General

What is PiggyDebitCredit?

PiggyDebitCredit is a decentralized borrowing protocol that allows you to draw interest-free loans against wsOHM or sPB used as collateral. Loans are paid out in PUSD (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 PUSD and by fellow borrowers collectively acting as guarantors of last resort. Learn more about these mechanisms under Liquidation.

PiggyDebitCredit as a protocol is non-custodial, immutable, and governance-free.

What’s the motivation behind PiggyDebitCredit?

Many PB holders need liquidity and have to sell PB. This hurts PB prices. Therefore, PiggyDebitCredit refers to the piggybankdao.finance approach, so that sPB holders can obtain PUSD through mortgage lending for investment or consumption.

What are the key benefits of PiggyDebitCredit?

PiggyDebitCredit'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 wsOHM or sPB

• Governance free — all operations are algorithmic and fully automated, and protocol parameters are set at time of contract deployment

• Directly redeemable — PUSD can be redeemed at face value for the underlying collateral at any time

Can PiggyDebitCredit be upgraded or changed?

No. PiggyDebitCredit has no admin key, and nobody can alter the rules of the system in any way. The smart contract code is completely immutable.

What are the main use cases of PiggyDebitCredit?

1. Borrow PUSD against sPB by opening a Trove

2. Secure Liquity by providing PUSD to the Stability Pool in exchange for rewards

3. Stake sPB or wsOHM to earn the fee revenue paid for borrowing or redeeming PUSD

4. Redeem 1 PUSD for 1 USD worth of wsOHM or sPB when the PUSD peg falls below $1

What are PUSD?

PUSD is the USD-pegged stablecoin used to pay out loans on the PiggyDebitCredit protocol. At any time it can be redeemed against the underlying collateral at face value. Learn more about the stability mechanism.

What do I need in order to use PiggyDebitCredit?

To borrow PUSD, all you need is a wallet (e.g. MetaMask) and sufficient sPB or wsOHM to open a Trove.

To become a Stability Pool depositor, you need to have PUSD and/or sPB tokens. PUSD can be borrowed by opening a Trove while sPB can be earned as a Stability Pool depositor. You can also use traderjoe or another (decentralized) exchange to buy the tokens on the open market.

Does PiggyDebitCredit charge any fees?

There is a one-off fee whenever PUSD is borrowed, and when PUSD is redeemed:

• For borrowers, there is a borrowing fee on loans as a percentage of the drawn amount (in PUSD).

• For redeemers, there is a redemption fee on the amount paid to users by the system (in wsOHM or sPB) when exchanging PUSD for sPB or wsOHM. 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 and are depicted as "Fee" in the following exemplary chart:

How can I earn money using PiggyDebitCredit?

There are two different ways to generate revenue using PiggyDebitCredit:

• Deposit PUSD to the Stability Pool and earn liquidation gains (in sPB or wsOHM).

• Stake PUSD earn PUSD revenue from borrowing and redemption fees.

• Stake sPB earn sPB revenue from borrowing and redemption fees.

• Stake wsOHM earn wsOHM 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 (Trove owner) and your collateral in sPB and wsOHM is liquidated. You will still keep your borrowed PUSD, but your Trove will be closed and your collateral will be used to compensate Stability Pool depositors.

• You are a Stability Pool depositor and your deposited PUSD is used to repay debt from liquidated borrowers. Since liquidations are triggered any time borrowers’ collateral drops below 110%, you will receive more sPB or wsOHM in return with a very high probability. However, if sPB or wsOHM decreases in price and you maintain exposure, you may lose value in your total pool deposits.

Please note that although the system is diligently audited, a hack or a bug that results in losses for the users can never be fully excluded.