How EARN works: PXDC, a stablecoin borrowed against PLSX on PulseChain

A loan on EARN is a position that holds PLSX and owes PXDC. Liquity calls it a trove; the console calls it a loan. You open one by depositing PLSX and choosing how much PXDC to draw. Three things are added to what you owe: the PXDC you receive, the one-time borrowing fee, and a 50 PXDC liquidation reserve that sits in the loan as a bounty for whoever liquidates it if it ever fails. The reserve is cancelled when you close the loan, so it costs nothing unless the loan is liquidated.

The only rule you must keep is the collateral ratio: the value of the PLSX in the loan, at the protocol’s oracle price, divided by the debt. It must stay above 110%. The oracle price moves with the market, so the ratio moves with it, and a loan opened at 150% can be under 110% after a bad day. Below 110%, anyone can liquidate the loan.

There is no interest and no repayment date. You can repay part of the debt, add or withdraw PLSX, or draw more PXDC at any time, as long as the ratio stays above the line. To close the loan you return the full debt, minus the reserve, and receive all of the PLSX back.

The borrowing fee is not fixed. It starts from a floor of 0.5%, rises when people redeem PXDC for PLSX (each redemption pushes the protocol’s base rate up), and decays back toward the floor over the following hours. It is capped at 5%. The console shows the fee that applies right now before you sign.

Open or adjust a loan in the console: Your position.

These constants are written into the EARN contracts and cannot be changed by anyone. The page you are reading checks them against TroveManager every time it loads.

Checked against the contract when this page loads; a figure turns green when it matches and amber, with the contract’s own value, if it ever differs.

EARN counts in 18 decimals, the same as PLSX and PXDC themselves.

The rates that move, the borrowing and redemption fees right now, are in the console: Protocol.

The Stability Pool is a pot of PXDC that stands ready to pay off liquidated loans. Anyone can deposit PXDC into it and withdraw at any time. When a loan is liquidated, PXDC equal to its debt is burned from the pool and the loan’s PLSX is handed to the depositors, split by their share of the pool.

Because liquidation happens when a loan is worth less than 110% of its debt but usually still more than 100%, the PLSX a depositor receives is normally worth more than the PXDC taken from them. That difference is the pool’s income. Depositors also receive newly issued EARN on a schedule that front-loads the early years and slows over time; the console shows the current issuance next to the pool.

The pool is also the system’s first line of defence. If it holds less PXDC than a liquidated loan owes, the remaining debt and collateral are spread across all other open loans, which raises their debt and their collateral together. The console shows what share of all debt the pool covers, and says so plainly when it is below full cover.

Deposit or withdraw in the console: Stability Pool.

EARN is the protocol’s second token. Stake it and you receive the protocol’s fees as they are paid: the borrowing fee arrives in PXDC, the redemption fee arrives in PLSX. Rewards are split by each staker’s share and can be claimed at any time. There is no lock-up; unstaking is immediate.

Staking does not protect the system and carries no liquidation risk. Its return depends entirely on how much borrowing and redeeming happens, which the console shows as the live fee rates and the total staked.

Stake or unstake in the console: Staking.

Anyone holding PXDC can redeem it against the protocol, not against a pool, for one dollar’s worth of PLSX per PXDC at the oracle price, minus the redemption fee. The PLSX comes out of the loans with the lowest collateral ratios first. Those borrowers lose collateral but lose the same value of debt, so their ratio goes up; a loan redeemed in full has its remaining PLSX set aside for its owner to claim.

Redemption is what holds PXDC from falling far below one dollar: if it trades at 90 cents, buying it and redeeming it for a dollar of PLSX is a profit until the price recovers. The fee starts at 0.5% and rises with the volume redeemed in a short time, so a large redemption pays more than a small one.

This console redeems whole loans only, and shows you which loans a redemption would touch and what it would return before you sign.

Redeem in the console: Redeem & liquidate.

A loan below 110% can be liquidated by anyone, at any time, in one transaction. The Stability Pool pays the debt and takes the PLSX. Whoever sends the transaction receives the loan’s 50 PXDC reserve plus 0.5% of its PLSX, which is what makes it worth someone’s gas to keep the system clean. The borrower keeps the PXDC they drew and loses the PLSX.

The console lists every loan that is currently below the line and lets you liquidate it, and it tells you what the reward is worth against the gas.

See the loans below the line, and liquidate one, in the console: Redeem & liquidate.

The protocol watches its own total ratio: all PLSX in all loans over all PXDC debt. If that falls below 150%, the system enters recovery mode. In recovery mode, loans below 150% can be liquidated, not only those below 110%, and any collateral above 110% of a liquidated loan’s debt is set aside for the borrower to claim. New borrowing is allowed only if it leaves the loan at 150% or better and, for an existing loan, raises its ratio; the borrowing fee drops to zero for it. Withdrawing collateral and closing loans are paused until the system ratio is back above 150%.

The console shows the system ratio in its hero and warns at the top of the page when recovery mode is on.

The system’s mode, rates and prices right now, in the console: Protocol.

Two hard rules bound the price. Redemption puts a floor under it: PXDC can always be exchanged for a dollar of PLSX at the oracle price, minus the fee. The 110% minimum ratio puts a ceiling on it: if PXDC trades far above a dollar, opening a loan and selling the PXDC is a profit, which adds supply until the price comes back. Between those rules the market price on PulseX can drift, and it does when the pool is thin.

PXDC trades on PulseX, and for long stretches the pool has held far less PXDC than the debt outstanding across all loans. That matters when you want to repay: if there is no PXDC to buy, a loan cannot be closed. The console shows the live pool depth next to the debt and warns before it lets anyone try to buy more PXDC than the pool holds.

• Price risk. Your ratio follows the PLSX price. A fast drop can take a comfortable loan under 110% before you react, and liquidation is final.
• Redemption risk. If your loan is among the lowest ratios in the system, a redemption can take PLSX from it. You lose no net value, but you lose PLSX you may have wanted to keep.
• Oracle governance. Everything in EARN is immutable except one thing: the address of the price oracle can be changed through a timelock with a ten-second minimum delay. On EARN the timelock that controls the oracle address has a 2-of-5 multisig as its proposer and executor, but a single externally-owned key still holds the admin role over those roles. That key can grant itself proposer and executor with no delay, then point the protocol at a new price feed after the ten-second wait. The price feed contracts themselves are unverified on the explorer. Every figure in the console is read from the oracle the contracts use right now, and the address is shown in the footer.
• Thin liquidity. See the peg section above: buying PXDC to repay may be impossible when the pool is empty, and the console will tell you.
• Smart-contract risk. The core contracts follow the Liquity v1 code, which was audited in its original form. This deployment changes the oracle and, on FLEX, the decimal scale, and those changes were not part of that audit. The oracle contracts are not verified on the explorer.

EARN once paid LP rewards to two PulseX pools, PXDC/PLSX and EARN/PLSX. Those rewards ended in May 2024. Some wallets still hold LP tokens and earned EARN inside the farm contracts, and the console shows a Finished farms card to such a wallet so it can withdraw.

The oracle the contracts use right now, and every other address the console talks to, are listed under Contracts in the console’s footer: Show the addresses.

The console is a static page with no backend and no account. It reads the chain through public RPC endpoints, asks your wallet to sign only the action you chose, and never asks for a message signature. Every contract it talks to is listed in its footer with an explorer link, and the same list lives in its config.js, which you can read in your browser. Before you sign anything, compare the recipient your wallet shows against that list.

The core contracts on PulseChain: TroveManager, BorrowerOperations, StabilityPool, Staking; the tokens: PLSX, PXDC, EARN. The protocol’s own documentation is at docs.powercity.io/earn-protocol; the Liquity v1 design it follows is described at docs.liquity.org.

The same community runs a console for FLEX, the sister protocol that issues HEXDC against HEX: flexhex.fyi, with its own guide at flexhex.fyi/learn/.