Technical Overview

How Ether dollars are created/eliminated

• Every client can receive Ether dollar loans from Ether Bank by making a deposit of at least 1.5 times the size of their requested loan in Ether as collateral.
• The loans with collaterals that are worth less than 1.5 times the value of the loan according to Ether market prices will be liquidated.
• Liquidation means that Ether Bank puts the loan’s collateral for sale. This way everyone can settle the loan on behalf of the receiver and win a part of their collateral. In other words, everyone can buy loan receiver’s collateral by paying Ether dollars. After the sale, the remains of the collateral are paid back to the loan receiver and the Ether dollars are eliminated by Ether Bank.
• The price for liquidation is determined in the market, so, those who buy a part of the collateral to settle the loan benefit to some extent and those whose loans are settled by others lose to some extent.
• Due to volatility of Ether, loan receivers have to make deposits worth more than 1.5 times the amount of their loans and, add to their loan collateral in case Ether price decreases, otherwise their loans will face liquidation risk.
• Every time the price of Ether dollar is less than its peg, in addition to the loans with collaterals worth less than 1.5 times the value of the loan, other loans with lower amounts of collateral compared to others are also liquidated. This causes Ether dollar supply to always be in coordination with its demand. This way, only Ether dollar loans with the highest amounts of collateral remain.
• There is no obligation or time limit to settle the loans in Ether Bank. Clients can settle their loans whenever they intend to unless liquidation is applicable for them.
• Ether Bank never prohibits loans with collaterals equal to or slightly higher than 1.5 times their amount. However, every time these loans have a lower amount of collateral compared to others, and the price of Ether dollars is less than its peg, they are instantly liquidated with some loss for the loan receivers and some benefit for the settlers.

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