multi-collateral.md

Multi-Collateral Vaults

A single Vault account can support more than one collateral asset.

Follow this guide to add more collateral assets:

• Learn about how multi-collateral Vaults work
• Transfer foreign assets
• Register a new collateral asset
• Manage a multi-collateral Vault

Multi-Collateral Operation

The installed Vault client supports multiple collateral currencies, while being managed the same way as a single-collateral Vault.

Multi-collateral Vaults have isolated collateral positions:

• Incoming Issue, Redeem and Replace requests can only be addressed to one collateral asset and do not affect the other collateral assets
• Collateralization ratios are independent, and must be managed separately
• If one collateral asset gets liquidated or banned, any other collateral assets managed under the same account will not be affected

Transfer Foreign Assets

Web UI

Follow the guide for cross-chain transfers.

Third Party Applications

Use the following third party applications to bring in collateral assets from other chains.

• Interlay <> Moonbeam: https://apps.moonbeam.network/moonbeam
• Interlay <> Acala: https://apps.acala.network/bridge
• Kintsugi <> Moonriver: https://apps.moonbeam.network/moonriver
• Kintsugi <> Karura: https://apps.karura.network/bridge

Locking Lending Tokens like qDOT or qUSDT as Collateral

qTokens can be listed as collateral as well. qTokens are interest bearing tokens as they earn interest from the lending operation.

To use a qToken as vault collateral follow three steps:

1. Deposit the qToken into the lending market. You can do this via the UI as in the linked guide or use loans.mint(token, amount) in polkadot.js.
2. When depositing a token to the lending market, it is not automatically locked as collateral.

a. If you just deposited the tokens into the lending market, there's nothing to do.

b. However, if you are borrowing tokens from the lending protocol, chances are that the token is used as collateral. Ensure that the qToken is not locked as collateral in the lending protocol. On the UI, navigate to the /lending page and untoggle the "Collateral" toggle.

3. Register the qToken as collateral as described in the registration section.

Registration

There are three ways to register a Vault:

1. Vault dashboard: Add new collateral assets via the Vault dashboard
2. CLI argument: Add the --auto-register argument when (re)starting the Vault client
3. (Advanced) Polkadot.js: or through polkadot.js.

Each approach is explained below.

?> It does not matter in which way new collateral assets are registered. The Vault client will pick up the new collateral asset with either approach.

?> Ensure that the Vault account has sufficient balance for each token that is going to be registered as collateral. If the Vault account does not have sufficient tokens, the registration will fail.

1. Registering through the Vault dashboard

?> This method is suitable if you are already running a Vault client and wish to register a Vault using the same account.

Navigate to "Create a Vault" and Add

Click on the "Add" button next to the collateral asset you wish to register.

Make sure to understand the riks

Deposit collateral

Deposit collateral in the new collateral assets. Once this is done, the new collateral Vault will appear in the cards in the Vault dashboard.

2. Registering through the CLI

?> This method is suitable both for adding a new collateral asset if you are already running a Vault, or for brand new installations.

Follow the instructions as in the vault installation guide.

For each collateral asset that should be registered, add the auto register flag with the token name and the amount of collateral in its smallest denomination, e.g., --auto-register=LKSM=20000000000000.

vault \
  --bitcoin-rpc-url http://localhost:8332 \
  --bitcoin-rpc-user <INSERT_CUSTOM_USERNAME> \
  --bitcoin-rpc-pass <INSERT_YOUR_PASSWORD> \
  --keyfile keyfile.json \
  --keyname <INSERT_YOUR_KEYNAME, example: 0x0e5aabe5ff862d66bcba0912bf1b3d4364df0eeec0a8137704e2c16259486a71> \
  --auto-register=KSM=3000000000000 \
  # newly added collateral assets here
  --auto-register=LKSM=20000000000000 \
  --btc-parachain-url 'wss://api-kusama.interlay.io:443/parachain'

Note that the auto-register argument can be specified multiple times. After the specific collateral asset is registered, the auto-register argument is no longer necessary and can be safely removed.

3. (Advanced) Registering through polkadot.js

?> This method is suitable if you are already running a Vault client and wish to register a Vault using the same account.

1. Go to polkadot.js.org/apps and ensure you have the right network selected, e.g., Kintsugi, Interlay, or one of the testnets.
2. Click on Developer -> Extrinsics
3. Select your existing Vault account, the vaultRegistry pallet and the registerVault extrinsic
4. Enter the collateral currency and the wrapped currency pair plus the minimum amount of collateral

a. Collateral currency: select the collateral currency. For Kintsugi/Interlay native assets, select e.g., Token.KSM or Token.KINT. For foreign assets from other parachains, select ForeignAsset and the number of the foreign asset. See this overview for all foreign assets. Example: LKSM is ForeignAsset.2. For lending tokens, select LendToken. Example: qKSM is LendToken.2.

b. Wrapped currency: select Token.KBTC on Kintsugi or Token.IBTC on Interlay

c. Minimum collateral: select the minimum collateral amount and convert this to the smallest denomination. Example: 1 LKSM = 10^12 Planck (1000000000000). The minimum collateral amount is 20 LKSM, or 20000000000000 Planck.

5. Sign and submit the transaction

The Vault client running for your account will automatically begin to operate the newly registered collateral asset.

Managing a Multi-Collateral Vault

Each registered collateral asset for your Vault has its own card in the Vault dashboard. All Vault guides are applicable to multi-collateral Vaults.

To view each collateral asset Vault, click on the "View" button on each card.