Frequently Asked Questions
So long as a user is attempting to withdraw an amount less than their outstanding debts and there is sufficient available liquidity in the respective market to withdraw, a supplier can withdraw their funds at any time.
If a market is at or near a utilization ratio of 100% (see the Interest section for additional information on this topic), a withdraw may not be possible. In a case where a pool reaches a utilization ratio of 100%, a user still may be able to withdraw. The withdrawal in this circumstance would come from the reserve funds that the protocol accrues over time from repaid interest from borrowers.
Users who take loans out on Lodestar need to manage their position to avoid liquidation. If the health factor of the account is less than 1.0, the account is subject to liquidation. Liquidations operate via a liquidator who repays a portion of a user's debt in exchange for a portion of the user's collateral.
To keep an account in good standing, a user needs to prioritize keeping their account above a health factor of 1.0. Lodestar recommends keeping a large buffer above a 1.0 health factor and keeping a close eye on their position during volatile market conditions especially in positions with high volatility risk.
The term "leverage" in this context describes a strategy in which funds are borrowed to increase the size of a collateral position.
The larger collateral position can earn more interest and/or benefit from positive price action relative to the borrowed assets. However, employing this strategy also increases exposure to negative price action, adversely affecting an account's overall health. Employing leverage strategies always carries with it increased risk and caution should be exercised before applying leverage to a collateral position.
The protocol's integration of Plutus DAO's plvGLP effectively allows users to leverage their plvGLP positions.
Harnessing this functionality entails supplying plvGLP to the protocol as collateral and borrowing stablecoins or orther majors like BTC and ETH. In order to maximize returns, borrow assets with low interest rates (typically stablecoins such as USDC) against the supplied plvGLP, swapping the borrowed assets for more plvGLP and re-supplying.
This process can be repeated multiple times dependent on risk appetite and applicable collateral factors. It should be noted that this strategy can be expensive to "unfold" due to the required gas fees and exit fees charged through Plutus DAO.
Read our Medium article for additional information.
Governance will be handled through snapshot in the v0 release of the protocol.