Deposit fee

This page explains the one time deposit fee in more detail.

What is a Deposit Fee?

When depositing collateral on Palm Finance, there is a one-time deposit fee which is floating with the backing percent of that collateral.

Deposit fee is in place to limit the amount of risky collateral to be added based on the risk and de-incentivize too much risky collaterals from backing PUST.

This is a market driven approach similar to Abracadabra's strategy of having hard caps on risky collateral types. When a risky collateral exceeds 1% in the entire system, this fee will increase sharply, thereby slowing down the addition of more risky assets and naturally maintaining the diversity of assets in the entire system.

Deposit fees rate

These are some examples of different collaterals and their associated fees based on risk.

It describes how the variable deposit fee will scale with backing percent. These fee parameters were established in collaboration with our economic auditors.

Token	Token category / risk	Fee Explanation
USDC	Yield bearing stablecoin	Low fee throughout slowly scaling from 0.25-1%
WETH	Medium-low risk asset	Low fee for first 50%, scaling up from there to higher percentages
JOE	Medium risk asset	Low fee up to 5% backing, scaling up to significant fee amounts
DANGER	High risk asset	Low fee up to 0.5% backing, scaling up quickly to significant fee amounts

An example of some fee options for a medium risk asset:

Deposit Fees=Risk-Adjusted Value of Collateral* fee %, and the deposit fee is added into the Asset Portfolio's PUST debt.

What will deposit fees look like at launch?

At launch, the deposit fee will be static and not dependent on backing percent. This is to allow users to deposit more collateral into system to reach enough liquidity. Once the system obtains a wide variety of different collateral types and volume, the variable deposit fees will be enabled.

Initial deposit fees at launch:.

Token	Deposit Fee	Effective MCR
qiUSDC	0.2O%	103%
WBTC.e	0.25%	110%
WETH.e	0.25%	110%
USDC	0.20%	103%
qiETH	0.25%	110%
qiBTC	0.25%	110%
WETH.e-USDC	0.5%	115%