# Preon Finance
> Preon Finance is a DeFi platform offering collateralized loans in stablecoin, leveraging digital assets within the Sphere Ecosystem since July 2023.
- Canonical URL: https://iq.wiki/wiki/preon-finance
- Categories: Projects & Protocols
- Tags: DeFi
- Created: 2024-11-05T12:28:20.197Z
- Last updated: 2024-11-05T12:28:20.197Z
- Source: IQ.wiki — the world's largest blockchain and crypto encyclopedia (https://iq.wiki)
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**Preon Finance** is a [crypto](https://iq.wiki/wiki/cryptocurrency) lending platform that allows users to utilize their digital assets as collateral and secure loans in [stablecoin](https://iq.wiki/wiki/stablecoin). [\[1\]](#cite-id-2ouojuwauht)[\[2\]](#cite-id-24vyum7h7db)[\[3\]](#cite-id-3jzmerz7gil)
# Overview
Launched on the [mainnet](https://iq.wiki/wiki/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](https://iq.wiki/wiki/defi) space. It also incorporates some elements of [yield farming](https://iq.wiki/wiki/yield-farming) and concentrated liquidity, with [tokenomics](https://iq.wiki/wiki/tokenomics) and synergies. [\[4\]](#cite-id-h0kt7phzd3)
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. [\[3\]](#cite-id-3jzmerz7gil)
## 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. [\[4\]](#cite-id-h0kt7phzd3)
# $STAR
$STAR is an over-collateralized [stablecoin](https://iq.wiki/wiki/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. [\[5\]](#cite-id-y8s1u2ozn17)
*Disclaimer: These fees are subject to change in the future due to market conditions and/or other factors. [\[5\]](#cite-id-y8s1u2ozn17)*
## Nebula Vaults
Nebula Vaults are [smart contract](https://iq.wiki/wiki/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. [\[6\]](#cite-id-w9yozvrpnst)
## Tokenomics
$PREON is the protocol’s main utility token powered by [LayerZero](https://iq.wiki/wiki/layerzero), giving users the ability to engage in secondary market activity, provide liquidity, and lock into $vePREON through the protocol’s veNFT contract. [\[5\]](#cite-id-y8s1u2ozn17)
$PREON’s initial mint supply is 500,000,000 with an elastic supply due to being an emissions token. [\[5\]](#cite-id-y8s1u2ozn17)
## $vePREON
$vePREON is a receipt [NFT](https://iq.wiki/wiki/non-fungible-token-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 [\[6\]](#cite-id-w9yozvrpnst)
## $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. [\[6\]](#cite-id-w9yozvrpnst)