> For the complete documentation index, see [llms.txt](https://ghast-protocol.gitbook.io/ghast-protocol/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://ghast-protocol.gitbook.io/ghast-protocol/features/money-market-mechanism.md).

# Money-Market Mechanism

As users will receive gmdTOKENS as receipt tokens for their positions in the Delta-Neutral Vaults, our Money Markets will allow users to use gmdTOKENS as collateral to borrow 80% of the value in the corresponding asset. Our Money-Market Mechanisms will be as follow: 

## **a. You can only use gmdTOKENS as collateral to borrow the corresponding assets:**

* If you deposit gmdUSDC, you can only borrow USDC with that gmdUSDC
* If you deposit gmdETH, you can only borrow ETH with that gmdETH
* If you deposit gmdBTC, you can only borrow BTC with that gmdBTC

## b. Additional loaning liquidity will be incentivized through the following sources: 

1. Standard Interest Fees
2. 20% of total distributed revenue of Ghast Protocol
3. 8,000 Annual Tokens Incentive **(1,600 $GHA + 6,400 $esGHA)**

## c. Users are allowed to borrow 80% of the deposited asset value:

* As the value of the assets increase by time, users have the option to further borrow more assets with the same collateral amount. 

## **d. Interest Rate equilibrium will be set at 2/3 of the Delta-Neutral Vaults APY**.

* For example, if supply and demand is at equilibrium, if the weekly APY for USDC Vault is at 30%, then the interest rate to borrow USDC will be set at 20%.
* If borrow and supply is too much skewed over one side, then the rates will be dynamic to adjust the levels of borrowing and depositing. 

## e. Interest rate will be capped at:  1 / our collateral rate \* DN Vaults APY

* Although interest rates are dynamic, interest rate will always be lower than the APY of our Delta-Neutral Vaults we to ensure looping mechanism is always capital efficient, and will never be at a loss for our users. Instead of liquidation, worse case scenario would simply be user's fund generating 0 yield.
* For example, if demand is too high for borrowing, and the DN Vaults APY is at 30%, then our interest rate can reach a max at 1 / 80% \* 30% = 37.5%. At this 37% interest rate, with a 80% collateral ratio and at 30% DN Vaults APY, users' yield will be at 0, but there will never be any liquidation risks whatsoever. 

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