In Vigiler Wallet, it is possible to maintain a compensation balance. This balance is only available to customers who have migrated their balance from the Inlock Platform or have purchased or received a compensation balance from another customer. The compensation balance gives the customer the right to a refund of 60% of the fees payable for platform operations and to periodic payments from the platform reserve fund. Platform fee refunds and periodic payments from the platform reserve fund shall reduce the compensation balance.
On the crypto asset locked in the compensation balance, the platform pays a return on a quarterly basis, which is allocated from 10% of the platform fees from which any Vigiler client has received a platform fee refund. Compensation Yield payments are in addition to the compensation balance and do not reduce the amount of the compensation balance. The quarterly accrued compensation yield will be paid in proportion to the percentage of the total compensation balance recorded by the platform that the customer is receiving at the time of payment.
Crypto assets stored in the compensation balance is unsecured (without coverage), which are recorded as locked balance, so they cannot be withdrawn from the platform, nor can the services of the platform be used against this balance. If a client has a compensation balance, it may transfer it, in whole or in part, to another Vigiler client by internal transfer or sell it through the Compensation Balance Auction, thereby reducing or eliminating its compensation balance. The Vigiler Client receiving the Compensation Balance may use the crypto funds received solely as a Compensation Balance.
The compensation balance can only be registered in USDC. Credits that reduce the compensatory balance (platform fee rebates, periodical credits, special credits) can be made in any asset supported by the Vigiler platform. If the credit is made in an asset other than USDC, the dollar value at the time of crediting will be deducted from the compensation balance.
The compensation balance can only be reduced by rebates or internal transfers. The customer acknowledges that the compensation balance is recorded without any collateral and agrees that he/she may not otherwise require the Vigiler platform to release, allocate or use it.
How can I reduce my compensation balance?
By using the platform’s services, the compensation balance is constantly reduced thanks to the platform fee rebates. For all platform fees paid, compensated customers are entitled to a refund of 60% for most services.
In addition to the platform fee rebate, from 31 December 2023, the Vigiler platform will also start to compensate from the reserve fund. The rate and frequency of this compensation will be half of the reserve fund accumulated up to that date each quarter. This is expected to be a small amount in the first year, but may be more significant after the first year depending on market conditions and platform usage.
If the customer does not wish to actively use the services or does not consider the release from the reserve fund to be fast enough, he/she will have the possibility to sell his/her compensation balance through the Compensation Balance Auction.
Who should buy or hold a compensation balance?
If you have a compensation balance or an activated badge on your account, your account will be “Premium account” mode, which allows you to run multiple Superposition, DualSwap and Collateral Options without any restrictions. In the absence of this, these extra services are available at the Basic account level with significant limitations.
Through the compensation balance, our customers also benefit from a platform fee rebate. The basic rule for the payment of platform fees is that 60% of the fee is refunded. An exception to this rule is the payment of interest on a loan:
- When a customer takes out a loan, they owe money to the Savings Pool. The Savings Pool consists of customers who have allocated their assets from their Wallet to the Savings Pool in exchange for interest income.
- Loan interest is a platform fee only if the interest paid is higher than the “Savings rate”
- The Savings rate can range from 0-80% in a near exponentially increasing manner depending on how much of the Savings Pool associated with the loan is allocated.
- The portion of the interest paid that is between the Savings rate and the percentage of interest paid is the platform fee. If the interest rate on the loan is lower than the Savings rate, no platform fee is incurred and in this case no platform fee refund is made.
- If the interest paid is higher than the Savings rate, the more is accounted for as a platform fee, of which 60% is a platform fee refund if the customers concerned have a compensation balance or have activated a badge on their account.
- The 60% platform fee rebate is shared between the customers, half of which is paid to the customer who paid the loan, and the other half to the “Savings Pool interest premium”.
- “Savings Pool interest premium”: Customers who have provided liquidity to the Savings Pool that is the source of the loan.
What is the difference between the benefits I get from Badge and Compensation Balance?
A Badge activated on a customer’s account gives the same benefits as if the customer had a compensation balance. So you can benefit from both “Premium account” mode and platform fee rebates.
It is important to note that each activated Badge provides the above benefits for 30 days, after which they will expire immediately.