How is iAUSD made?

iAUSD is made by borrowers on iA Borrow. iASOL holders lock their collateral in iA Borrow and mint iAUSD based on a predetermined collateralization ratio. The minted iAUSD receives a portion of their staking yield (read more How is iAUSD yield generated?), ensuring that their newly minted iAUSD is useful and in-demand.

Now they can use their minted iAUSD and swap it for USDC, SOL or any token available on Solana DEXs.

This is how new iAUSD supply enters the marketplace. And because of the unique design of the iA Borrow protocol, the iAUSD is always backed by more value of Solana. 100 iAUSD would be backed by $150 worth of Solana (for example).

Example

Ali swaps 100 SOL for 98.62 iASOL tokens (assuming 1 iASOL = 1.014 SOL). Ali then deposits the the iASOL into iABorrow. With SOL priced at $100, Ali’s collateral is worth $10,000 USD.

Ali mints 5,000 iAUSD creating a debt position with 50% LTV (Loan to Value). Ali's position has a good safety margin given than the liquidation LTV is 66.6% ( corresponds to 150% over-collateralization)

Ali pays zero fees and zero interest to mint iAUSD. Moreover, all staking yield from the iASOL continues to benefit Ali, distributed between the iASOL collateral and the minted iAUSD

How is iAUSD destroyed?

When the user wants to pay back their loan, they must pay back the iAUSD loan amount. The returned iAUSD to the iABorrow protocol is burned reducing the total supply of iAUSD.