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Product Docs
  • Welcome to AZKA FINANCE
  • AZKA Token Murabaha Overview
    • General
    • System Components
    • Protocol Architecture
    • Token Types
    • Use Cases
    • AZKA RoadMap
  • Murabaha Pools V1
    • Providing Liquidity
    • Pool Metrics
    • vROI
    • Murabaha Fee Rate Curve
    • Shariah Considerations
  • Executing Murabaha V1
    • Pre-Requisites
    • Initiating Murabaha
    • Executing Murabaha
    • Quote Methodology
      • Amount of Murabaha Token Required (AMTR)
      • Required Amount of Currency (RAC)
    • Shariah Considerations
  • Managing Murabaha V1
    • Managing Murabaha
    • Liquidation Parameters
    • Liquidation Mechanics
    • Shariah Considerations
  • Token Murabaha Risk Framework
    • General
    • Asset Risk
    • Liquidity Pool Risk
    • Liquidation Risk
    • Risk Parameters
  • AZKA Token Design and Tokenomics
    • General
    • Specific Utilities (AZKA, vAZKA, dLP)
    • Token Distribution
    • vAZKA
      • vAZKA Reward Distribution
    • dLP (Dynamic LP)
      • Initiating dLP
      • vAZKA Murabaha Eligibility
      • Managing Eligibility
      • Claiming vAZKA
  • Governance
    • General
    • DAO Structure and Policies
    • azTeams
  • Developer Docs
    • Murabaha Pools
    • Executing Murabaha
    • Liquidations
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  1. Executing Murabaha V1

Initiating Murabaha

Gas Fees on Ethereum are more expensive than on Layer 2 Chains, but support more liquidity and higher value Murabaha's. Murabaha Takers wanting to obtain smaller sized Murabaha's with lower gas costs should use Arbitrum.

1) Murabaha Takers navigate to a specific pool on the dashboard and select 'Murabaha'.

If it is the first time the user is executing Murabaha, they will be prompted with 2 interfaces:

  • A 'Top up Collateral' interface allowing them to select the type from any of the supported assets accepted as Collateral and the amount they wish to top up. The user must fulfil the Minimum Collateral requirement which will be significantly higher on L1 than L2. Multiple collateral types can be used to secure various debts. In V1 there is no isolation mode and hence all deposited collateral will be used to secure any and all debts the user has. However, collateral and debts of the same category are not allowed. For instance, having ETH as collateral and ETH as debt is not permitted. Even if a user's collateral account is diversified, such as holding ETH, WBTC, and USDT, they still cannot have ETH as debt. To have ETH as debt, the user can only hold stable-coins and/or WBTC as collateral. This same principle applies to all token types; for WBTC debts to be allowed, the collateral composition must consist of ETH and/or stable-coins. Further, it's important to note that not all stable-coins are considered the same from a Shariah perspective. Therefore, USDT debts would be accepted if the collateral composition includes ETH, WBTC, and/or USDC. This condition is enforced to prevent 'Riba' (Usury) during the liquidation process

  • A 'Murabaha Execution' interface allowing them to specify the parameters of the Murabaha and obtain the necessary information needed for execution.

For first time users the first transaction will be to lock collateral and the second transaction will be to execute Murabaha. Users with existing collateral can proceed directly to Murabaha execution.

2) Select Duration, Murabaha Token and Currency Token

In the Murabaha Aggregator interface users can select the Duration (ie 30 days), the Murabaha token (ie, ARB) and the currency token they want the debt to be denominated in (ie, USDT).

Once the user has provided the amount they require, the UI will display the highest available duration for the Murabaha amount being requested.

3) Set Slippage

The user can set their own slippage tolerance or go with the default slippage tolerance. The slippage tolerance is used to set a maximum level of price deviation the user is comfortable with in the event of a MEV/Front-running attack or broad market movement between the time of execution and the confirmation of the transaction .

4) Select Quote Method

If the user has the intention of holding the Murabaha token, intends to sell it using a centralised exchange or another on-chain DEX source they can just input the 'Amount of Murabaha Token Required' (AMTR). If they intend to sell the Murabaha token via another on-chain DEX source than what is used to source the Murabaha tokens (Paraswap), then the user should make a feasible calculation as to the amount of Murbaha tokens they require.

If the user intends to sell the Murabaha token in a subsequent on-chain swap within a relatively short window after it has been received, they can enable the RAC calculation (Required Amount of Currency) and input the amount of currency token they need to obtain after the subsequent sale of the Murabaha token. The purpose of this calculation is to give a feasible approximation as to the amount of Murabaha Token (ie, ARB) needed to satisfy the amount of currency token (ie, USDT) the user intends to acquire from the subsequent swap.

The first transaction being the Murabaha transaction that results in the taker receiving some Murabaha type token (ie, ARB). The second transaction is executed by selling the Murabaha token for some desired currency (ie, USDT) and is executed independently by the taker. The RAC quote is generated based on the path the DEX Aggregator uses (Paraswap) to source the swap and hence it would only be a valid/accurate quote if the user conducts the subsequent transaction using the same DEX aggregator.

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Last updated 1 year ago