# Fee Model

**A One-Time Fee of 0.5%**

Most borrowing platforms use a fluctuating APR determined by supply and demand, making it tedious for users who must regularly monitor their positions to prevent liquidation. Lyve solves this by offering interest-free loans with a modest one-time fee of 0.5% for long-term borrowings exceeding six months. 

**Short-Term Borrower Incentives**

For those who repay their debt within six months, Lyve provides a pro-rata refund of the initial 0.5% fee. This mechanism is managed by a smart contract that calculates the refund based on the time elapsed, ensuring at least a week's worth of interest is accounted for. 

**The Benefits of Using LSTs as Collateral**

While your LST is acting as collateral, it continues to grow in value against ETH, generally between a 3% and 8% APR. This dual-income stream lowers your risk of liquidation or redemption as time passes, assuming stable or growing ETH prices. 

**Liquidation Fees and Redemption Mechanism**

To mitigate LYU's volatility, Lyve will implement a Liquity-like redemption mechanism post-launch.