Loan: Collection

Interest is charged to stabilize the market price relative to the protocol price by creating constant tension. This interest is paid out of the collateral, resulting in a gradual decrease of the collateral over time. The interest rate is fixed at the inception of the loan, based on the current rate agreed upon by AionicDAO.

At any-time accrued interest may be collected on a loan by calling the collect function.

Collectors are incentivized to execute the collect transaction by receiving a percentage of the interest as a reward. The interest proceeds minus the collection fee go to the AionicDAO treasury.

The example below shows interest collection on a sample loan. The time between the current collection and previous collection on the loan is 1yr.

Parameters
Collector Fee	10%
Interest Rate	10%

Accounts Before Collection

Loan		Collector		DAO
Collateral	10 ETH	Collateral	0 ETH	Collateral	0 ETH
Time	2023

$$Interest \ Collected = Collateral * Interest  \ Rate * Time \ Elapsed$$

$$10 \ ETH * 10 \% * 1yr = 1 \ ETH$$

$$Collector \ Portion = Interest \ Collected * Collector \ Fee = 1 \ ETH * 10\% = 0.1 \ ETH$$

$$DAO \ Portion = Interest \ Collected - Collector \ Portion = 1 \ ETH - 0.1 \ ETH = 0.9 \ ETH$$

Accounts After Collection

Loan		Collector		DAO
Collateral	9 ETH	Collateral	0.1 ETH	Collateral	0.9 ETH
Time	2024