General
What is EARN Protocol?
EARN is a decentralized borrowing protocol that allows you to draw interest-free loans against PLSX used as collateral. Loans are paid out in PXDC (a USD pegged stablecoin) and need to maintain a minimum collateral ratio of 110%.
In addition to the collateral, the loans are secured by a Stability Pool containing PXDC and by fellow borrowers collectively acting as guarantors of last resort. Learn more about these mechanisms under Liquidation.
EARN as a protocol is non-custodial, immutable, and governance-free.
What’s the motivation behind EARN?
Stable-value assets are an essential building block for PulseChain applications and have grown to represent tens of billions of dollars in value.
However, the vast majority of this value is in the form of fiat-collateralized stablecoins like Tether and USDC. Decentralized stablecoins like DAI and sUSD make up only a small portion of the total stablecoin supply, meaning the vast majority of stablecoins are centralized.
EARN addresses this by creating a more capital efficient and user-friendly way to borrow stablecoins. Furthermore, EARN is governance-free, ensuring that the protocol remains decentralized.
What are the key benefits of EARN?
EARN Protocol’s key benefits include:
0% interest rate — as a borrower, there’s no need to worry about constantly accruing debt
Minimum collateral ratio of
110%— more efficient usage of deposited PLSXGovernance free — all operations are algorithmic and fully automated, and protocol parameters are set at time of contract deployment
Directly redeemable — PXDC can be redeemed at face value for the underlying collateral at any time
Fully decentralized — EARN Protocol contracts have no admin keys and will be accessible via multiple interfaces hosted by different Frontend Operators, making it censorship resistant
Can EARN be upgraded or changed?
No. EARN has no admin key, and nobody can alter the rules of the system in any way. The smart contract code is completely immutable.
How can I use EARN?
You first need to choose a web interface (aka frontend) to access the system. EARN can be accessed through POWERCITY's Amplifier front-end or by third-party frontend applications and integration services.
What are the main use cases of EARN?
Borrow PXDC against PLSX by opening a Vault
Secure EARN Protocol by providing PXDC to the Stability Pool in exchange for rewards
Stake EARN to earn the fee revenue paid for borrowing or redeeming PXDC
Redeem
1 PXDC for1 USDworth of PLSX when the PXDC peg falls below$1
What are PXDC and EARN?
PXDC is the USD-pegged stablecoin used to pay out loans on the EARN Protocol. At any time it can be redeemed against the underlying collateral at face value. Learn more about the stability mechanism.
EARN is the secondary token issued by EARN Protocol. It captures the fee revenue that is generated by the system and incentivizes early adopters and frontends. The total EARN supply is capped at 100,000,000 tokens. For more information on how the tokens are allocated and released over time, please refer to EARN Rewards and Distribution.
What do I need in order to use EARN?
To borrow PXDC, all you need is a wallet (e.g. MetaMask) and sufficient PLS to open a Vault and pay the gas fees.
To become a Stability Pool depositor or EARN staker, you need to have PXDC and/or EARN tokens. PXDC can be borrowed by opening a Vault while EARN can be earned as a Stability Pool depositor. You can also use PulseX exchange to buy the tokens on the open market.
Does EARN Protocol charge any fees?
There is a one-off fee whenever PXDC is borrowed, and when PXDC is redeemed:
For borrowers, there is a borrowing fee on loans as a percentage of the drawn amount (in PXDC).
For redeemers, there is a redemption fee on the amount paid to users by the system (in PLSX) when exchanging PXDC for PLSX. Note that redemption is separate from repaying your loan as a borrower, which is free of charge.
Both fees depend on the redemption volumes, i.e. they increase upon every redemption in function of the redeemed amount, and decay over time as long as no redemptions take place. The intent is to throttle large redemptions with higher fees, and to throttle borrowing directly after large redemption volumes. The fee decay over time ensures that the fee for both borrowers and redeemers will “cool down”, while redemptions volumes are low.
The fees cannot become smaller than 0.5% (except in Recovery Mode), which protects the redemption facility from being misused by arbitrageurs front-running the price feed. The borrowing fee is capped at 5%, keeping the system (somewhat) attractive for borrowers even in phases where the monetary is contracting due to redemptions. Other than that, the two fees are identical.
How can I earn money using EARN Protocol?
There are two different ways to generate revenue using EARN:
Deposit PXDC to the Stability Pool and earn liquidation gains (in PLSX) and EARN rewards.
Stake EARN and earn PXDC and PLSX revenue from borrowing and redemption fees.
Can I lose my funds?
As a non-custodial system, all the tokens sent to the protocol will be held and managed algorithmically without the interference of any person or legal entity. That means your funds will only be subject to the rules set forth in the smart contract code.
There are two scenarios under which you may lose a part of your funds:
You are a borrower (Vault owner) and your collateral in PLSX is liquidated. You will still keep your borrowed PXDC, but your Vault will be closed and your collateral will be used to compensate Stability Pool depositors.
You are a Stability Pool depositor and your deposited PXDC is used to repay debt from liquidated borrowers. Since liquidations are triggered any time borrowers’ collateral drops below
110%, you will receive more PLSX in return with a very high probability. However, if PLSX decreases in price and you maintain exposure, you may lose value in your total pool deposits.
Please note that PXDC isn't perfectly pegged to the USD, and can deviate slightly in both directions under certain market conditions.
Although the system is diligently audited, a hack or a bug that results in losses for the users can never be fully excluded.
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