Before onboarding new vault types, the Hedge community will carefully assess the risks of each collateral (e.g. liquidity & volatility) and set the parameters for the vault.
For each vault there exists various parameters including:
Collateral Token: this is the collateral that the Hedge protocol will accept in the vault to mint USH.
Minimum Collateral Ratio (MCR): This is the minimum collateral ratio a vault must maintain before be liquidated.
Recovery Mode Collateral Ratio (RMCR): This is the minimum amount that the Vault Type must be collateralised by before entering Recovery Mode and enabling the liquidation of vaults under this collateral ratio.
Minimum Debt: This is the minimum debt that must be extended against an individual vault type to be opened.
Maximum Debt against Vault Type: This is the total debt against a Vault Type that can be extended. This is used to avoid having too much debt set against a certain type of collateral.
Interest Rate: If set to a value other than 0, the vault will accumulate interest over time.
Initialization Fee: This is the fee taken during loan initiation.
Redeemability: Whether the vault can have collateral redeemed to keep USH peg. Only the lowest collateral ratio vault for each Vault Type may be redeemed against. See more details at Redeeming against a vault.
Oracle: The oracle price feeds used for this Vault Type.