🗳️Staking

The Ethereum Credit Guild uses a gauge staking system to determine the relative debt ceilings of the lending terms in the same market (a market is a 'gauge type' at the smart-contract level).

The providers of first-loss capital (GUILD stakers or gToken stakers through the SurplusGuildMinter) determine the relative debt ceilings of the lending term (which collateral assets are lenders exposed to, at what rate, at which borrow ratio), along with the tolerance, which provides 'wiggle room' for the market to grow and efficiently distribute liquidity.

By default, when a LendingTerm is onboarded (i.e. becomes a non-deprecated gauge in the GUILD token at the smart-contract level), it has a debt ceiling of 0. As GUILD gets staked in the gauge, the debt ceiling increases. This means that GUILD holders collectively decide of the relative debt ceiling of all terms.

As an example, a system with 2 users (GUILD holders) and 2 gauges (lending terms): -> User A votes 1000 tokens for gauge A, 1000 tokens for gauge B -> User B votes 100 tokens for gauge A, 5000 tokens for gauge B -> The total votes is 1000 + 1000 + 100 + 5000 = 7100 -> The gauge A weight is 1000 + 100 = 1100 -> The gauge B weight is 1000 + 5000 = 6000 -> The system will target 1100 / 7100 ~= 15% of the debt ceiling for gauge A, and ~85% for gauge B

The debt ceiling is the maximum number of borrowable gTokenfor a given term.

First loss capital stakers earn a % of the interest paid by borrowers (this is a governable parameter set per-market), as well as GUILD rewards, and are subject to slashing in case of loss. Stakers can change their vote at any time, unless the liquidity on the term they are voting for is fully utilized. If liquidity is fully utilized, stakers must either wait for borrowers to repay, or offboard the lending term and close the associated loans.