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User Economics
Deposit & Borrow Mechanics
Aurum’s economic model is designed for simplicity and user benefit, with transparent parameters:
- Collateralization Ratio: Users may borrow up to 50% of their deposited collateral value, maintaining a minimum 200% collateralization ratio.
- Example Position:
- Deposit: 100 SOL (~$12,000 at current prices)
- Maximum Borrow: 50 SOL worth of aurSOL (~$6,000)
- Initial Collateralization: 200%
- Position Evolution: As yield accrues, the debt balance decreases while collateral remains unchanged, gradually increasing the collateralization ratio and improving position security.
Fee Structure
Aurum maintains a straightforward fee structure designed to balance user value with protocol sustainability:
- Initial Borrow Fee: 1% of borrowed amount (e.g., 0.5 SOL on a 50 SOL borrow)
- Yield Allocation: 80% of generated yield applies to debt reduction, 20% to protocol operations
- No Hidden Costs: No deposit fees, withdrawal fees, or maintenance fees
- Standard Transaction Fees: Only standard Solana network fees apply for interactions with the protocol
User Benefits Analysis
For a typical user with a 100 SOL deposit generating 8% annual yield:
- Annual Yield Generation: ~8 SOL
- Debt Reduction: ~6.4 SOL (80% of yield)
- Protocol Revenue: ~1.6 SOL (20% of yield)
- Initial Borrow Fee: 0.5 SOL (one-time)
Key Benefits:
- Passive Debt Reduction: Loans that pay themselves down without additional capital
- No Liquidation Risk: Positions cannot be liquidated due to market volatility
- Capital Efficiency: Access to 50% of deposited value while maintaining full SOL exposure
- Flexible Duration: No fixed terms or repayment schedules
- Simplified Experience: No need to actively manage complex yield strategies
Exit Options
Users enjoy flexible exit options to suit different circumstances:
- Maintain Position: Allow yield to continuously reduce debt over time
- Partial Withdrawal: Withdraw a portion of collateral (subject to maintaining minimum collateralization)
- Full Repayment: Repay remaining aurSOL debt and withdraw all collateral
- Natural Completion: Once debt is fully paid off by yield, withdraw full collateral
This economic structure creates alignment between user and protocol interests, with both benefiting from successful yield generation and long-term engagement.