Borrow at 99.5% LTV with Zero Liquidation Risk
Parameters
| Parameter | Value |
|---|---|
| Collateral | XCEL+ (staked XCEL) |
| Loan-to-value | Up to 99.5% of floor value |
| Interest | 0% |
| Origination fee | 0.5% one-time |
| Liquidations | None |
| Collateral lock | XCEL cannot be unstaked or sold while borrow is active |
No Liquidation Mechanism
The floor price guarantees XCEL can never trade below 1 xlUSD. The 0.5% spread between the 99.5% LTV and the 100% floor is the protocol's buffer.
Collateral is locked for the duration of the borrow — it can't be sold or unstaked until repaid. The reserve never faces simultaneous redemption pressure from both sides.
If a borrower walks away, the protocol retains the locked XCEL and the floor backing remains intact. The locked position continues earning fees.
Borrowed xlUSD Uses
- Swap externally for USDC
- Deploy into other protocols
- Recursive leverage (see below)
Recursive Leverage
The 99.5% LTV enables recursive leveraging:
- $1,000 USDC → mint xlUSD → buy XCEL → stake
- Borrow 99.5% → buy more XCEL → stake
- Repeat
~20x realistic multiplier ($1,000 → ~$20,000 in staked XCEL). Theoretical max is 200x (1 / 0.005).
This works safely because the floor price prevents liquidation cascades. Each leveraged position remains productive — earning yield, fees, and XRT emissions.
Monthly Compounding Example
$1,000/month × 20x leverage = $20,000/month in staked XCEL 12 months = ~$240,000 in staked positions earning protocol revenue.
Fee Distribution
See Fee Structure & Treasury for borrowing fee distribution details.