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What is Service Fee Loan and Frequently Asked Questions

1. What is a service fee loan?

A service fee loan is a flexible, convenient, and low-rate method for paying service fees. It automatically covers 3 days of service fees when the service fee balance is not enough for 3 days.

When the remaining service fee duration is less than 3 days, it pays the remaining amount of service fees due.

Each hashrate can be individually configured to enable or disable this loan.


2. How to activate a service fee loan?

You can select and activate the service fee loan option when placing an order for hashrate.

For operational hashrate, the loan can be activated at any time and managed in bulk on the Service Fees page.

Once activated, the output from hashrate will be paid into the collateral account.

Ensure your Loan-to-Value (LTV) is below 65% to facilitate disbursement.


3. Which products are service fee loans available for?

A product can activate a service fee loan if it meets all the following conditions:

a. It supports service fee loans and has outstanding service fees due.
b. Each hashrate unit of it is at least 2,000T.
c. The hashrate has at least 30 days of operational time.
d. The hashrate has at least 10 days of prepaid service fees.


4. Under what circumstances can service fee loans be deactivated?

Once activated, a service fee loan can be deactivated at any time.

Each hashrate unit can be independently set to activate or deactivate service fee loans.

Once deactivated, service fees will no longer be paid by the loan, and mining output will resume payments to the configured receiving address.

The service fee loan can be reactivated 24 hours after deactivation.


5. How are interest charges calculated for service fee loans?

Interest on a service fee loan is calculated monthly based on the principal amount: Monthly interest = principal * monthly rate.

Specific rules:

Disbursements from the 1st to the 3rd of each month are added to the pending principal balance.
Disbursements from the 4th to the end of the month are added to the outstanding principal balance, and interest is calculated incrementally.
At 00:00 on the 4th (UTC+0), your monthly interest is recalculated based on the outstanding principal balance of your service fee loan account.


Example:
If the daily service fee for hashrate is $100, with a service fee loan monthly interest rate of 0.58%, the following occurs:

On March 28th, if the remaining service fee is less than 3 days, a service fee loan automatically covers 3 days of fees, disbursing $300.00, accruing interest of $300 * 0.58% = $1.74.
On April 1st, an additional $300 is loaned, bringing the outstanding principal to $600, with $1.74 in interest.
On April 2nd, a payment of $200 is made, covering all accrued interest by $1.74 and reducing the principal by $198.26; the remaining principal is $401.74 with no interest left.
On April 4th, interest is recalculated at $401.74 * 0.58% = $2.33, resulting in a new outstanding principal of $401.74 and interest at $2.33.


6. How to repay?

You can initiate repayment anytime by clicking the Repay button under My Account - Service Fee Loan.

The repayment amount will first be applied to interest fees, followed by the principal.


Repayments can be made in two ways:

a. Transfer repayment:
Repay using your FUFU points or USDT. When repaying with USDT, ensure that the full amount is transferred, as insufficient payment will lead to a failed repayment.

b. Repay with collateral:
Make deductions from collateral based on the real-time currency price.


7. What is LTV (Loan-to-Value)?

LTV represents the loan-to-value ratio, the ratio of the total principal of all service fee loans plus any accrued interest to the value of the collateral.

This value is updated every minute based on the real-time currency price.


LTV is categorized into four levels:

a. Available for withdrawal: 50%
When your LTV is < 50%, you can withdraw your collateral, the maximum withdrawal being the amount from your current LTV to 50%.

b. Loan disbursement: 65%
When your LTV is < 65%, loans will be automatically disbursed to cover three days of service fees when service time is under three days. No disbursements occur if your LTV is ≥ 65%.

c. Warning: 80%
When your LTV is ≥ 80%, it triggers a warning for you to replenish or repay before reaching 90% LTV, otherwise a liquidation will be enforced.

d. Liquidation: 90%
When your LTV is ≥ 90%, a liquidation will be enforced immediately to repay the loan.


8. What happens during a service fee loan liquidation?

Liquidation occurs when the LTV reaches 90%, either due to a drop in collateral value or an increase in the total loan amount from accrued interest.

The liquidation repayment amount = (Principal + Interest) * (1 + 2% liquidation rate).

Funds are initially deducted from the FUFU points account, with any shortfall covered by forcibly selling the collateral.

Following liquidation, all service fee loans will be closed.

You can withdraw any remaining collateral after the liquidation is complete.


9. How to reduce the LTV?

When LTV is ≥65%, users are recommended to reduce their LTV as soon as possible by depositing more collateral or making repayments. This will help avoid issues with loan disbursements and losses from potential liquidation.


10. How to withdraw collateral?

Pledged BTC can be withdrawn by adjusting the LTV to 50% or less.

The withdrawal amount, minus a network fee of 0.0005 BTC, will then be transferred to your receiving address.

Updated on: 22/05/2024

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