 or 0.5. All non-stablecoin collateral has a safety ratio between 0 and 1. Stablecoin collaterals have a safety ratio up to 1.1, which allows you to borrow at an effective collateral ratio of less than 110%. Your individual collateral ratio will fluctuate over time as the prices of your collateral change. You can influence the ratio by adjusting your vault’s collateral and/or debt — i.e. adding more collateral or paying off some of your debt. For example: Let’s say the current value of one ETH-LYNX LP is `$1,000` and you decide to deposit `30 LPs`. Say ETH-LYNX LP has a Safety ratio of `0.8`. This means your risk-adjusted collateral value is `$1,000 * 30 * 0.8 = 24,000`. If you borrow `10,000 veUSD`, then the collateral ratio for your vault would be `Collateral Value / Debt = 24,000/10,000 = 240%`. If you instead took out `20,000 veUSD` that would put your vault's collateral ratio at `24,000/20,000 = 120%`. ### [](#how-can-i-take-advantage-of-leverage) **How can I take advantage of leverage?** You can sell the borrowed veUSD on the market for ETH and use the latter to top up the collateral of your Vault. That allows you to draw and sell more veUSD, and by repeating the process you can reach the desired leverage ratio. ### [](#why-did-the-collateral-and-debt-of-my-trove-increase-without-my-intervention) **Why did the collateral and debt of my vault increase without my intervention?** If vaults are liquidated and the is empty (or gets emptied due to the liquidation), every borrower will receive a portion of the liquidated collateral and debt as part of the . 🏭 [Stability Pool](/the-protocol/borrowing/stability-pool) [redistribution mechanism](/the-protocol/borrowing/risk-methodology) --- # Maintaining the peg | Vaultedge docs [PreviousPrice stability](/the-protocol/veusd/price-stability) [NextThe flywheel](/the-protocol/the-flywheel) Last updated 4 months ago In case of de-pegging, veUSD has two mechanisms to restore the peg. Depending on whether the peg is lost to the upside or downside, users can profit from this situation through arbitrage opportunities. **veUSD Above $1:** In this scenario, users can mint veUSD at a 1:1 ratio with stablecoins (such as USDC/USDT) and sell the veUSD on a DEX. For example, if 1 veUSD = $1.10 USDT, a user can deposit an equivalent amount of USDT on Vaultedge to mint the same amount of veUSD at a 1:1 ratio. The user can then sell the veUSD on a DEX for a 10% profit in USDT and use the USDT to repay the debt. **veUSD Below $1:** In the event of veUSD de-pegging, users can buy veUSD at a discount on the open market (DEX) and then Soft liquidates collateral from the protocol vault at a higher price, resulting in a profit. When a user performs arbitrage following this mechanism, the veUSD is burned, reducing the supply and helping to bring veUSD back to its peg. 🏭 ![](https://docs.vaultedge.fi/~gitbook/image?url=https%3A%2F%2Fcontent.gitbook.com%2Fcontent%2FDFiAgxHY26De1v29C6ap%2Fblobs%2FAwjVDCh1hsmXlbtQnNa6%2Fflowchart2%2520%285%29.png&width=768&dpr=4&quality=100&sign=334a191d&sv=2) ![](https://docs.vaultedge.fi/~gitbook/image?url=https%3A%2F%2Fcontent.gitbook.com%2Fcontent%2FDFiAgxHY26De1v29C6ap%2Fblobs%2F4xZbdv47o0liwfZ5wkyJ%2Fflowchart2%2520%286%29.png&width=768&dpr=4&quality=100&sign=17464d52&sv=2) ![](https://docs.vaultedge.fi/~gitbook/image?url=https%3A%2F%2Fcontent.gitbook.com%2Fcontent%2FDFiAgxHY26De1v29C6ap%2Fblobs%2FpbXw1DPFZp5gcRrevUUg%2Fflowchart2%2520%287%29.png&width=768&dpr=4&quality=100&sign=c3094040&sv=2) --- # Stability pool | Vaultedge docs [](#what-is-the-stability-pool) What is the Stability pool? ---------------------------------------------------------------- The Stability Pool is an additional line of defense in maintaining system solvency. It acts as the source of liquidity to repay debt from liquidated Vaults, ensuring that the total veUSD supply always remains backed. The Stability Pool is funded by Stability Providers depositing veUSD to receive liquidated tokens. When liquidations occur, the Stability Providers lose a pro-rata share of their veUSD deposits, while gaining a pro-rata share of the liquidated collateral. As Vaults are liquidated at a collateral-to-debt ratio of 110%, it is expected that Stability Pool Providers will receive a greater USD-value of collateral relative to the debt they pay off. ### [](#how-does-it-work) How does it work? When a Vault is liquidated in the Stability Pool, the amount of veUSD corresponding to the remaining Vault debt is burned from the Stability Pool’s balance to repay its debt. In exchange, the **entire collateral** from the Vault is pro-rata distributed among Stability Providers. Stability Providers can immediately withdraw the collateral received from liquidations and sell it to reduce their exposure to collateral tokens. **Stability Providers may receive any whitelisted collateral assets during liquidations.** If a user borrows against their own ETH tokens and decides to deposit some of the borrowed veUSD into the Stability Pool, they will participate in all liquidations, not just ETH. The users who do not wish to get exposed to certain assets can swap those assets immediately after the liquidation. ### [](#why-should-i-deposit-veusd-to-the-stability-pool) Why should i deposit veUSD to the Stability pool? Stability Providers will make liquidation gains from liquidated vaults. As liquidations happen just below a collateral ratio of `110%`, users will most likely experience a net gain whenever a vault is liquidated. ### [](#what-happens-if-the-stability-pool-is-empty-when-liquidations-occur) What happens if the Stability Pool is empty when liquidations occur? If the Stability Pool is empty, the system uses a secondary liquidation mechanism called redistribution. In such a case, the system redistributes the debt and collateral from liquidated Vaults to all other existing Vaults. The redistribution of debt and collateral is done in proportion to the recipient Vault collateral amount. ### [](#can-i-withdraw-my-deposit-whenever-i-want) Can i withdraw my deposit whenever i want? As a general rule, you can withdraw the deposit made to the Stability Pool at any time. There is no minimum lockup duration. However, you cannot withdraw while there are pending liquidatable vaults. ### [](#can-i-lose-money-by-depositing-funds-to-the-stability-pool) Can i lose money by depositing funds to the Stability Pool? While liquidations will occur at a collateral ratio well above `100%` most of the time, it is theoretically possible that a vault gets liquidated below `100%` in a flash crash or due to an oracle failure. In such a case, you may experience a loss since the collateral gain will be smaller than the reduction of your deposit. If veUSD is trading above `$1`, liquidations may become unprofitable for Stability Providers even at collateral ratios higher than `100%`. However, this loss is hypothetical since veUSD is expected to return to the peg, so the “loss” only materializes if you had withdrawn your deposit and sold the veUSD at a price above `$1`. [PreviousSoft liquidations](/the-protocol/borrowing/soft-liquidations) [NextRecovery mode](/the-protocol/borrowing/recovery-mode) Last updated 3 months ago 🏭 --- # Risk methodology | Vaultedge docs [PreviousVaults](/the-protocol/borrowing/vaults) [NextSoft liquidations](/the-protocol/borrowing/soft-liquidations) Last updated 2 months ago The Vaultedge protocol regularly updates the collateral asset prices via a decentralized data feed. When a vault's Individual Collateral Ratio (ICR) falls below 150%, the vault enters the liquidation mechanism, under the following steps: ICR Stage Process **150% > ICR > 110%** Soft liquidations All assets are sent to the soft liquidation mechanism allowing anyone to bid on the collateral at a small discount (based on the ICR) **110% >= ICR** Stability pool the stability pool will repay the vaults' debt and receive the collateral . **110% > ICR** & stability pool without liquidity Redistribution the redistribution mechanism will take place . When a Vault falls below the ICR of 110%, it is considered under-collateralized and is **automatically sent to the stability pool.** The liquidation mechanism is automatic, which makes the liquidation process very efficient **Deppeg Mitigation Process:** If veUSD falls below $1, the soft liquidation mechanism should generate enough demand to restore its peg. However, there may be situations where there aren’t enough vaults eligible for soft liquidation. In such cases, if the demand for veUSD remains insufficient to bring it back to $1, the Minimum Redemption Ratio (MRR) will be increased, allowing vaults to be soft liquidated at a higher Individual Collateral Ratio (ICR). These liquidated vaults will not incur a net loss. The MRR will continue to be raised until there is sufficient demand to restore veUSD to its $1 peg. #### [](#what-are-liquidations) What are liquidations? To ensure that the entire stablecoin supply remains fully backed by collateral, Vaults that fall under the minimum collateral ratio of `110%` will be closed (liquidated). The debt of the vault is canceled and absorbed by the Stability Pool and its collateral distributed among Stability Providers. When a Vault gets liquidated, users keep their veUSD but lose their collateral tokens as the debt is paid off through liquidations. Users will no longer be able to retrieve their collateral tokens by repaying the debt. **Liquidations result in a net loss for the Vault owner** 🏭 [read more](/the-protocol/borrowing/stability-pool) [read more](/the-protocol/borrowing/stability-pool) --- # Soft liquidations | Vaultedge docs [PreviousRisk methodology](/the-protocol/borrowing/risk-methodology) [NextStability pool](/the-protocol/borrowing/stability-pool) Last updated 11 days ago ### [](#how-does-veusd-closely-follow-the-price-of-usd) How does veUSD closely follow the price of USD? The ability to soft liquidate veUSD for collateral at face value (i.e., 1 veUSD for $1 of collateral) and to mint veUSD at a 100.5% collateral ratio against USDC establishes a price floor and ceiling, respectively, through arbitrage opportunities. These are referred to as "hard peg mechanisms" since they rely on direct processes. ### [](#what-are-soft-liquidations) What are Soft liquidations? Soft liquidations involves depositing veUSD into other users' Vaults and withdrawing an equivalent risk adjusted value of collateral. The soft liquidation process depends on the Safety Ratio of each collateral. When assets are entered into the soft liquidation mechanism, users can redeem them at a discount determined by the Individual Collateral Ratio (ICR) and the Safety Ratio of the asset. **Vaults cannot be soft liquidated if the ICR of the vault is higher than 150% (Unless the protocol is in recovery mode)** The discount is calculated using the following equation _(_The discount is expressed as a percentage_):_ Discount\=(1−SR)×(1.5−ICR)0.4Discount = \\frac{(1 - SR) \\times ( 1.5 - ICR)}{0.4}Discount\=0.4(1−SR)×(1.5−ICR)​ This equation ensures that the higher the ICR of a Vault, the lower its discount. For example, if a Vault enters the soft liquidation mechanism with an ICR of 150%, the discount will be 0. Additionally, the equation allows for a maximum discount equal to the Safety Ratio of the asset. When collateral gets redeemed, a user soft liquidating the vault will be partially paying the veUSD debt. The system cancels the veUSD debt from these Vaults, deducting the corresponding risk adjusted value from their collateral. ### [](#do-i-lose-money-if-im-soft-liquidated-against) Do i lose money if i'm soft liquidated against? If your Vault is soft liquidated against, you may incur a net loss depending on your ICR. Additionally, you will lose some of your collateral exposure. While your Vault might experience a financial loss, its collateral ratio will improve after the soft liquidation. ### [](#what-happens-if-my-vault-is-soft-liquidated-against) What happens if my vault is soft liquidated against? The reduction in your collaterals corresponds to the nominal veUSD amount by which your vault debt is decreased. You can think of soft liquidations as someone else repaying your debt and retrieving a RAV equivalent amount of your collateral. As a positive side effect, soft liquidations improve the collateral ratio of the affected vault, making it less risky. Liquidations that do not reduce your debt to zero are called soft liquidations, while those that fully pay off a vault debt are referred to as full liquidations. In such cases, your vault is closed, and you can claim your collateral surplus along with the Liquidation Reserve at any time. Let’s say you own a vault with `1 ETH` collateralized and a debt of `2,500 veUSD`. The current price of ETH is `$4,000`and the Safety Ratio is `0.9` . This puts your collateral ratio (CR) at `144% (= 0.9 * 1 * (4,000) / 2,500)`. Let’s consider that 150% is the threshold in the Vaultedge system for a vault to be eligible for soft liquidation, look at an example of a soft liquidation: **Example of a soft liquidation** Somebody redeems `2000 veUSD` for `0.50761 ETH` (veUSD repayed) and thus repays `2000 veUSD` of your debt, reducing it from `2,500 veUSD` to `500 veUSD`. **Incurring in a loss of** `**0.00761 ETH**`. ### [](#can-i-be-soft-liquidated-if-my-icr-is-above-150) **Can I be soft liquidated if my ICR is above 150%?** If veUSD falls below $1, the soft liquidation mechanism is designed to generate enough demand to restore its peg. However, there may be cases where there aren’t enough vaults eligible for soft liquidation. In such scenarios, if the demand for veUSD remains insufficient to bring it back to $1, the Minimum Redemption Ratio (MRR) will be increased, enabling vaults to be soft liquidated at a higher Individual Collateral Ratio (ICR). Importantly, these liquidated vaults will not incur a net loss. The MRR will continue to be raised until there is enough demand to restore veUSD to its $1 peg. ### [](#can-i-soft-liquidate-multiple-assets-in-the-same-transaction) **Can I soft liquidate multiple assets in the same transaction?** Although this action is technically permitted at the smart contract level, our frontend does not support it because the discount will not apply to multi-collateral soft liquidations. Therefore, we strongly advise against soft liquidating multiple assets simultaneously, as it may result in a loss. In return, `0.50761 ETH` \=2000/(4000∗(1−Discount)) = 2000 / (4000 \* ( 1 - Discount ))\=2000/(4000∗(1−Discount)), worth `$2,030.44`, is transferred from your vault to the liquidator. Your collateral goes down from `1 to 0.4923 ETH`, while your collateral ratio goes up from `144%` to `354% = (0.9 * 0.4923 * 4,000) / 500)`. 🏭 --- # Borrowing | Vaultedge docs [PreviousTerminology](/the-protocol/terminology) [NextVaults](/the-protocol/borrowing/vaults) Last updated 12 days ago ### [](#why-borrow-with-vaultedge) Why borrow with Vaultedge: With minimum Health Factor as low as 100.5%, Vaultedge provides greater capital efficiency than other borrowing systems, meaning users can secure the same loan with less collateral. Additionally, Vaultedge’s unique architecture allows it to offer exclusive collateral options. Instead of selling tokens for liquidity, users or protocols can deposit in Vaultedge and borrow against them to receive veUSD. Vaultedge also offers a unique solution for veToken holders, enabling them to access their yield in advance. **There is no recurring interest, no minimum debt, or deadline to repay the debt** as long as there is a sufficient amount of collateral. ### [](#borrowing-process) Borrowing process: Borrowing is pretty straightforward if you understand a couple key things. Users of Vaultedge can create a vault by depositing collateral assets and borrow our stablecoin, veUSD. After you pay back your borrowed veUSD, you can withdraw your deposited collateral. Until then, your collateral is held in Vaultedge smart contracts as backing for the issued veUSD and a guarantee that the veUSD debt will be paid back. You can take out a loan if the RAV (Risk-Adjusted Value) of your collateral is greater than 110% (or 1.1 times) your borrowed veUSD. The more collateral deposited, and the more safe vs. risky collateral you put in, the higher the "Risk-Adjusted Value." The ratio between collateral and debt in your vault is called your vault's "**Individual Collateral Ratio**" (ICR) . When minting veUSD against your deposited collateral, you will receive the minted amount minus the issuance fee (which varies based on collateral type) and a liquidation reserve of 20 veUSD, refundable upon repayment of your veUSD debt. ### [](#liquidations) Liquidations: If your collateral drops in price, it will cause your ICR value to drop, and potentially may make your Vault eligible for liquidation. Luckily, stablecoin collaterals should not drop in value as long as the component stablecoins remain pegged. So adding stablecoins to your vault is a good way to prevent liquidation no matter what happens in the markets. In both Normal and Recovery Mode, you will be eligible for liquidation if your vault's collateral ratio is below 110%. But in Recovery Mode you are also eligible for liquidation if your AICR (Adjusted Individual Collateral Ratio) is less than TCR. Vault Status Normal Mode Recovery Mode ICR < 110% Liquidation Liquidation 110% < ICR and AICR < TCR Can't be liquidated Liquidation 110% < ICR and 150% < AICR Can't be liquidated Can't be liquidated So if you keep your **ICR above 110%** and **AICR above 150%**, your vault can never be liquidated under normal mode or recovery mode. There are two system modes, **Normal Mode** and . We expect the system to remain in normal mode the vast majority of the time. Recovery mode is an edge case designed to address significant systemic drops in collateral value. **Recovery mode happens if the Total Collateral Ratio (TCR) falls below 150%.** The TCR is displayed on the Dashboard page under "System Collateral Ratio." 🏭 [**Recovery Mode**](/the-protocol/borrowing/recovery-mode) ![](https://docs.vaultedge.fi/~gitbook/image?url=https%3A%2F%2F1618996297-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FDFiAgxHY26De1v29C6ap%252Fuploads%252FSIt9byQAageZKX5OB9fe%252FBorrowing.png%3Falt%3Dmedia%26token%3D637dde92-5589-450e-9eed-b17397478176&width=768&dpr=4&quality=100&sign=b2bdcbd4&sv=2) --- # The flywheel | Vaultedge docs [PreviousMaintaining the peg](/the-protocol/veusd/maintaining-the-peg) [NextTerms and Conditions](/terms-and-conditions) As Vaultedge will count with a big amount of veTokens in the collateral vaults, the protocol will implement strategies that will serve 2 specific functions: * **Propel veUSD liquidity on Dexes**, to ensure deep liquidity pools by voting toward veUSD pairs. Leveraging on the ve(3,3) Dexss, Vaultedge will drive rewards to veUSD farms. * **Maximizing rewards harvested by the protocol.** This approach addresses two crucial aspects of Vaultedge—repaying users' debt and growing the Vaultedge treasury. The implemented strategy will have a compounded effect, accelerating debt repayment and increasing protocol revenue through a 15% management fee on the yield. 🏭 ![](https://docs.vaultedge.fi/~gitbook/image?url=https%3A%2F%2Fcontent.gitbook.com%2Fcontent%2FDFiAgxHY26De1v29C6ap%2Fblobs%2FcRHIhpw6nnlH16zidHuF%2Fchart%2520%282%29.png&width=768&dpr=4&quality=100&sign=fc8912d4&sv=2) --- # veUSD | Vaultedge docs veUSD is an over-collateralized, decentralized, variable supply payment coin pegged to the Dollar. veUSD is created by users minting veUSD loans and it’s removed from circulation (burnt) when users repay their loan or soft liquidate veUSD for the collateral assets. When new veUSD is minted by the users, the platform charges a issuance fee between 0.5% and 3%. In a situation when the demand for veUSD is lower, and the price of veUSD moves below 1 USD, the issuance fee is increased, to curb the supply and bring its price back to 1 USD. Also, when the demand for veUSD is lower and the veUSD price is below 1 USD more Soft liquidations are expected. This brings the supply of veUSD down and increases the demand for it, bringing its price back to 1 USD. The supply of veUSD is completely decentralized and independent of the Vauledge DAO or any other entity. **Vaultedge users are the only ones controlling the number of veUSD being minted and burnt in their Vaults.** [PreviousVE tokens management](/the-protocol/borrowing/ve-tokens-management) [NextPrice stability](/the-protocol/veusd/price-stability) Last updated 4 months ago 🏭 ![Page cover image](https://docs.vaultedge.fi/~gitbook/image?url=https%3A%2F%2F1618996297-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FDFiAgxHY26De1v29C6ap%252Fuploads%252FDUFShWWPrxqjxugz3jX4%252FveUSD.png%3Falt%3Dmedia%26token%3D76019d2c-e878-4a90-a9a5-3aa3cf833ac9&width=1248&dpr=4&quality=100&sign=797de2b2&sv=2) --- # Recovery mode | Vaultedge docs [PreviousStability pool](/the-protocol/borrowing/stability-pool) [NextCollateral Whitelisting](/the-protocol/borrowing/collateral-whitelisting) Last updated 11 days ago [](#what-is-recovery-mode) What is Recovery Mode? ------------------------------------------------------ The core principle of our system is to ensure that veUSD remains fully over-collateralized and consistently redeemable. While we offer highly capital-efficient loans with low collateralization requirements, safeguarding redeemability in all circumstances necessitates balancing the system with more secure, well-capitalized loans. This equilibrium is maintained through the activation of Recovery Mode. When the system's Total Collateral Ratio (TCR) drops below 150%, meaning that veUSD isn't as well-collateralized, the system moves into recovery mode. It goes back into Normal Mode once TCR goes back to above 150%. During Recovery Mode, vaults with an adjusted individual collateral ratio () **below the TCR of the system** are eligible to be liquidated. 100% of the collateral in the vault will be liquidated Additionally, the system restricts borrower actions that could further reduce the Total Collateral Ratio (TCR). New veUSD can only be minted by improving the collateral ratio of existing Vaults or by opening a new Vault with a collateral ratio of at least 150%. **Pure stablecoin vaults are still safe during recovery mode.** Because Recovery Mode uses the Adjusted Collateral Ratio **(AICR)**, Vaults backed entirely by stablecoins are exempt from these conditions due to their higher AICR. Recovery Mode encourages borrowers to take actions that restore the Total Collateral Ratio (TCR) above 150%. To ensure safety in all conditions, users should maintain their Vault collateral ratio above the TCR and, ideally, above 150%. This mechanism is designed to promote healthy borrowing practices and act as a deterrent. The mere possibility of Recovery Mode helps steer the system away from triggering it. While not a desirable state, Recovery Mode is a necessary safeguard to uphold the system's stability. ### [](#what-is-the-adjusted-collateral-ratio) What is the Adjusted Collateral Ratio? A vault's Adjusted Individual Collateral Ratio or AICR is a ratio between collateral and debt giving additional weight to stablecoins. ARAV\=Adjusted\_Safety\_Ratio×Price×Collateral\_Amount{ARAV} = \\text{Adjusted\\\_Safety\\\_Ratio} \\times \\text{Price} \\times \\text{Collateral\\\_Amount}ARAV\=Adjusted\_Safety\_Ratio×Price×Collateral\_Amount This calculation is similar to the Risk-Adjusted Value calculation except with a different ratio for each collateral. Stablecoin collaterals have an Adjusted Safety Ratio of 1.6 while other assets will have System Ratio = Safety Ratio. The idea is that we are comfortable with the full system being backed by low collateral ratio loans against stablecoins. But if veUSD is mostly collateralized by riskier assets, we need a higher dollar value of those assets in the system vs. veUSD issued. ### [](#what-is-the-total-collateral-ratio-1) What is the Total Collateral Ratio? The Total Collateral Ratio (TCR) is a number representing system safety and the value of the system collateral vs. the amount of veUSD minted against it. The system will be in "recovery mode" if the TCR is below 150%. This calculation works like the AICR calculations above. ### [](#what-is-the-purpose-of-recovery-mode) What is the purpose of Recovery Mode? The goal of Recovery Mode is to encourage borrowers to take actions that swiftly restore the Total Collateral Ratio (TCR) above 150% and motivate veUSD holders to replenish the Stability Pool. Economically, Recovery Mode incentivizes collateral top-ups and debt repayments, while also serving as a self-correcting deterrent. Its mere possibility helps steer the system away from ever triggering it. While necessary, Recovery Mode is not an ideal state for the system. ### [](#what-are-the-fees-during-recovery-mode) **What are the fees during Recovery Mode?** While Recovery Mode has no impact on the soft liquidation fee, the borrowing fee is set to `0%` to maximally encourage borrowing (within the limits described above). ### [](#how-can-i-make-my-trove-safe-in-recovery-mode) **How can I make my vault safe in Recovery Mode?** By increasing your Adjusted Collateral Ratio to `150%` or greater, your vault will be protected from liquidation. This can be done by adding collateral, repaying debt, or both. ### [](#can-i-be-liquidated-if-my-collateral-ratio-is-below-150-in-recovery-mode) Can I be liquidated if my adjusted collateral ratio is below `150%` in Recovery Mode? You can be liquidated in recovery mode if your vault's adjusted collateral ratio is smaller than the TCR. In order to avoid liquidation in Normal Mode and Recovery Mode, a user should keep their vault collateral ratio above 150%. #### [](#how-do-liquidations-work-in-recovery-mode) How do liquidations work in Recovery Mode? * ICR = Individual Collateral Ratio * MCR = Minimum Collateral Ratio * TCR = Total Collateral Ratio * SP = Stability Pool Condition Liquidation Behavior ICR <=100% Redistribute all debt and collateral (minus ETH gas compensation) to active vaults. 100% < ICR < MCR & SP veUSD > vault debt veUSD in the Stability Pool is offset with the Vault's debt. The vault's collateral (minus ETH gas compensation) is shared between stability pool depositors. 100% < ICR < MCR & SP veUSD < vault debt The total Stability Pool veUSD is offset with an equal amount of debt from the vault. A fraction of the vault collateral (equal to the ratio of its offset debt to its entire debt) is shared between depositors. The remaining debt and collateral (minus ETH gas compensation) is redistributed to active vaults. MCR <= ICR & AICR < TCR & SP veUSD >= Vault debt In this case, the Stability Pool veUSD is offset with an equal amount of debt from the vault. A fraction of collateral with dollar value equal to `1.1 * debt` is shared between depositors. Nothing is redistributed to other active vaults. Since its ICR was `> 1.1`, the vault has a collateral remainder, which is sent to the `CollSurplusPool` and is claimable by the borrower. The vault is closed. MCR <= ICR & AICR < 150% & SP veUSD < Vault debt Do nothing. Because there is insufficient veUSD in the stability pool to fully offset, this vault is not liquidated AICR >= 150% Do nothing. ### [](#how-much-of-a-troves-collateral-can-be-liquidated-in-recovery-mode) How much of a Vaults collateral can be liquidated in Recovery Mode? Liquidated collateral lost is capped at `110%` of a vault's debt. Specifically, the dollar value of the collateral sent to the stability pool is a maximum of 110% of the veUSD debt that is offset. Any remainder, i.e. the collateral above `110%`, can be reclaimed by the liquidated borrower using the standard web interface. This means that a borrower will face the same liquidation “penalty” (`10%`) in Recovery Mode as in Normal Mode if their vault gets liquidated. #### [](#what-is-the-total-collateral-ratio-1-1) AICR\=ARAVVault\_Debt{AICR} = \\frac{\\text{ARAV}}{\\text{Vault\\\_Debt}}AICR\=Vault\_DebtARAV​ SystemCollateralValue\=Adjusted\_Safety\_Ratio×Price×Collateral\_Amount{System Collateral Value} = \\text{Adjusted\\\_Safety\\\_Ratio} \\times \\text{Price} \\times \\text{Collateral\\\_Amount}SystemCollateralValue\=Adjusted\_Safety\_Ratio×Price×Collateral\_Amount TCR\=System RAVTotal veUSD Debt{TCR} = \\frac{\\text{System RAV}}{\\text{Total veUSD Debt}}TCR\=Total veUSD DebtSystem RAV​ 🏭 [AICR](/the-protocol/terminology) --- # Terminology | Vaultedge docs **Vault:** A user may deposit a basket of assets and open a Vault. It is used as backing to mint and withdraw veUSD. **Debt:** The amount of veUSD you have minted against the collateral in your vault. **Deposit Fee:** This is a one-time fee when collateral is deposited into Vaultedge. The fee amount varies depending on veUSD borrowed, deposited collateral type and its backing percentage. As backing percentage increases and if the collateral is higher risk, the deposit fee is higher. **Soft liquidation Fee:** There is a one-time 3% fee paid on soft liquidations. **Safety Ratio:** Used as a weighting mechanism to give lower risk (less volatile, more liquid) collateral a higher weight in the system compared to higher risk collateral. A high safety ratio means more debt can be issued against the same dollar amount of the asset. **Risk-Adjusted Value (RAV):** RAV value is a way for the system to weight collateral risk. For some dollar value of collateral, safer collateral has a higher RAV relative to risky collateral. The risk-adjusted value depends on the collateral's safety ratio. Safety ratios must be between 0 and 1.1. Stable collateral (i.e. USDC, USDT, DAI) can have a safety ratio between 1 and 1.1, but all other collateral has a safety ratio between 0 and 1. **Stability Risk-Adjusted Value (sRAV):** sRAV value is a way for the system to weight collateral risk while also accounting for the benefits of utilizing stablecoin collateral when the system is in **Recovery mode**. The calculation of sRAV is exactly the same for non-stable collateral. But the sRAV of stablecoin collaterals utilizes a safety ratio of 1.6 rather than the actual safety ratio. **For Non-Stable Collaterals:** For example, I have 1000 Lynx at a price of $2.75 with a safety ratio of 0.8: **For Stablecoin Collaterals:** For example, I have 1000 DAI at a price of $1.03: _Current Stablecoin Collaterals (ones that use this 1.6 ratio) are: USDC, USDT, DAI_ **Individual Collateral Ratio (ICR):** Ratio of the Risk-Adjusted Value of a borrower's vault collateral compared to their debt. Vaults are eligible for liquidation if their individual collateral ratio drops below 110%. **Adjusted Individual Collateral Ratio (AICR):** By using sRAV, even all the vaults are low collateral stablecoin vaults, the system will still not hit recovery mode. **Total Collateral Ratio:** The TCR is the System's Risk Adjusted Value (RAV) over the total veUSD debt. When TCR is below 150% the system enters recovery mode. **Critical Collateral Ratio:** **Minimum Collateral Ratio:** The MCR is the minimum ratio Vaults must maintain to avoid liquidation. **Health Factor (HF):** The HF (Health Factor) is a key metric that reflects the health of each vault by considering the ICR (Individual Collateral Ratio) and the liquidation ratio. A higher HF indicates a safer position. There are two important levels to be aware of: Health Factor: =< 1.37 \[the vault can be soft liquidated by other users\] Health Factor: =< 1 \[the vault gets liquidated by the Stability Pool\] **Liquidation reserve:** When you open a Vault and draw a loan, 20 veUSD are set aside as a way to compensate gas costs for the transaction sender in the event your Vault being liquidated. The Liquidation Reserve is fully refundable if your Vault is not liquidated, and is given back to you when you close your vault by repaying your debt. The Liquidation Reserve counts as debt and is taken into account for the calculation of a vault collateral ratio, slightly increasing the actual collateral requirements. **Backing Percent:** How much of the protocol is backed by that particular asset. If the system has RAV of $1,000,000 and it has $10,000 RAV of Lynx, then it has 1% backing percent of Lynx. **Recovery Mode:** ### [](#other-useful-definitions) Other Useful Definitions **Stablecoin** \- Stablecoins are cryptocurrencies that are designed to be stable in price. Often times their market values will be pegged to some external reference such as the US dollar. **Peg** - When something is pegged, it means that it is fixed to an amount at a particular level. For example, veUSD is pegged to 1 USD and should remain fixed to the price of 1 USD. **Annual percentage rate (APR)** - APR is expressed as a percentage that represents the monetary value or reward that investors are expected to earn. This includes any fees or additional cots associated, but does not take compounding into account. **Staking** - Staking is the process of locking up tokens in exchange for rewards for securing a protocol. By staking your assets, you support the blockchain network and help confirm transactions. **Arbitrage** \- Arbitrage is the process of purchasing and selling the same asset in different markets in order to profit from the difference in the listed prices. By profiting through exploiting market inefficiencies, it inadvertently resolves the price in different markets. **High-risk collateral** \- High-risk collateral refers to assets with high price volatility or low liquidity. These collateral types will have a lower safety ratio assigned to them because liquidation risk are higher due to fluctuations in price. [PreviousGeneral](/the-protocol/general) [NextBorrowing](/the-protocol/borrowing) Last updated 1 month ago RiskAdjustedValue\=Safety ratio×Token amount×Token Price in USD{Risk Adjusted Value} = \\text{Safety ratio} \\times \\text{Token amount} \\times \\text{Token Price in USD} RiskAdjustedValue\=Safety ratio×Token amount×Token Price in USD Stability−RiskAdjustedValue\=1.6×Token amount×Token Price in USD{Stability- RiskAdjusted Value} = 1.6 \\times \\text{Token amount} \\times \\text{Token Price in USD}Stability−RiskAdjustedValue\=1.6×Token amount×Token Price in USD StabilityRisk−AdjustedValue\=0.8∗1000∗2.75\=2200RAVStability Risk-Adjusted Value = 0.8 \* 1000 \* 2.75 = 2200 RAVStabilityRisk−AdjustedValue\=0.8∗1000∗2.75\=2200RAV StabilityRisk−AdjustedValue\=1.6×1000×1.03\=1648 sRAV{Stability Risk-Adjusted Value} = 1.6 \\times 1000 \\times 1.03 = 1648 \\, \\text{sRAV}StabilityRisk−AdjustedValue\=1.6×1000×1.03\=1648sRAV IndividualCollateralRatio\=RAV of vault’s CollateralDebt in vault{Individual Collateral Ratio} = \\frac{\\text{RAV of vault's Collateral}}{\\text{Debt in vault}}IndividualCollateralRatio\=Debt in vaultRAV of vault’s Collateral​ For example, I have 1000 Lynx at a price of $2.75 with a safety ratio of 0.8. This has a RAV of 2200. I have taken out 2000 veUSD in debt:IndividualCollateralRatio\=2200 RAV2000 veUSD\=110%{Individual Collateral Ratio} = \\frac{2200 \\, \\text{RAV}}{2000 \\, \\text{veUSD}} = 110\\%IndividualCollateralRatio\=2000veUSD2200RAV​\=110% IndividualCollateralRatio\=2200 RAV2000 veUSD\=110%{Individual Collateral Ratio} = \\frac{2200 \\, \\text{RAV}}{2000 \\, \\text{veUSD}} = 110\\%IndividualCollateralRatio\=2000veUSD2200RAV​\=110% Ratio of the Stability Risk-Adjusted Value **(sRAV)** of a borrower's vault collateral compared to their debt. This is utilized for determining whether a vault is eligible for liquidation during . AdjustedIndividualCollateralRatio\=sRAV of vault’s CollateralDebt in vault{Adjusted Individual Collateral Ratio} = \\frac{s\\text{RAV of vault's Collateral}}{\\text{Debt in vault}}AdjustedIndividualCollateralRatio\=Debt in vaultsRAV of vault’s Collateral​ TCR\=∑i\=1n(CollateralValuei×SafetyRatioi)TotalVeUSDDebtTCR = \\frac{\\sum\_{i=1}^{n} (CollateralValue\_i \\times {SafetyRatio\_i})}{TotalVeUSDDebt}TCR\=TotalVeUSDDebt∑i\=1n​(CollateralValuei​×SafetyRatioi​)​ The CCR represents the threshold below which the protocol enters **The system goes into recovery mode when the Total Collateral Ratio of the system is under 150%.** The system blocks borrower transactions that would further decrease the TCR. This means that borrowers may not withdraw collateral or borrow veUSD during recovery mode. 🏭 [**Recovery Mode**](/the-protocol/borrowing/recovery-mode) [recovery mode.](/the-protocol/borrowing/recovery-mode) [Read more.](/the-protocol/borrowing/recovery-mode) [](https://techdocs.yeti.finance/how-does-yeti-finance-work/recovery-mode) --- # Terms and Conditions | Vaultedge docs [PreviousThe flywheel](/the-protocol/the-flywheel) Last updated 1 month ago Last Updated: 21/03/2025 These Terms and Conditions (“Terms”) govern your (“User”, “you” or “your”) access to and use of the Vaultedge platform (the “Platform”), including the associated website at (the “Website”). By accessing or using the Platform, you agree to be bound by these Terms, including all notices and disclaimers contained herein. If you do not agree with these Terms, you must immediately cease using the Platform. 1. Acceptance of Terms By accessing or using the Platform, you confirm that you have read, understood, and agree to be bound by these Terms and any future modifications. Your continued use of the Platform constitutes your acceptance of any changes. It is your responsibility to review these Terms periodically. Please note that the Privacy Policy, is hereby incorporated by reference into these Terms. By accessing or using the Platform, you acknowledge and agree to be bound by the Privacy Policy as part of these Terms. If you do not agree with the Privacy Policy, please refrain from using the Platform. 1. Definitions For purposes of these Terms, the following definitions apply: * Vaultedge: A decentralized borrowing protocol enabling users to borrow against their portfolio of assets by minting veUSD, a USD-pegged, over-collateralized stablecoin. * veUSD: The USD-pegged stablecoin issued exclusively through the Vaultedge protocol upon the deposit of eligible collateral. * DAO: Decentralized Autonomous Organization responsible for managing the on-chain aspects of the Vaultedge protocol. * Front End: The Website and user interface provided by the Company solely for displaying on-chain data and facilitating user interactions with the Protocol. * User: Any person or entity accessing or using the Platform. * Restricted Jurisdictions: Jurisdictions prohibited from accessing the Platform, including those designated on the OFAC and FATF lists, or other high-risk/blacklisted regions as determined by applicable law. * Blacklisted Wallets: digital wallet addresses that, based on internal compliance screening procedures and in accordance with applicable laws and regulatory guidelines, are identified as being associated with users from Restricted Jurisdictions or with entities subject to sanctions or otherwise deemed high-risk. Such wallet addresses are subject to access restrictions that are enforced solely through the Platform’s front-end mechanisms, and the Company reserves the right to modify its criteria for determining Blacklisted Wallets at its sole discretion, without liability for any errors or inaccuracies. 1. Eligibility and User Representations 1. Eligibility: By using the Platform, you represent that you: 2. Are at least 18 years of age (or the applicable legal age in your jurisdiction). 3. Are not subject to economic or trade sanctions administered or enforced by any governmental authority; or otherwise, you are not a member of any sanctions list or equivalent maintained by the United States government, the United Kingdom government, the European Union, or the United Nations, including without limitation the U.S. Office of Foreign Asset Control Specifically Designated Nationals and Blocked Person List. 4. Possess the legal capacity to enter into these Terms. 3.2 User Self-Certification: Before accessing the Platform, you must complete a transaction-based self-certification confirming that you are not a U.S. citizen or resident and do not originate from any Restricted Jurisdiction. Any false or misleading information provided during self-certification may result in immediate termination of access. 1. Access Restrictions and Geo-Blocking 1. Geo-Blocking: The Platform shall implement geo-blocking mechanisms on its Front End to restrict access by users located in, or attempting to access the Platform from, any jurisdiction designated as a "Restricted Jurisdiction" (as defined in the Definitions section of these Terms). Such measures may include, but are not limited to, IP address filtering, location-based redirection, and requiring users to confirm their country of residence. The list of Restricted Jurisdictions may be updated by the Company at its sole discretion and without prior notice. By accessing the Platform, users acknowledge and consent to the application of these geo-blocking measures. 1. Jurisdictional Access Restrictions: In order to comply with applicable international and domestic regulations—including those enforced by the Office of Foreign Assets Control (OFAC) and the Financial Action Task Force (FATF)—the Platform will restrict access to users from jurisdictions subject to sanctions, embargos, or identified as high-risk. Users determined to be originating from or currently located in such jurisdictions shall be prevented from accessing, registering on, or transacting through the Platform. The Company shall continuously monitor regulatory updates and modify the list of restricted jurisdictions accordingly. These restrictions shall apply irrespective of the method or device used to access the Platform. 1. Blocking of Blacklisted Wallets: To ensure regulatory compliance while maintaining the decentralized operation of on-chain activities, the Platform shall enforce the blocking of digital wallet addresses ("Blacklisted Wallets") identified through internal compliance screening procedures and third-party verification as being associated with users from Restricted Jurisdictions or with sanctioned/high-risk entities. Identification methods may include analysis of user self-certification data, blockchain analytics, and other compliance tools. Blocking of such wallets shall be executed solely at the Front End level, ensuring that while these wallets are restricted from accessing the Platform’s services, the underlying decentralized protocol remains unaffected. The Company reserves the right to update its criteria and mechanisms for identifying Blacklisted Wallets at its sole discretion and shall not be held liable for any misclassification or errors arising from these determinations. 1. Platform Operation and Scope 1. Front End Responsibility: The Company is responsible solely for the development, operation, and maintenance of the Platform’s Front End. The Website collects and displays only on-chain data and does not interact directly with user funds. 1. On-Chain Operations: The on-chain functions of the Vaultedge protocol are governed and executed by the DAO. The Company is not responsible for the on-chain operations, including smart contract execution, governance, or protocol upgrades. 1. Protocol Description: Vaultedge enables Users to deposit eligible collateral to mint veUSD, a USD-pegged stablecoin that is over-collateralized. Eligible collateral includes, but is not limited to: * Blue-chip Assets: Well-established cryptocurrencies and stablecoins (e.g., WETH, WBTC, USDC, USDT, LYNX). * Staked Assets: Assets derived from staking, such as wrapped staked ETH (wsETH). * Liquidity Provider (LP) Tokens: Tokens representing stakes in decentralized liquidity pools. * Voting Escrow (VE) Tokens: Tokens used in governance mechanisms. * Real World Assets (RWAs): Selected traditional assets as approved under the protocol’s guidelines. By depositing eligible collateral, Users can mint veUSD according to the platform’s dynamically determined collateralization requirements, ensuring that the value of the deposited collateral exceeds the value of the minted veUSD. This over-collateralization mechanism is designed to mitigate the risks associated with market volatility. A detailed list of services and functionality of the Platform shall be made available to Users on the relevant page of the Website. The Company reserves the right to change the information on the list of services and functionality of the Platform at any time if the relevant functionality and services are changed by the DAO decision. The Company is not responsible for when and how DAO changes the functionality and services of the Platform. 1. Smart contracts: By using the Platform, you acknowledge and agree that all transactions executed on blockchain-based networks are automatically processed by one or more smart contracts. You hereby consent to such automated execution and processing of transactions in connection with your use of the Platform. Furthermore, you acknowledge and agree that the terms encoded within the applicable smart contract(s) shall govern the allocation of funds and the transfer of ownership of any cryptoassets involved in each transaction. 2. User Control Over Cryptoassets: Users retain full control over their cryptoassets at all times. Neither we nor any affiliated entity is a party to any transaction executed on the blockchain networks underlying Platform. We do not possess, control, or have custody of any cryptoassets or user funds. When you interact with Platform, you maintain sole control over your cryptoassets. 3. Use of Third-Party Self-Custodial Wallets: Access to Platform may require the use of third-party self-custodial wallets. We do not control, guarantee, or assume responsibility for the performance, security, or reliability of these wallets. By using the Front End to access Platform, you acknowledge that your self-custodial wallet is provided and maintained by a third-party service provider and is subject to its separate terms, conditions, fees, disclaimers, and risk warnings. It is your sole responsibility to review and understand those terms to ensure compliance and awareness of any associated costs or risks. 1. Non-Intermediary Status: Due to the decentralized and non-custodial nature of Vaultedge, we act solely as the provider of the Platform’s Front End interface and are not an intermediary, agent, advisor, or custodian with respect to any Vaultedge transactions. We do not have any fiduciary obligations to you regarding your transactions or any activities you conduct using our Platform. 1. Limited Access to Transactional Information: We do not have access to information about all Vaultedge transactions beyond what is publicly available on the blockchain. However, we may collect information regarding users of our Platform in accordance with our Privacy Policy. 1. Blockchain Fees: Transactions on blockchain networks may incur gas fees or other network transaction fees, which are non-refundable. We do not provide services related to the delivery, holding, or receipt of cryptoassets, nor do we collect any fees from such transactions. 2. Prohibited activity of Platform or Website: You are expressly prohibited from engaging in any of the following activities: 3. Unlawful Activities – Using the Website or Platform for any illegal purpose or in furtherance of any unlawful activity, including but not limited to money laundering, terrorist financing, tax evasion, or the purchase, sale, or distribution of illegal drugs, contraband, counterfeit goods, or prohibited weapons. 4. Unauthorized Commercial Use – Exploiting the Website or Platform for any unauthorized or unapproved commercial purpose, including any fraudulent activities. 5. Malicious Code – Uploading, transmitting, or distributing viruses, worms, Trojan horses, time bombs, cancel bots, spiders, malware, or any other harmful software or code that could disrupt, compromise, or interfere with the proper functioning of the Website or Platform. 6. Unauthorized Access and Reverse Engineering – Attempting to copy, modify, decompile, disassemble, reverse engineer, or otherwise extract source code or underlying ideas from any parts of Website or Platform\`s functionality, including by reformatting or framing content, without prior written consent. 7. Unauthorized Data Collection – Harvesting, scraping, or otherwise collecting data or information from the Website or Platform without express authorization. 8. Fraud and Deception – Accessing or using the Website of Platform under false or fraudulent pretenses, engaging in any misleading or deceptive conduct, or misrepresenting your identity or affiliations. 9. Interference with Other Users – Disrupting, interfering with, or otherwise preventing other Users from accessing or lawfully using the Website or Platform. 10. Circumvention of Security Measures – Tampering with, bypassing, or interfering with security features, access controls, or other protective measures of the Website or Platform, any third-party systems, or networks used in connection with the Website or Platform. 11. Exploitation of Smart Contracts – Engaging in hacking, denial-of-service attacks, or any exploitative action on smart contracts in connection with the Website or Platform, even if such actions are technically possible within the smart contract’s code. 12. Anticompetitive Behavior – Engaging in any conduct that constitutes unfair competition, market manipulation, or any other deceptive, abusive, or unethical business practice. 1. Consequences of prohibited activity: Company reserves the right, at our sole discretion, to: * Restrict, suspend, or permanently revoke your access to Website or Platform, in whole or in part, if you violate these Terms, applicable law, or engage in any prohibited activity. * Take corrective actions, including modifying, rectifying, or altering transaction data to mitigate harm caused by a violation of these Terms or applicable law. * Investigate and prosecute any suspected breach of these Terms, including cooperating with law enforcement bodies and regulatory authorities, and disclosing relevant information as necessary to comply with legal obligations. Violations of these Terms may result in civil, criminal, or administrative liability, and we reserve all legal rights and remedies available under applicable law. 1. Compliance with Laws: You shall comply with all applicable laws, regulations, and guidelines in connection with your use of the Platform. Failure to comply may result in suspension or termination of access. 1. Intellectual Property and Content 1. Company\`s ownership. The Website, including any models, interfaces, algorithms, indexes or other software developed by Company or its affiliates, contractor, employees or subsidiaries, along with all associated features, functionality, and tools, is protected by copyright, trademark, patent, trade secret, and other intellectual property local and international laws. You acknowledge and agree that the Platform and all related intellectual property rights are our exclusive property and our licensors. You are prohibited from removing, altering, or obscuring any copyright, trademark, service mark, patent marking, or other proprietary rights notices incorporated in or accompanying the Platform. 1. Trademarks. The company name, the term "Vaultedge" the company logo, and all related names, logos, product and service names, designs, and slogans are trademarks of the Company or its affiliates or licensors. You must not use such marks without the prior written permission of Company. All other names, logos, product and service names, designs, and slogans on the Platform are the trademarks of their respective owners. 1. User Content: Any data or content you provide in connection with the Platform shall be subject to the Company’s Privacy Policy. The Company reserves the right to remove or block any content that violates these Terms or applicable laws. 1. License: Subject to your continued compliance with these Terms, we grant you a personal, worldwide, revocable, non-exclusive, and non-transferable license to access and use the Platform. This license is granted solely for the purpose of enabling you to use the Platform in accordance with these Terms. 1. Feedback: Any feedback, suggestions, ideas, bug reports, or other information you provide regarding Platform or Website, whether solicited or unsolicited, is entirely voluntary. By submitting such feedback, you grant us a perpetual, irrevocable, worldwide, royalty-free, and transferable right to use, modify, distribute, and otherwise exploit the feedback in any manner, including sharing it with third parties, without any obligation to provide compensation, attribution, or any other benefit to you. You further acknowledge that we have no obligation to implement, consider, or maintain the confidentiality of any feedback provided. 1. Taxes 1. Taxation responsibility: Users are solely responsible for determining, reporting, and paying any taxes, duties, or assessments that may be imposed by any governmental authority in connection with their use of the Platform. This includes any liabilities arising from the use, transfer, or exploitation of cryptoassets and interactions with smart contracts. Users acknowledge that blockchain-based transactions are novel, and their tax treatment remains uncertain. It is the User's responsibility to seek independent tax advice to ensure compliance with applicable laws. 1. Risk Disclosures and Legal Disclaimers 1. Risk Acknowledgment: Users acknowledge that all on-chain interactions with the Vaultedge protocol, including collateral deposits, veUSD minting, and related transactions, are subject to inherent risks typical of decentralized systems. These risks include, but are not limited to: * Technical Risks: Smart contract vulnerabilities, coding errors, and network congestion. * Market Risks: Price volatility of collateral assets that may trigger automated liquidation if collateral values fall below required thresholds. * Operational Risks: Potential delays or failures in transaction processing and protocol operations. * Regulatory Risks: Uncertainties arising from the evolving regulatory landscape affecting decentralized protocols. Users are solely responsible for understanding and managing these risks. It is recommended that users perform their own due diligence and seek independent financial and technical advice before engaging with the Vaultedge protocol. The Company, its affiliates, and the DAO shall not be held liable for any losses or damages incurred as a result of these inherent risks. 1. No Financial, Investment, or Legal Advice: The information provided on the Platform is for informational purposes only and does not constitute financial, investment, or legal advice. You should consult with professional advisors before engaging in any transactions. 1. Service “As-Is” Basis: The Platform is provided “as-is” and “as available” without any warranties, express or implied. The Company expressly disclaims all warranties, including but not limited to those of merchantability, fitness for a particular purpose, and non-infringement. 1. No Custodial Relationship: The Company does not custody or control user funds. All on-chain interactions are executed directly through smart contracts managed by the DAO, and you remain solely responsible for managing your digital assets. 1. Limitation of Liability 1. Disclaimer of Warranties: The Company makes no representations or warranties regarding the performance, reliability, or availability of the Platform. Use of the Platform is at your own risk. 1. Limitation of Liability: To the fullest extent permitted by applicable law, Company, its directors, officers, contractors, employees, affiliates or subsidiaries shall be liable to you for any loss, damage, or injury of any kind, including but not limited to direct, indirect, incidental, special, exemplary, consequential, or punitive damages, or for any loss of profits, data, use, business, goodwill, or any other intangible losses, whether arising in contract, tort (including negligence), indemnity, strict liability, statute, or otherwise, even if advised of the possibility of such damages. Without limiting the foregoing, such exclusion of liability applies to any damages arising out of or in connection with: * the use of Platform or your inability to use or access the Platform; * any misuse of the Platform, including without limitation, unauthorized access; * any conduct by Users on the Platform; * the termination, suspension, or restriction of your access to the Platform. Furthermore, Company, its directors, officers, contractors, employees, affiliates or subsidiaries shall not be liable for any damages, in whole or in part, caused by or arising from: * user errors, including but not limited to forgotten passwords or incorrectly constructed smart contracts or transactions; * server failures or data loss; * malfunctions, unintended functionalities, or unexpected behaviors of the blockchain, any computer or crypto asset network (including wallet providers), including losses associated with network forks, replay attacks, double-spend attacks, governance disputes, variations in mining difficulty, changes in cryptographic or consensus mechanisms, hacking, or cybersecurity breaches; * changes in the value of any cryptoasset; * changes in law, regulation, or policy; * events of force majeure; * or actions of any third party. In no event shall the aggregate liability of Company, its directors, officers, contractors, employees, affiliates or subsidiaries to you or any other user, from any and all claims and causes of action, exceed one thousand U.S. dollars. Under no circumstances shall Company, its directors, officers, contractors, employees, affiliates or subsidiaries be required to provide you with any virtual currency as a remedy, to order specific performance, or to provide any other remedy. If damages are calculated in relation to the value of a virtual currency, both you and we agree that such calculation shall be based on the lowest value of the virtual currency during the period between the accrual of the claim and the determination of damages. Some jurisdictions do not allow the exclusion or limitation of certain warranties or liabilities. Accordingly, in those jurisdictions, the limitations and exclusions set forth herein may not apply to you to the fullest extent permitted by law, and the liability of Company, its directors, officers, contractors, employees, affiliates or subsidiaries and the scope of any warranties will be limited to the maximum extent permitted by applicable law. 1. Force Majeure: Neither party shall be liable for any failure or delay in performing its obligations under these Terms if such failure or delay is due to events beyond its reasonable control, including, but not limited to, natural disasters, acts of government, labor disputes, or other force majeure events. 1. Indemnification 1. General indemnification: You agree to indemnify, defend, and hold harmless the Company, our affiliates, directors, officers, employees, contractors and subsidiaries from and against any and all claims, liabilities, damages, losses, costs, and expenses, including reasonable attorneys' fees, arising out of or related to: * Breach of Terms: Your actual or alleged breach of these Terms. * Misuse of Platform: Your improper or unauthorized use of the Platform, or any related smart contracts or scripts. * Legal Violations: Your violation of any applicable laws, regulations, rules, codes, statutes, ordinances, or orders issued by governmental or quasi-governmental authorities. * Third-Party Rights: Your infringement or alleged infringement of any third party's rights, including intellectual property, publicity, confidentiality, property, or privacy rights. * Third-Party Services: Your use of any third-party products, services, or websites in connection with the Platform. * Misrepresentations: Any false, misleading, or inaccurate representations made by you. 1. Indemnification cooperation: We reserve the right, at your expense, to assume the exclusive defense and control of any matter subject to indemnification by you. You agree to cooperate fully with us in asserting any available defenses. You shall not settle any claim without our prior written consent. 1. Modifications to the Platform and Terms 1. Modifications to Platform: The Company reserves the right to modify, suspend, or discontinue the Platform or any part thereof at any time without prior notice. Changes to on-chain operations, including smart contract updates, are governed by the DAO. 1. Amendments to Terms: The Company may amend these Terms at any time. Any changes will be effective immediately upon posting on the Website. Your continued use of the Platform constitutes acceptance of the updated Terms. 1. Termination and Suspension 1. Termination: The Company may terminate or suspend your access to the Platform at any time, with or without cause, and without prior notice, in its sole discretion. 1. Effect of Termination: Upon termination, all rights granted to you under these Terms will immediately cease, and you must promptly discontinue your use of the Platform. 1. Governing Law and Dispute Resolution 1. Governing Law: These Terms shall be governed by and construed in accordance with the laws of Marshall Islands, without regard to any conflict of laws principles. 1. Negotiations: Prior to initiating any legal proceedings, including arbitration as outlined below, both parties agree to engage in good faith negotiations to resolve any dispute, claim, or controversy arising out of or relating to these Terms or use of Platform (each, a "Dispute" and collectively, "Disputes"). The aggrieved party shall provide written notice to the other party detailing the nature of the Dispute. The receiving party shall have thirty (30) business days to respond. Within sixty (60) business days of the initial notice, both parties shall confer in good faith to attempt to resolve the Dispute. If unresolved within ninety (90) business days of the initial notice, the parties may agree to mediation or proceed to arbitration as specified below. 1. Arbitration: Any dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration administered by the Singapore International Arbitration Centre ("SIAC") in accordance with the Arbitration Rules of the Singapore International Arbitration Centre for the time being in force, which rules are deemed to be incorporated by reference in this clause. The arbitrator(s) shall possess expertise in matters involving internet technology, software applications, financial transactions, and, preferably, blockchain technology. The prevailing party shall be entitled to reasonable attorney's fees and costs. Except as required by law, neither party nor its representatives may disclose the existence, content, or results of any arbitration without prior written consent from the other party. 1. Class Action Waiver: You agree that any claims, disputes, or controversies arising out of or relating to these Terms or your use of the Platform shall be resolved solely on an individual basis. You expressly waive your right to participate in any class, collective, or representative action or proceeding against us, whether in arbitration or litigation. Any dispute resolution process, including arbitration, shall be conducted only on an individual basis, and no arbitrator or court shall have the authority to consolidate or join claims of multiple users. If any portion of this class action waiver is held to be invalid or unenforceable under applicable law, then such provision shall be severed, and the remainder of these Terms shall continue in full force and effect, with all disputes to be resolved individually. 1. Entire Agreement and Severability 1. Entire Agreement: These Terms, together with our Privacy Policy and any additional policies referenced herein, constitute the entire agreement between you and the Company regarding your use of the Platform and supersede all prior or contemporaneous understandings or agreements. 1. Severability: If any provision of these Terms is found to be invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the invalid or unenforceable provision shall be replaced by a valid provision that most closely reflects the parties' original intent. 1. Contact Information If you have any questions, concerns, or comments regarding these Terms, please contact us at: Email: hello@vaultedge.fi This document constitutes a legally binding agreement between you and the Company regarding your use of the Vaultedge Platform. By using the Platform, you acknowledge that you have read, understood, and agreed to these Terms and Conditions. [https://www.vaultedge.fi/](https://www.vaultedge.fi/) ---