Locked LOCKS and Borrowing

When a user stakes LOCKS, they can also borrow up to the full floor price of their staked LOCKS. For instance, if the user has 100 LOCKS staked and the floor price of a LOCKS token is 1 HONEY, then they can borrow 100 HONEY from the FSL. Their staked LOCKS is then locked and can’t be withdrawn or sold until the loan is fully repaid, although the user will still receive staking rewards for their locked LOCKS. The borrowed HONEY are still counted as part of the FSL for the purpose of calculating market price etc because they need to be repaid before the tokens that they are backing can be sold. Borrowing doesn’t dilute the floor price in any way.

Crucially, there is zero risk of liquidation with these loans. Users can borrow the floor price of their tokens, no more and no less. Since floor price can never decrease, there is never any need to liquidate users (compared to standard lending protocols where borrowing limits are determined by market price). If the floor price increases, the amount that users can borrow will increase proportionally.

All loans come with a one off 3% origination fee, 100% of which is sent to the DAO treasury. After the origination, the loans are completely interest free for their duration.