Definitions

Below are common terms that will be used throughout this guide. You may want to reference these definitions while you read through the documentation.

PulseX/PLSX: The premier decentralized exchange (DEX) on PulseChain. PulseX enables you to exchange tokens ("PRC20s") on PulseChain for one another. It is also the world's largest yield farm. Every time a token is swapped on PulseX, liquidity providers earn fees as a reward. Most tokens inflate at high rates while PLSX never inflates. The supply only becomes more rare as 21% of all fees could be used to buy up the price and burn the freshly bought PLSX.

Vault: a collateralized debt position (CDP), bound to a single wallet address.

PXDC: PulseX Dollar Coin is the stablecoin that may be issued from a user's collateralized debt position and freely transferred/traded to any wallet address. Intended to maintain parity with the US dollar, and can always be redeemed directly with the system. 1 PXDC is always exchangeable for $1 USD value of PLSX.

Collateral: any asset which a borrower must provide to take out a loan. PLSX is the collateral used in EARN Protocol.

Active collateral: the amount of PLSX collateral recorded in a Vault.

Collateral Ratio: The current US Dollar value of the PLSX tokens locked up in the Vault divided by the amount of PXDC minted. This ratio will determine the health of your debt. The minimum collateral ratio (CR) required is 110%, but higher ratios are recommended to avoid potential liquidation.

ICR = Individual Collateral Ratio for a single vault

MCR = Minimum Collateral Ratio

TCR = Total Collateral Ratio

SP = Stability Pool

Active debt: the amount of PXDC debt recorded in a Vault.

Total active collateral: the sum of active collateral over all Vaults. Equal to the PLSX in the ActivePool.

Total active debt: the sum of active debt over all Vaults. Equal to the PXDC in the ActivePool.

Total defaulted collateral: the total PLSX collateral in the DefaultPool

Total defaulted debt: the total PXDC debt in the DefaultPool

Entire system collateral: the sum of the collateral in the ActivePool and DefaultPool

Entire system debt: the sum of the debt in the ActivePool and DefaultPool

Total collateralization ratio (TCR): the ratio of the dollar value of the entire system collateral at the current PLSX:USD price, to the entire system debt

Critical collateralization ratio (CCR): 150%. When the TCR is below the CCR, the system enters Recovery Mode.

Borrower: an externally-owned account or contract that locks collateral in a Vault and issues PXDC tokens to their own address. They “borrow” PXDC tokens against their PLSX collateral.

Depositor: an externally owned account or contract that has assigned PXDC tokens to the Stability Pool, in order to earn returns from liquidations, and receive EARN token rewards.

Redemption: the act of swapping PXDC tokens with the system, in return for an equivalent value of PLSX. Any account with a PXDC token balance may redeem them, whether or not they are a borrower.

When PXDC is redeemed for PLSX, the PLSX is always withdrawn from the lowest collateral Vaults, in ascending order of their collateralization ratio. A redeemer can not selectively target Vaults with which to swap PXDC for PLSX.

Repayment: when a borrower sends PXDC tokens to their own Vault, reducing their debt, and increasing their collateralization ratio.

Retrieval: when a borrower with an active Vault withdraws some or all of their PLSX collateral from their own Vault, either reducing their collateralization ratio, or closing their Vault (if they have zero debt and withdraw all their PLSX)

Liquidation: the act of force-closing an undercollateralized Vault and redistributing its collateral and debt. When the Stability Pool is sufficiently large, the liquidated debt is offset with the Stability Pool, and the PLSX is distributed to depositors. If the liquidated debt can not be offset with the Pool, the system redistributes the liquidated collateral and debt directly to the active Vaults with >110% collateralization ratio.

Liquidation functionality is permissionless and publicly available – anyone may liquidate an undercollateralized Vault, or batch liquidate Vaults in ascending order of collateralization ratio.

Collateral Surplus: The difference between the dollar value of a Vault's PLSX collateral, and the dollar value of its PXDC debt. In a full liquidation, this is the net gain earned by the recipients of the liquidation.

Offset: cancellation of liquidated debt with PXDC in the Stability Pool, and assignment of liquidated collateral to Stability Pool depositors, in proportion to their deposit.

Redistribution: assignment of liquidated debt and collateral directly to active Vaults, in proportion to their collateral.

Pure offset: when a Vault's debt is entirely canceled with PXDC in the Stability Pool, and all of it's liquidated PLSX collateral is assigned to Stability Providers.

Mixed offset and redistribution: When the Stability Pool PXDC only covers a fraction of the liquidated Vault's debt. This fraction of debt is cancelled with PXDC in the Stability Pool, and an equal fraction of the Vault's collateral is assigned to depositors. The remaining collateral and debt is redistributed directly to active Vaults.

Gas compensation: A refund, in PXDC and PLSX, automatically paid to the caller of a liquidation function, intended to at least cover the gas cost of the transaction. Designed to ensure that liquidators are not dissuaded by potentially high gas costs.