Zero-Interest Lending
Last updated
Last updated
Ethos Reserve issues interest-free loans denominated in the $ERN stablecoin. Instead of paying interest, users pay a small issuance fee, meaning they don’t need to worry about micro-managing their position. The issuance fee usually sits around 0.5%, but it varies slightly depending on the state of redemptions. Learn more about redemptions in this section.
There is no fee for paying back a loan.
ERN Loan Example
If a user deposits sufficient collateral, they can take out a 100 ERN loan.
Their total debt will appear as 110.5 ERN, which is made up of a 0.5% issuance fee (in this case 0.5 ERN), 10 ERN held as a liquidation deposit, and 100 ERN minted to the user’s wallet.
When the user pays back 100.5 ERN, the 10 ERN liquidation deposit will automatically be paid into their position and the position will be closed.