Phantom Docs
Basic concepts in Phantom
Oracle is responsible for providing accurate, real-time prices for traditional financial assets that correspond to synthetic assets.
CDP (collateralized debt position): A smart contract that runs on the blockchain. The user can over-collateralize the specified collateral, in which case the smart contract will automatically issue the corresponding synthetic asset to the user.
CDP collateralization rate = total price of collateral in this CDP / (the price of traditional financial assets provided by the oracle * the number of synthetic assets created). Note: Most price units are in US dollars.
Minimum collateralization rate: The synthetic assets must have sufficient collateral as credit backing to ensure that the Phantom protocol works properly. As a result, when a CDP's collateral rate falls below its minimum collateral rate, the CDP will be liquidated.
Liquidation: When a CDP's collateral ratio is less than its minimum collateral ratio, the CDP is considered unsafe. At that point, anyone can liquidate that position and take over the collateral at a discount rate. The Phantom protocol's liquidation discount rate is 10%, which means that a user can assist others in returning synthetic assets and obtaining collateral at a 10% discount.
For example, if a user liquidates a synthetic asset worth $100 USDT, he or she can obtain collateral worth $100 USDT without paying the discount. However, with the liquidation discount (m), the user can obtain 100/(1-m) USDT. Assume m=10%, the user can get collateral worth 111 USDT.
Handling Fee: In Phantom, the user will be charged 1% of the collateral as a handling fee each time the collateral is retrieved ( as long as the CDP's collateral rate is greater than the minimum collateral rate).
Operation interval: The time interval between two operations by a single user in the system must be greater than 60 seconds to ensure system security and stability.
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