Top-ups

How do Top-up fees work?

When a collateral top-up occurs it is charged a platform fee. This fee is taken from the funds of the user that registered the top-up position. Top-up fees are split between Mero LPs, Mero governance token holders, and the Mero keeper who reported the top-up.

How does Mero ensure that my funds are available for top-ups?

Liquidity pools maintain required reserves, as well as idle funds which are not allocated to strategies (to keep withdrawal costs low).

What protocols are supported for top-ups?

Aave and Compound.

How many loans can I register for top-ups?

Users can only register top-ups to one loan per protocol, regardless of the pool. Meaning, if Mero is integrated with Aave and Compound, users can only register one loan on each protocol. However, users can work around this by simply using a second wallet.

What happens if I pay off my loan or close my debt position?

Nothing. You will need to unregister your top up position to reclaim your LP tokens.

What's the problem with over-collateralization?

Over-collateralized loans require borrowers to ensure that sufficient amounts of collateral are supplied at all times, or else they get liquidated and pay a penalty fee. To protect against liquidation risk, borrowers are faced with a trade-off. While supplying higher amounts of collateral lowers the risk of getting liquidated, it bears the opportunity cost of not being able to allocate the funds elsewhere to earn higher yield.