Burn / Repay
Repaying borrowed Kresko Assets of an ICDP
Last updated
Repaying borrowed Kresko Assets of an ICDP
Last updated
This documentation is a work in progress!
Repaying debt is the most effective way to increase your .
As with , the term burn comes from the ERC-20 standard and it refers to the process of decreasing the supply of a token.
Repayment of debt in the is done by a function which burns the amount repaid from the repaying accounts balance. This decreases the total supply of the Kresko Asset and decreases the protocol debt amount for the repaying account.
Because the debt value for the asset within the protocol is reduced, the account is now able to any collateral that was backing it.
Unlike minting, repayment of debt is not limited by the market status of the underlying asset but two situations exist where users wont be able to do so.
Protocol has a USD-denominated lower limit that forbids tiny debt positions. This prevents spamming and ensures no dust positions form which could get annoying for the users themselves and troublesome for liquidators to process.
This means if the Minimum Debt Value is $10 and debt owed is valued $300, repaying $290.01 will not work. Repaying any amount less or equal to $290 or the full $300 will work.
In an emergency situation the multisig can pause repayments for a Kresko Asset to prevent possible negative impact it would have.