In Aqua Protocol, the need for repayment of AquaUSD debt, including the accrued borrow rate, arises under specific circumstances related to the management of your collateral. Here are the scenarios where repayment is required:

  1. Partial Withdrawal of Collateral:

    • If you want to partially withdraw your deposited collateral (TONCOIN or LSTs), a proportional partial repayment of your AquaUSD debt is required to release the corresponding amount of collateral.

  2. Full Withdrawal of Collateral:

    • For completely withdrawing your collateral, you must fully repay the entire AquaUSD debt. This will release all of your deposited collateral back to you.

  3. Increasing Collateral Ratio:

    • To prevent redemption or liquidation, particularly if your Collateral Ratio (CR) approaches or drops below the critical threshold (like 150% for liquidation) or if your position has one of the lowest CRs in the system, consider making a partial repayment of your AquaUSD debt. Such a repayment will elevate your CR, thereby diminishing the likelihood of facing liquidation or redemption.

In each scenario, the amount of AquaUSD debt to be repaid depends on your specific intention - whether it's a partial withdrawal, full withdrawal, or adjustment of the collateral ratio. The applicable repayment fee varies based on the amount of AquaUSD being repaid.

Total AquaUSD Debt Calculation:

  1. AquaUSD Minted: This is the initial amount of AquaUSD borrowed by the user.

  2. Borrow Rate Fee:

    • This fee accrues over time based on the borrowed AquaUSD amount.

    • It varies according to market conditions and is added to the initial borrowed amount. Currently, the borrow rate is 0.

  3. Repayment Fee: This is charged when the user repays their AquaUSD debt:

    • 0.50% fee is applied.

  4. Total AquaUSD Debt:

    • The total AquaUSD debt for repayment is the sum of the AquaUSD minted, the borrow rate fee, and the repayment fee.

    • Formula: Total AquaUSD Debt = AquaUSD Minted + Borrow Rate Fee + Repayment Fee.

Example Scenario:

  • Assume a user has minted 800 AquaUSD.

  • The borrow rate fee accrued is, say, 10 AquaUSD.

  • The repayment fee, as per the tier, is 0.25% of 800 AquaUSD, which equals 2 AquaUSD.

  • The total AquaUSD debt would then be calculated as 800 AquaUSD (minted) + 10 AquaUSD (borrow rate fee) + 2 AquaUSD (repayment fee) = 812 AquaUSD.

Repaying this combined debt, either partially or entirely, is necessary for users who wish to adjust their collateral ratio or withdraw their collateral from Aqua Protocol.

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