Adjusting Loan Terms


Optimal Borrow APY may change over time due to the Prologue Leverage vault utilization rate changing as depositors enter and exit the Prologue Leverage vault.

The SPICE protocol automatically adjusts Borrow APYs according to parameters described in Leverage Vault. Users also have the option to manually refinance their loan to a new Borrow APY at any time.

When refinancing is requested, SPICE will suggest a new Borrow APY. If the user accepts, SPICE will refinance the user into the new Borrow APY.

Increasing Leverage

After obtaining leverage, if you didn’t do so in the first transaction, you can increase your total leverage to a maximum size of 150% of your initial deposit.

Using the same figures from the obtaining leverage example, let's say you want to increase your leverage to 150% of your initial deposit amount, or 15 ETH, after obtaining leverage for the first time at 100% or 10 ETH.

Example: assumes a 5% BorrowAPY, 15% PrologueAPY, 60% maxLTV

  • Base: 10 ETH Deposit @ 15% Net APY

  • First Borrow: 10 ETH Deposit + 10 ETH Loan @ 25% net APY

  • Second/Max Borrow: 10 ETH Deposit + 15 ETH Loan @ 30% net APY

Here are formulas to arrive at a net APY:

PositionSize=min(Deposit/(1−maxLTV),Deposit+Loan)Position Size = min(Deposit / (1 - maxLTV),Deposit + Loan)
InterestEarned=PositionSize∗PrologueAPYInterest Earned = PositionSize * PrologueAPY
InterestPaid=Loan∗BorrowAPYInterestPaid = Loan *BorrowAPY
NetAPY=(InterestEarned−InterestPaid)/DepositNetAPY = (Interest Earned - InterestPaid) / Deposit

Note - Because liquidity for leverage comes from the Prologue Leverage vault, the maximum amount of leverage a user may request will also be dictated by the amount of available liquidity in the Prologue Leverage vault.

Decreasing Leverage

When decreasing your Prologue Leverage, you are effectively "repaying" your outstanding debt.

You are able to either perform a partial repayment over time or a total repayment of your debt all at once.

When you decrease your Prologue Leverage, you will retain your Borrow APY, until a refinancing event occurs.

Since "repayment" for leverage comes from the Prologue vault, the maximum amount a user can decrease their leverage by the available liquidity in the Prologue vault.

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