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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.

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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

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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)

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Key Benefits:

  1. Passive Debt Reduction: Loans that pay themselves down without additional capital
  2. No Liquidation Risk: Positions cannot be liquidated due to market volatility
  3. Capital Efficiency: Access to 50% of deposited value while maintaining full SOL exposure
  4. Flexible Duration: No fixed terms or repayment schedules
  5. Simplified Experience: No need to actively manage complex yield strategies

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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.

Technical ArchitectureRisk And Management