New USDX is issued (minted) against collateral as a debt position, or pre-minted USDX can be borrowed against collateral via the lending option. The user has two ways to obtain USDX in Orbitium:
Users who mint/borrow USDX pay the following fees:
| Minting USDX (Open A Debt Position) | Borrowing USDX (Through Lending) |
|---|---|
| - LTV - 70% |
To secure a loan in Orbitium, LTV or loan-to-value ratio is used to determine the necessary collateral. Loan-to-Value ratio is the ratio of (the value of the collateral assets) to (the value of the borrowed assets). It determines the maximum amount of borrowing that can be made against a particular collateral. A higher LTV ratio means that a borrower can obtain a larger amount of borrowed assets with a smaller amount of collateral.
The liquidation threshold is the point at which a loan is considered “undercollateralized” or “insufficiently covered”. If the Liquidation Threshold is exceeded, a liquidation event is triggered to maintain the desired loan-to-value ratio (LTV). During the liquidation event, assets in the vault are partially sold, to the extent it is necessary, to stabilize the credit line.
To mint USDX, a user can deposit accepted collateral (ORB, BTC, ETH, USDT) in the Orbitium vault and receive a corresponding amount of USDX based on the LTV and a fixed interest rate. If the Liquidation Threshold is exceeded, the debt position may be subject to liquidation. The user is notified and given an opportunity to stabilize the position before liquidation occurs.
The debt position can be closed at any time, with a 1% principal "burn" tax owed on top of the interest rate and transaction costs. The principal amount of USDX is then burned, while the tax is redistributed. The tax is paid in the collateral currency the position was opened in but is converted and redistributed as USDX.
To borrow USDX, a user can deposit ORB, BTC, ETH, or USDT as collateral in the Orbitium vault. The amount of USDX loaned depends on the LTV ratio of the deposited collateral. Once the collateral is deposited, Orbitium manages it, and the borrower owes interest on the issued loan.
There is no terminal date for the interest payment, but unpaid interest and market volatility can cause the collateralization ratio to drop below the liquidation point, leading to an auction. To avoid this, users are encouraged to pay their interest regularly and maintain a healthy collateralization ratio.