FAQ

What are the key benefits of Preon?

Preon offers several key benefits to its users. It is a zero-percent-interest Collateralized Debt Position (CDP) lending protocol within the Sphere Ecosystem. This means you can open a collateralized debt position and deposit a wide variety of tokens without incurring any interest. Additionally, Preon has yield farming capabilities, which allow you to earn yield on your collateral, and with our numerous partnerships and the unique and synergistic integrations that have resulted from them, optimize and maximize your yield returns. Liquidity providers can also engage in yield farming activities on Preon. This makes Preon an attractive and secure environment for both new and experienced DeFi users.

Is using Preon safe?

Preon prioritizes user safety and the security of the platform. The codebase has undergone audits by multiple reputable parties including Dedaub, a titan in blockchain security, and our BPT code by Balancer, a partner of Preon, with whom we have built a unique synergy. These audits ensure a robust and secure protocol for our users to the best of our abilities. To ensure further safety, Preon also employs a temporary multisig system consisting of 8 participants, which adds an extra layer of security. Furthermore, Preon's smart contracts are upgradeable, allowing for continuous improvement in security and functionalities, though the core codebase remains immutable, battle tested across multiple protocols utilizing it.

How can I use Preon?

Preon provides multiple functionalities for a variety of users. Users can open a collateralized debt position to borrow the $STAR stablecoin, depositing various tokens as collateral. The protocol also supports yield farming, allowing users to earn yield with $STAR. Unique to Preon, users may leverage Balancer Pool Tokens (BPTs) as collateral at zero-percent interest. Also, liquidity providers can participate in yield farming activities using the $PREON token, which can be further staked into $vePREON.

What are $PREON, $oPREON, $vePREON & $STAR?

$STAR is the stablecoin of the Preon protocol, allowing users to borrow against a variety of assets and receipt tokens. $PREON is the governance token of Preon, which can be staked into $vePREON in an 80/20 liquidity pool to gain voting power in the protocol's governance. $oPREON is an options token, which can be redeemed for $PREON at a specified future date.

Are there any fees or negative APYs for using Preon?

Preon does charge minimal fees for maintenance and upkeep of the protocol, and to provide yield for $vePREON holders. Preon does not charge interest on debt. There is a small deposit, withdrawal, and redemption fee of up to 0.5% over 6 months, as well as an upfront minting fee of up to 0.5%. Additionally, a fee is taken on any farming done on a Nebula Vault, which is distributed to vePREON lockers.

What are options tokens?

Options tokens are derivatives that provide access to options contracts on DeFi platforms. Options contracts give the holder the right (but not the obligation) to buy or sell an underlying asset at a predetermined price within a specified time. $oPREON is an options token representing a call option for $PREON, giving users the ability to buy $PREON using $ETH at a discount to the normal market price.

What are OFTs?

OFTs, or Omni-chain Fungible Tokens, are tokens that are interoperable across multiple chains, facilitated by Layer Zero technology. Preon is exploring options to make $PREON and $STAR into OFTs for enhanced flexibility and utility across different chains.

What is a Stability Pool?

A stability pool in Preon is instrumental in maintaining the stability of the $STAR stablecoin peg. It ensures that one $STAR token is always backed by more than $1 in collateral via over-collateralization. Since bluechip assets are so volatile and experience significant fluctuations in price on a regular basis, one way that Preon protects the over-collateralization of $STAR (and thus its peg) is through the stability pool, which acts as the first line of defense for the $STAR peg.

What are Nebula Vaults?

Nebula Vaults are smart vaults that can be collateralized and offer diversified farming strategies. These vaults provide an innovative way for users to maximize their yield in the DeFi space.

Is there a maximum number of vaults one can open?

You can open one vault per collateral type.

Is there a permanent Auto-Lock feature for vePREON?

Not at the moment.

What are the steps to provide liquidity for $STAR?

To provide liquidity for the $STAR token, you can either mint $STAR or swap for $STAR, then provide liquidity on any decentralized exchange (DEX) that supports the token.

Can the developers do something if I get liquidated?

No, developers cannot intervene in liquidation events due to the decentralized nature of Preon. Liquidations are necessary components of the protocol to ensure its stability and security. It's important for users to manage their collateralized debt positions responsibly to avoid liquidation.

What kind of power do the developers have over the protocol at a smart contract level?

The developers, or the Preon Core, reserve the right to upgrade contracts. All actions are performed with a time lock and require a multisig approval from 8 participants. This ensures the security and transparency of the protocol. In the future, the Core plans to delegate governance matters to the Preon DAO, allowing for a more decentralized control over the protocol.