Collateral (Security Deposit) Management
Yield Generation on Collateral (Security Deposit)
Last updated
Yield Generation on Collateral (Security Deposit)
Last updated
Takaturn is a DeFi protocol that provides liquidity (in USDC) for users, using their investment assets (ETH) as collateral security.
Collateral security is a normal DeFi industry condition when lending/borrowing. In Takaturn it is used to reduce the risk to turn group users.
Recall that Takaturn 1.0 asked for collateral security of 1.5x RCC in ETH to be deposited to the VAULT smart contract. Regardless of users position, eg 1st, 2nd, 3rd etc to receive MP.
In Takaturn 2.0 Collateral reduces with later positions in the turn group. 1.5x RCC for all participants at the time they are beneficiary. Please refer to the table below.
Calculation of collateral security is related to, number of users in the turn group, user's position in the turn group and monthly contribution cycles.
1
50
X
4
X
1,5
=
300
2
50
X
3
X
1,5
=
225
3
50
X
2
X
1,5
=
150
4
50
X
1
X
1,5
=
75
Users deposit collateral security into the Collateral VAULT smart contract. Collateral is denominated in ETH.
Once collateral security is deposited, users become eligible to participate in their selected turn group.
Minimum collateral security is as per the . No maximums apply.
Takaturn 2.0 allows users to generate yield on their collateral security above, provided they 'opt-in' to YG. Yield generated through Takaturn is
Takadao, the developer, receives a management fee of 20% on yield generated.
Takaturn 2.0 enables users to access interest-free credit, using their crypto savings (). In addition it offers users a chance to grow their savings.
We will be using 4 fictitious ‘Personas’ to illustrate possible outcomes. They are:
Daniel - Male, mid 30s, from the United Kingdom - Daniel wants to buy a car but he does not want to sell the ETH that he currently owns and that he keeps as an emergency fund. He would like to borrow against his ETH holdings.
Fatima - Female, late 20s, from Argentina - Fatima is looking to supplement her income and start a business, a ‘side hustle’ to her current full-time employment. Fatima has heard that ETH is a good long term investment and has been putting her savings into ETH & BTC since the local currency, Argentine Peso, began to depreciate. She requires capital for her business but does not want to sell her precious crypto tokens.
Salta - Female, early 40s, from Kazakhstan - Salta is looking for ways to maximize growth of her crypto portfolio and she is looking for halal ways of achieving this.
Rudy - Male, early 50s, from Hong Kong - Rudy has a great job and his only focus is now on his retirement. He is looking to invest in safe long-term opportunities that are in the DeFi environment and easy to use.
They registered on Takaturn and joined available turn groups that matched their requirements. Their position in the turn group is determined by the time and date that they deposited the collateral security. The system will display this.
A participant's position in the turn group determines the collateral in ETH each has to deposit.
The first beneficiary of the money pot deposits the most amount of security deposit due to him being the first to receive the money pot.
In the case of our participants above the order of money pot beneficiaries will be illustrated as follows:
Daniel
Fatima
Salta
Rudy
Turn group for a Money Pot (MP) of 200 USDC.
Takaturn 2.0 beneficiaries are exempt from their contribution for the month in which they are beneficiaries (thus 150 USDC plus 50 USDC abatement = 200 USDC MP).
Each user will contribute 50 USDC 3 times in 4 cycles. Takaturn turn 1.0 asked for 4 contributions in 4 cycles.
In the first month, the first beneficiary, Daniel, receives the 150 USDC MP.
Based on the MP value of 200 USDC, he has to place a security deposit in the amount of 1.5 x 200 USDC in ETH to cover the potential default. Please refer to the table above for beneficiary position 1.
1.5 x collateral in ETH covers risk exposure is the minimum amount required by Daniel as the 1st beneficiary of the MP.
Takaturn 2.0 allows participants to deposit more collateral than is the required minimum.
ETH v USD : 1ETH = $2000
Yield generated : 1% per month after costs & fees
All participants : Opt-in to the YG module
50 USDC per month contribution, money pot is 150 USDC + 50 USDC abatement = 200 USDC. Minimum ETH collateral deposit for all beneficiaries is 1.5X RCC (Refer to the Table above).
1 USDC = 1 USD
Someone cannot claim the Money pot if s/he has less than 1.1X RCC. Should this happen, the Money pot will be frozen at the time that it is due to the appropriate beneficiary.
The frozen Money pot can be claimed once the beneficiary’s collateral is equal to or exceeds 1.1X RCC ( which means needing to pay a few more cycles or ETH price must go up)
The frozen Money pot will be used to pay for cycle contributions if the relevant beneficiary defaults and/or runs out of collateral.
The frozen money pot could consist of USDC and ETH (from defaulters). In case of default the order of liquidated holdings will be, firstly collateral security (ETH), secondly, frozen MP USDC will be transferred to beneficiaries in case of further default and finally any ETH in the MP.
The above conditions are coded into the Takaturn 2.0 protocol.
The algorithm will perform the relevant checks at every MP release event and release the MP or not depending on the outcome of its checks.
To illustrate how the frozen MP and Collateral security v RCC concepts work, consider the following scenario and those in Appendix 1:
These people use the Takaturn protocol to in a manner to help one another achieve their respective financial objectives. They do not know one another.
Calculations: all calculations are made using the methodology. In real world terms the Takaturn 2.0 YG compounds monthly over the relevant periods (eg 4, 6, or 12 months) =