Loans

Borrow $SNOW at 99% LTV

Borrowing:

• Mechanism: Users can borrow $AVAX using $SNOW as collateral.

• Loan Terms:

  • Collateral Requirement: Users can borrow up to 99% of their $SNOW value in $AVAX (99% Loan-to-Value Ratio).

  • Duration: Minimum 1 day, Maximum 365 days.

  • Interest: Interest rates are calculated on a linear scale with a base rate of 0.05%. Interest is collected up front, or upon initiation of a loan, from the borrowed amount.

  • Liquidation: If a loan defaults, then the $SNOW collateral is burned. Since loans are over-collateralized, burning the collateral causes the ratio of $AVAX per $SNOW to increase. $SNOW collateral from liquidated positions are burned collectively, every day, at 00:00 UTC.

You can only have one active loan position in Snowball. If you have a standard loan, you must repay it before opening a looped position — and vice versa.

*Loans can taken with a 99% LTV. Interest is paid upon initiation of the loan, and is deducted from the total borrowed amount. 65% of fee increases $SNOW backing.

The maximum loan amount is based on the AVAX backing of $SNOW and the protocol-defined ratio — not market price. Loans can't be liquidated by price movement; collateral is only lost if the loan isn’t repaid on time.

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Liquidation Example:

Assume there are 100 $SNOW in circulation, backed by 100 $AVAX. User A holds 60 $SNOW and User B holds 40 $SNOW.

User A opens a 99% LTV loan, using their 60 $SNOW as collateral to borrow 59.4 $AVAX. They select a loan term (1–365 days) but fail to repay on time.

The position is liquidated:

• 59.6 $$SNOW is burned

• 0.4 $SNOW is sent to PoL bribes and treasury

Now, only 40 $SNOW remain in circulation (held by User B), but the total $AVAX backing increases from:

• The 1% collateral premium

• 65% of the interest fee

As a result, the backing per $SNOW increases, and User B benefits with each $SNOW now being worth more $AVAX.