As a user, you can participate in Alpaca Finance's AUSD ecosystem in four ways:
🖨 Position Owner: As a lender at Alpaca Finance, you can visit the AUSD page to collateralize your ibTokens and borrow AUSD (creating an AUSD position). This additional AUSD can greatly increase your potential yields and fund deployment options.
💰 AUSD Holder: There will be multiple earning opportunities for AUSD holders. At launch, AUSD holders can use AUSD to provide liquidity in the AUSD-BUSD pool to earn yields from trading fees. As we develop additional use cases for AUSD, holders will be able to deploy the stablecoin in more locations within Alpaca Finance as well as external protocols.
💱 Arbitrageur: Helps maintain the peg price of $1 for AUSD by buying and selling AUSD when price deviates from $1, earning a steady profit on the price difference.
Liquidator: Monitors AUSD positions in case their Safety Buffers reach 0 (when collateral value become too low relative to debt, thus approaching risk of bad debt), at which time can liquidate the position (Bots Only). AUSD's uses gentle liquidation. This limits the max liquidation size to the Close Factor, which is currently set to 25% of a position's Debt Value. This reduces the associated costs and liquidation risk for AUSD borrowers, while still preventing the risk of bad debt.
The diagram below, shows how each participant works together in our AUSD ecosystem: