🀝 Borrowing and Redemption

🀝 Borrowing and Redemption

Borrowing

Borrowing within the Roots protocol involves using Berachain-native assets as collateral to mint $MEAD stablecoin. The process is as follows:

  1. Connect Wallet: Connect your wallet to the Roots dApp.
  2. Select Collateral: Choose an eligible asset (e.g., $BERA).
  3. Deposit Collateral: Specify the amount of $BERA to deposit.
  4. Mint $MEAD: Mint $MEAD up to 83.33% of the collateral value (assuming a 120% collateral ratio).

Example

  • Collateral: Deposit 10 $BERA (worth $120).
  • Mint $MEAD: Mint up to $100 $MEAD.

Redemption

Redemption allows users to repay their $MEAD debt and retrieve their collateral. The process is as follows:

  1. Connect Wallet: Connect your wallet to the Roots dApp.
  2. Specify Amount: Enter the amount of $MEAD to redeem.
  3. Repay Debt: Confirm the transaction to repay the $MEAD debt.
  4. Retrieve Collateral: Retrieve the corresponding amount of collateral.

Example

  • Repay Debt: Redeem $100 $MEAD.
  • Retrieve Collateral: Retrieve 10 $BERA (minus any fees).

Fees and Associated Costs

Borrowing and Redemption within the Roots protocol may involve the following fees:

  1. Minting and Redemption Fees:

    • A small percentage of the $MEAD being minted or redeemed.
  2. Network Transaction Fees (Gas Fees):

    • Fees associated with processing transactions on the Berachain blockchain.

Important Considerations

  • Collateral Ratio: Maintain a collateral ratio of at least 120% to avoid liquidation.
  • Liquidation: Positions below the required collateral ratio may be liquidated.

By following these steps and understanding the associated costs, users can effectively manage their borrowing and redemption activities within the Roots protocol.