The Leverage vault allows anyone to deposit tokens to fulfill Prologue Holders' leverage requests and in return, earn yield.
The Leverage vault gives depositors sole exposure to Prologue Leverage yields.
Loans only get refinanced under the following conditions:
- The loan must have been open for at least 14 days
- pool utilization >87.5% and pool APY <= 26%
- OR pool utilization <=87.5% and pool APY >= 26%
- OR pool utilization >=80% and pool APY <= 10%
- OR pool utilization <=80% and pool APY >= 10%
The order in which loans get refinanced is based on the loan size and deviation from optimal borrower APY detailed below.
This non-conventional rebalancing design reduces gas costs by:
- only rebalancing loans when there is a large deviation in current pool APY from optimal pool APY detailed below
- loans that reduce the APY deviation the most are rebalanced first
Here’s how SPICE determines Borrower APY:
- 1.For <=60% LTV Loans
Borrower APY as a function of utilization
- 2.For >60% LTV Loans
Although a leverage user may not request a loan >60% LTV, there are instances when the LTV of their outstanding loan exceeds the limit.
For any LTV >60%, the Borrower APY that the leverage user receives will be directly proportional to BOTH the utilization rate and the leverage user's LTV.
Users may decide to deposit into their Prologue NFT, thereby decreasing their LTV. They can then manually refinance their loan to return back to <=60% LTV.
This is designed to incentive borrowers to maintain healthy LTVs.
High LTVs impact borrowing rates
Leverage Vault APY as a function of utilization
- Spice makes no guarantees around future smart contract performance.
- Interacting with either Prologue Leverage or the Prologue Leverage Vault is not risk-free.