HOW IT WORKS

1. Deposit Collateral

• Example: You lock 1 WETH (worth $3,000) in a CDP.

• Requirement: The collateral must be overcollateralized (150%).

2. Generate Debt (Mint USDP)

• Maximum loan calculation:

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  Max Loan = Collateral Value / 1.5  
  $3,000 (ETH) / 1.5 = $2,000 USDP  

• Actions:

  • The contract mints 2,000 USDP (stablecoin).

  • You pay a stability fee (e.g., 3% annual interest).

3. Manage/Repay the Position

• If ETH drops below $3,000:

  • The collateral gets automatically liquidated (WETH is sold to repay the debt).

  • A 13% penalty applies (10% to liquidators, 3% to the protocol).

• To close the position:

  • Repay 2,000 USDP + accrued fees.

  • Reclaim your 1 WETH.