Understanding Preon Fees
A Transparent Overview: Everything You Need to Know
As pioneers in the DeFi space, the Sphere Ecosystem is constantly innovating, offering unique solutions to the challenges within the DeFi world. Preon, the Sphere Ecosystem’s revolutionary CDP lending protocol that brings together elements of yield farming, is the latest such innovation. This article aims to shed light on the various fees associated with using the Preon protocol, in line with our commitment to transparency and community involvement.
Depositing And Withdrawing Fees
The first category of Preon fees users encounter is the fee associated with depositing and withdrawing, which will be a progressive fee of up to 0.5%. However, rather than paying these fees upfront, they are distributed linearly over a three-month period. This means that if you deposit funds into the protocol, the fee will be gradually covered and progressively increased to up to 0.5% over three months, easing the initial burden and making our DeFi solutions and Preon utilities even more accessible.
Preon will also be charging a 0.5% redemption fee, which will be paid beforehand and which users ill be reimbursed once they close their positions. In addition, when a ser repays their debt before the expiry of six months (around 182 days), the 0.5% fixed borrowing fee will be refunded pro rata for the time elapsed.
Minting Process And Fees
Minting in Preon is an important process, as it facilitates the creation of our overcollateralized stablecoin, $STAR. Loans issued through Preon are always secured by having more value locked in collateral than the amount of debt given out. To ensure transparency and fairness, Preon has introduced a linear fee model in the minting process. Unlike depositing and withdrawing fees, however, users will pay the up to 0.5% in minting fees upfront.
To learn more about our $STAR stablecoin and other utilities that will be introduced with Preon’s soft-launch in under 5 minutes, check out the article below:
The minting process in Preon does not involve recurring interest — Preon is a zero-percent-interest protocol. Instead, a one-time fee of up to 0.5% is charged on minting of our tokens, and redemption for loans lasting between one and three months. The fees collected are distributed between the protocol and governance holders, creating an equitable sharing model for all parties involved.
Yield Farming and Governance
To incentivize $STAR utility, Preon has implemented a combination of ve(3,3) and FOO. $STAR users can provide liquidity to any $STAR pair on Preon’s Farm section to earn $oPREON, an option call reward that can be redeemed for a discounted value in $ETH or zapped into $vePREON, our de-facto governance token.
Each week, $vePREON holders direct emissions to farms via the Preon Gauge, borrowing from Solidly. Rewards are then streamed according to the vote epoch. In addition to directing emissions, $vePREON holders can boost their rewards within farms using their governance position and earn protocol fees and/or bribes for their epoch votes. This structure incentivizes active participation in governance and ensures the protocol’s long-term sustainability.
Compounding Fees
Compounding fees are another crucial aspect to consider when using Preon. These fees are about 20% for yield auto-compounding. It is important to remember that these fees are integral to the protocol’s functionality and help support the ongoing development and maintenance of the protocol, as well as emissions to $vePREON holders.
Conclusion
At Preon, we are committed to keeping our community informed and involved in all aspects of our DeFi solutions. We believe that understanding the fee structure within our utility options is essential for users to make the most out of our innovative DeFi offerings. Whether you are depositing, minting, or earning through yield farming, we strive to maintain a transparent and fair environment for all users.
As we continue to innovate and develop, we encourage our community to stay engaged with us, providing feedback and input that can help us shape the future of DeFi. Together, we can continue to revolutionize the financial landscape, creating a more inclusive and decentralized financial future for all.
Thank you for reading, Preonauts! As we approach our launch date, more news and informtion regarding Preon will be made available. To be the first to receive this news as it comes out, join our community Discord server:
Until next time, friends. Preon to the $STARs.
