Fees
Introduction
The NoFrame protocol is designed with flexibility and adaptability at its core, allowing it to accommodate the varying needs of its users. The protocol offers two types of fees:
Fixed fees (Minting fee and Redemption fee)
The aim of these fees is to maintain the stability and liquidity of the protocol while also providing an incentive for user participation.
Both fixed fees and continuous interest can be adjusted by DAO.
1. Minting Fees
Minting fees are one-time fees charged at the moment of borrowing. This fee is applied when a user borrows fixUSD against their collateral.
Every time fixUSD is drawn from a CDP , a minting fee is charged on the drawn amount and added to the debt. Please note that the minting fee is variable (and determined algorithmically), with a minimum value of 0.5% under normal operation.
2. Redemption fees
The purpose of this fee is to protect the system during periods of low collateral ratio by disincentivizing redemptions and ensuring the system remains solvent.
3. Borrow Interest Rate
Borrow Interest Rate is a fee that accrues over time on outstanding debt. This is common in most lending protocols and serves as a source of revenue that helps maintain the protocol's operations. This fee is charged on the fixUSD borrowed against the collateral and the DAO will have a say concerning its parameters.
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