SAIL Curve Leveraging
Last updated
Last updated
Blacksail Finance offers users the ability to leverage their positions within our innovative bonding curve model. The SAIL Curve Leveraging feature enables users to maximize their capital efficiency while maintaining a stable ecosystem for all participants. SAIL can be used as collateral to borrow USDC for other uses with 0 interest, while earning swap revenues.
Deposit USDC to Acquire SAIL
Users start by depositing USDC into the SAIL bonding curve contract to receive SAIL tokens.
Lock SAIL to Borrow USDC
After obtaining SAIL, users can lock their SAIL tokens and borrow USDC against them with no interest.
Important Note: Swap fees from the bonding curve slowly pay off the outstanding user balance allowing users to borrow more tokens gradually over time, if they choose not to pay off the full amount of the lend.
The borrowed USDC allows users to recapture a portion of the funds they initially used to buy SAIL.
The amount of USDC that can be borrowed against locked SAIL depends on the current supply of SAIL in the bonding curve contract:
Early Buyers: The first buyers of SAIL from the bonding curve can borrow most of their USDC back after locking their SAIL.
Later Buyers: As the supply of SAIL decreases (more SAIL is purchased), the amount of USDC available for borrowing gradually reduces.
Important Note: When SAIL is locked and leveraged, it cannot be transferred or sold until the borrowed debt is fully repaid.
The following formula determines the amount of USDC (outUSDC) that can be borrowed from a specific amount of locked SAIL (colSAIL):
outUSDC = ((vUSDC * tsSAIL) / (tsSAIL - colSAIL)) – vUSDC
vUSDC: The initial USDC value in the bonding curve.
tsSAIL: Total supply of SAIL.
colSAIL: Amount of locked SAIL used as collateral.
outUSDC: Borrowable USDC amount.
To maintain the integrity of the system, USDC reserves are split into two categories:
Borrowed USDC (bUSDC)
Represents placeholder USDC that’s backed by locked SAIL collateral.
Borrowed USDC ensures the bonding curve remains stable and that every locked SAIL remains collateralized.
Active USDC (aUSDC)
Represents actual USDC reserves available for liquidity, swaps, and participant exits.
Active USDC determines the price range, ensuring every circulating SAIL token can exit the system safely.
The SAIL price floor represents the minimum price level that ensures system stability. The price floor is determined by the following formula:
SAIL Price Floor = (vUSDC + bUSDC) / aSAIL
aUSDC: Active USDC in the reserve, representing available liquidity.
bUSDC: Borrowed placeholder USDC, collateralized by locked SAIL.
aSAIL: Actual circulating supply of SAIL.
The price floor ensures that the bonding curve maintains sufficient liquidity and stability, while the price ceiling can grow infinitely.
To unlock their collateralized SAIL (colSAIL), users must:
Repay their borrowed USDC (outUSDC).
No interest is charged on borrowed USDC.
Swap fees from the bonding curve slowly pay off the outstanding user balance allowing users to borrow more tokens gradually over time, if they choose not to pay off the full amount of the lend.
Once repaid, bUSDC is converted back into aUSDC, ensuring the system maintains its liquidity reserves.
The user can then sell their unlocked SAIL back into the bonding curve to retrieve USDC.
Important Note: SAIL is never liquidated while USDC is borrowed, the borrowed USDC is always available for repayment to unlock their collateralized SAIL.
Blacksail's leveraging system is designed to:
Maximize capital efficiency for participants.
Ensure price stability and ecosystem sustainability.
Create a fair market structure where active liquidity (aUSDC) ensures exits for all circulating SAIL.
By balancing leverage with strict collateralization and liquidity management, Blacksail Finance empowers users while safeguarding the long-term stability of the protocol.
