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Balanced

https://app.balanced.network

1. Deposit ICX

Your ICX will be deposited in Balanced as collateral, which allows the strategy to borrow a certain amount of bnUSD. For example: a collateral of 100 ICX allows you to borrow maximum 25 bnUSD.
  • On deposit, a minimal ICX portion is swapped to bnUSD to pay for the borrowing fee on Balanced (approximately 0.2% in ICX).
  • Since the deposited ICX will be converted to sICX, staking reward bonus from sICX is accounted as well.

2. Borrow bnUSD

From time to time, Optimus will continuously monitor the borrowing position and automatically adjust it at a safe collateral ratio just below the maximum BALN amount you can earn. What this really means is:
  • If ICX price drops quickly: Optimus will payback a certain amount of borrowed bnUSD to reduce the risk of reaching the liquidation ratio.
  • If ICX price increases: Optimus will borrow more bnUSD to increase the collateral ratio to an optimized figure for a higher BALN reward return.

3. Rebalancing

Definition

In summary, rebalancing is a mechanism to maintain the peg of bnUSD to $1 on Balanced (more details here). There are 2 effects of rebalancing on a borrower (in our case they are Optimus users who deposit ICX on Balanced borrowing strategy):
  • If the price of bnUSD is below $1: your collateral (sICX) will be sold for a certain amount of bnUSD, which will be used to pay back your bnUSD debt. The result is that you lose a minimal portion sICX and the total debt is also lower.
  • If the price of bnUSD is above $1: your debt (bnUSD) will be increased, since a portion of it will be used to buy sICX. The result is that you have more sICX and the total debt is also higher.

How Optimus strategy is affected by rebalancing

First of all, please remember that we don't take any of your sICX or bnUSD as our revenue due to any effects of rebalancing events. The only fee our strategy will charge is the BALN reward generated.
  • In the scenario bnUSD is below $1: the total collateral (sICX) of the strategy will be decreased and the total debt of the strategy is also decreased resulting in more available bnUSD. If you unfortunately withdraw from / deposit to the strategy during this time, Optimus will automatically calculate the decreased amount of sICX and use the increased amount of bnUSD to buy back sICX. Therefore, your original ICX amount remains almost the same with a deduction of 1% swap fee on Balanced.
  • In the scenario bnUSD is above $1: the total collateral (sICX) of the strategy will be increased and the total debt of the strategy is also increased resulting in more available sICX. If you unfortunately withdraw from / deposit to the strategy during this time, Optimus will automatically calculate the increased amount of sICX and use that amount to payback your increased bnUSD debt. Therefore, your original ICX amount remains almost the same with a deduction of 1% swap fee on Balanced.