Benefits for Stability Providers

Discounted Collaterals from Liquidations:

Stability Providers have the opportunity to access discounted collaterals from liquidations without the need to expend gas or run liquidation bots. When Vaults are liquidated just below the Minimum Collateral Ratio (MCR), Stability Providers receive a discount equivalent to the difference between the MCR and 100% on the liquidated collateral. This discount results in a net gain for Stability Providers when a Vault is liquidated, enhancing their overall returns on their deposits.

Example Illustration: Assume there is a total of 1,000,000 yUSD in the Stability Pool and your deposit is 100,000 yUSD. Now, a Vault with debt of 210,000 yUSD and collateral of 100 lrETH(liquid restaking ETH) is liquidated at an lrETH price of $2,500, and thus at a collateral ratio of 119% (= 100% * (100 * 2,500) / 210,000). Given that your pool share is 10%, your deposit will go down by 10% of the liquidated debt (21,000 yUSD), i.e. from 100,000 to 79,000 yUSD. In return, you will gain 10% of the liquidated collateral, i.e. 10 lrETH, which is currently worth $25,000. Your net gain from the liquidation is $4,000. Note that depositors can immediately withdraw the collateral received from liquidations and sell it to reduce their exposure to lrETH, if the USD value of lrETH is expected to decrease.

EpsiLoan Token Emissions:

Stability Providers are integrated into the EpsiLoan emission system, allowing them to accrue emissions while providing liquidity to the Stability Pool. As part of the EpsiLoan ecosystem, Stability Providers have the opportunity to coordinate and vote to maximize the share of emissions directed toward stability pool deposits. This enables Stability Providers to further enhance their returns and participate in the governance and operation of the EpsiLoan protocol.

In summary, Stability Providers in EpsiLoan benefit from discounted collaterals from liquidations, which result in net gains, as well as the opportunity to accrue emissions through their participation in the Stability Pool. These benefits underscore the importance of Stability Providers in maintaining system stability and liquidity within the EpsiLoan Protocol, while incentivizing active participation and engagement from users and stakeholders.