How to Calculate and Repay Interest

Calculating and Repaying Interest

1. Interest Calculation

At KuCoin EU, interest on borrowed funds is calculated hourly based on the principal amount and the applicable hourly interest rate. Users can review hourly interest details by navigating to Order → Cross/Isolated Margin → Interest.

Key Points:

• Initial Interest Charge: Interest begins to accrue immediately after borrowing funds, with the first calculation applied at the time of borrowing.
• Ongoing Interest Calculation: After the initial charge, interest is calculated and applied automatically on an hourly basis.

  

2. Hourly Interest Repayment

The system automatically deducts and repays the hourly interest from the borrower's account, continuously updating the accumulated debt. This ensures interest payments are current and accurate over time.

  

3. Interest Allocation

The interest paid by borrowers is allocated as follows:

• Platform Service Fee: 5% of the total interest income is reserved by the platform as a service fee.
• Risk Reserve Fund Contribution: An additional 10% of the total interest income is allocated to a risk reserve fund to mitigate platform-related risks.

Hourly Rollover Interest

To ensure timely payouts to lenders, the system facilitates hourly interest transactions dynamically, borrowing the required interest amount from the lending pool every hour and repaying it to lenders. The borrowed interest is then added to the borrower’s debt.

How It Works:

1. The system borrows an amount equivalent to the hourly interest in the relevant cryptocurrency from the lending pool.
2. This borrowed interest amount is added to the borrower’s total debt balance.
3. The system distributes the borrowed interest to lenders in the respective cryptocurrency as payment.

Circumstances Leading to Interest Payment Failure:

Interest payments may occasionally fail due to:

• Market Issues: If the currency is delisted from the free lending market.
• Liquidity Constraints: If insufficient depth exists in both the margin trading and lending markets for the respective currency.

Handling Failed Interest Payments:

If the system is unable to borrow the necessary interest funds due to the above reasons, the following actions are taken:

• The system will liquidate assets from the borrower’s account to cover the hourly interest amount.
• If the borrower holds enough of the required cryptocurrency, the interest amount will be deducted directly from the holdings.
• If holdings are insufficient, assets will be liquidated to repay the interest debt.

By automating hourly interest calculations, repayments, and allocations, the system ensures efficiency and fairness in managing borrower-lender transactions while safeguarding platform stability.

 

 

We hope this article has been helpful. Please reach out to our 24/7 customer support via online chat or submit a ticket if you have any other questions.