Repayments

Repayment Flow Overview

Repayment Subaccount

Repayments use a different prefix than deposits to distinguish them:

• Deposit prefix: 0x1
• Repayment prefix: 0x2

This allows the protocol to correctly attribute incoming funds as debt repayment rather than new collateral.

Detection Process

The detection process is identical to deposits:

1. Inflow Detection - Pool scans for new balances every 60 seconds
2. Treasury Transfer - Funds moved from repayment subaccount to treasury
3. Event Creation - Pool creates a RepaymentConfirmed event

Debt Share Burning

When the lending canister receives a repayment event:

1. Checks idempotency (skip if already processed)
2. Syncs pool indices
3. Calculates current debt
4. Burns debt shares: shares_to_burn = repay_amount / borrow_index
5. Handles any overpayment

Example: User has 1000 debt shares at borrow_index = 1.05 → Current debt = 1050 tokens. User repays 525 tokens → Shares burned = 525 / 1.05 = 500 shares → Remaining: 500 shares = 525 tokens debt

Overpayment Handling

If the user sends more than their outstanding debt, the excess becomes protocol service fees. The user's debt is fully cleared.

Why not refund?

• Refunds require another blockchain transaction
• Gas costs may exceed overpayment amount
• Simplifies protocol logic

Partial Repayments

Users can repay any amount up to their full debt. The protocol calculates how many debt shares to burn based on the current borrow index.

Example:

• User has 1000 debt shares at borrow_index = 1.05 → Current debt = 1050 tokens
• User repays 525 tokens → Shares burned = 525 / 1.05 = 500 shares
• Remaining: 500 shares = 525 tokens debt

Interest Consideration

When repaying, remember that debt accrues interest continuously (even while repayment transactions are processing):

Example (simplified, compounding not shown for clarity): Borrowed 1000 USDT, 6 months elapsed, 10% APY → Accrued interest: ~50 USDT → Total debt: ~1050 USDT

Repayment Address

Each user has a unique repayment address per pool:

Timing

Health Factor Impact

Repaying debt improves your health factor:

Before repayment: Collateral: $50,000, Debt:$40,000, HF = 1.0 (at risk)

**After repaying $10,000:** Collateral:$50,000, Debt: $30,000, HF = 1.33 (safer)

Idempotency

Repayments have the same deduplication as deposits:

1. Ledger index tracking: Each transaction processed once
2. PROCESSED_INFLOWS set: Event deduplication
3. Subaccount debouncing: One job per subaccount per scan