The refundable deposit on token loans
Source: kadia-lending at commit f9c0bdd (f9c0bdd766155fa8afa24e29e0e0cc13508e2d05), with corrections checked by kadia-lending against 66f4aca: docs/specs/lending-design.md (LD) and docs/specs/economic-model-v1.md (EM v1).
A loan whose collateral is a token, not ERG, holds some of your own ERG in its loan box, as a refundable deposit (LD D41, EM v1 §7):
- In the LP market, every loan holds at least 1.2 ERG of yours.
- In the v1 pools, a loan backed by a token (USE, SigUSD or an rs-coin) holds an ERG deposit in the same way, returned to you when the loan closes. Its amount is set before launch; the LP market’s is 1.2 ERG.
- A loan backed by ERG needs no deposit: the collateral is ERG, which pays its own rent.
Why it exists
Section titled “Why it exists”Ergo charges storage rent on boxes left untouched for about four years. Tokens can’t pay rent in ERG, so the deposit makes sure the loan box always pays its own rent. In the LP market, 1.2 ERG covers two rent periods for a box of up to 480 bytes (LD D41).
What it is, and isn’t
Section titled “What it is, and isn’t”- It’s yours. You send it when you open the loan. The review screen shows it as a refundable deposit.
- It isn’t collateral. It doesn’t count toward your loan’s value or your loan-to-value.
- It isn’t a fee. Nobody earns it.
When it comes back
Section titled “When it comes back”| Event | The deposit |
|---|---|
| You close the loan: repay everything | Comes back to you with your collateral |
| A liquidation closes the loan | Comes back to you |
| A partial liquidation (the loan stays open) | Stays in the open loan until it’s later closed |
It always returns to the loan’s owner address, never to a keep address or to whoever repaid (LD D36, D41, D43).
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