Preon Finance is a crypto lending platform that allows users to utilize their digital assets as collateral and secure loans in stablecoin. ^[1][2][3]

Overview

Launched on the mainnet in July 2023, Preon is a CDP (collateralized debt position) lending protocol that is part of the Sphere Ecosystem’s suite of solutions disrupting the DeFi space. It also incorporates some elements of yield farming and concentrated liquidity, with tokenomics and synergies. ^[4]

Loans are paid out in $STAR (Preon's USD-pegged stablecoin) with a minimum maintained collateral ratio of 110%. Preon accepts multiple token types as collateral, making $STAR available to a wide range of users. ^[3]

CDP

A CDP (collateralized debt position), at its most basic level, is held when a user deposits collateral in a smart contract in order to generate stablecoins. CDPs allow users to take out loans against their own assets. A use case for this utility is when users do not wish to sell an asset but need or want additional funds to use elsewhere. ^[4]

$STAR

$STAR is an over-collateralized stablecoin backed by a 110% minimum collateral ratio. Loans are secured by always having more value locked than the amount of debt given out. Preon introduced a linear fee model in the minting process. Users do not pay the 8% borrow fee upfront. The fees are split & paid linearly over 6 months. ^[5]
Disclaimer: These fees are subject to change in the future due to market conditions and/or other factors. ^[5]

Nebula Vaults

Nebula Vaults are smart contract vaults that act as collateral in exchange for the ability to borrow $STAR. These vaults are the backing of the stablecoin and are used mainly to optimize the farming opportunities for all users in different ways. ^[6]

Tokenomics

$PREON is the protocol’s main utility token powered by LayerZero, giving users the ability to engage in secondary market activity, provide liquidity, and lock into $vePREON through the protocol’s veNFT contract. ^[5]

$PREON’s initial mint supply is 500,000,000 with an elastic supply due to being an emissions token. ^[5]

$vePREON

$vePREON is a receipt NFT for locking $PREON into the protocol’s veNFT contract for a time period between 1 week to 2 years. $vePREON holders are rewarded with the following:

• One-time borrow fee (added to borrowers debt)
• Repayment fee
• Performance fee on collateral yield farming
• Liquidation profits
• Different revenue sources provided by the protocol ^[6]

$oPREON

$oPREON is the emission token of Preon's Stability Pool. It is illiquid on its own, but can be zapped for $vePREON or redeemed using $STAR at a discount. The earned $STAR is used for the protocol in the form of incentives for $vePREON holders and is sent to the Treasury, where it is employed for various purposes. ^[6]