Fees & Treasury
The Minterest protocol’s Treasury refers to designated pools containing a portfolio of token assets whose function is to accumulate the surplus value the protocol captures from its various activities, and for which for the purposes of simplicity can be best considered as the protocol applying fees. The Treasury utilizes these tokens to perform the following core functions:
  • The accumulation of fees by the protocol which it accrues in return for performing auto-liquidations, managing interest rates, and supporting flash loan functionality.
  • The payment of any administrator mechanisms for performing services as determined by the governance structure of the protocol.
  • The conversion of the Treasury’s operating surplus into MNT tokens via its Buy Back processes and the distribution of those MNT tokens to users who have staked MNT and so elected to participate in the protocol’s governance.
  • The curation of the protocol’s surplus over time.

Liquidation fees

In referring to liquidation fees, what is specifically being referenced is the liquidation discount which occurs in the pricing of the sale of the borrower’s collateralized assets. Liquidation fees do serve a positive purpose within the protocol’s economy in that they are penalties which moderate user behaviour by encouraging them to undertake lending positions which support the protocol’s solvency. Liquidation fees, while also part of the protocol’s value capture mechanisms, are also required to compensate for any pricing slippage which may occur in the Buy Back process. The balance of liquidation fees are held by the protocol’s treasury pools and are then applied in the Buy Back flow.

Interest Fees

Another source of protocol income is interest fees, which is the difference between what borrowers pay and lenders receive and is extracted from interest paid by borrowers. This amount is determined by the Protocol Interest Factor. The protocol interest is exchanged by the protocol into stablecoins ensuring stability in its value until it is applied in the Buy Back flow.

Flash Loan Fees

The protocol is able to support flash loan functionality, however this will not be active at launch, with its application being subject to governance. If implemented, and again subject to any governance outcome, it would be expected that flash loans will have a loan servicing fee applied to them upon their successful execution.