Fees for Borrowers

Virtue uses a fixed and predictable fee model designed to maintain VUSD’s price stability while optimizing long-term borrowing costs.

🔹 One-Time Borrow Fee

When a user opens a CDP (Collateralized Debt Position) and mints VUSD, a one-time Borrow Fee is applied(0.3%). This fee is immediately added to the user’s total debt.

This mechanism helps prevent short-term arbitrage behavior that may disrupt the peg of VUSD — by adding an upfront cost to discourage frequent minting and repaying in a short window.

🔹 Continuous Interest Fee

In addition to the Borrow Fee, Virtue applies a fixed Interest Fee that accrues over time. This fee is calculated based on the user’s outstanding debt and the time the CDP remains open.

💡 Borrow Fee Override Mechanism

To reward long-term borrowers and enhance cost efficiency, Virtue introduces the Borrow Fee Override Mechanism:

You only pay the higher of the Borrow Fee or the Interest Fee — not both.

🧠 How it works:

1. A one-time Borrow Fee is applied at the start and added to your debt.

2. Interest Fee accrues over time.

3. If the Interest Fee eventually exceeds the Borrow Fee, the Borrow Fee is waived.

4. In the end, only the higher fee is charged.

This creates a natural balance:

• Short-term borrowers pay a flat Borrow Fee, discouraging rapid mint/burn behavior.

• Long-term borrowers pay a gradually increasing Interest Fee — and benefit from reduced effective borrowing costs over time.