# Global Parameters

## H2O, the farming reward

H2O Finance Protocol is built based on the Tokenomics of H2O. The governance token H2O would be the reward in the whole ecosystem. There are 3 ways to obtain H2O reward,

**As Liquidity Provider -**Provide liquidity for H2O/BUSD trading pair on MDEX, stake LP to farm H2O 

**As Lender** -Deposit BNB/BUSD/BTC/ETH/USDT/CAKE/MDX and variety of tokens to get H2O reward

**As Borrower** -Farm in dozens of trading pairs LP pools underlying MDEX and PancakeSwap to get H2O reward

**As Trader** -Buy or sell BTC/ETH/BNB on margin and get H reward depending on position value.

## **Interest rate model**

We employ a triple-slope interest rate model to determine the borrowing interest rate with detail below:

**Interest = m \* utilization + b**

| Utilization Range | Interest rate at min. range | m     | b    |
| ----------------- | --------------------------- | ----- | ---- |
| 0% - 80%          | 0 - 10%                     | 0.125 | 0    |
| 80% - 90%         | 10%                         | 0     | 0.1  |
| 90% - 100%        | 10 - 60%                    | 5     | -4.4 |

## Margin Trading—— H2O M Fee

1. A fixed trading rate of 0.1% will be charged when opening or closing position with the same rate based on the position value.
2. No trading fee would be charged for margin call. However the trading rate for closing position is calculated by position value including the added collateral fund.
3. H2O M is based on the depth and liquidity of DEX pools, and the DEX trading fee rate is calculated based on the actual transaction part (the borrowing funds).

## Liquidation Reserve

In order to ensure high-risk positions are liquidated on time and for asset safty reason, we use liquidation bot to excute liquidation. 5% of the positions liquidated will be paid to the platform as liquidation fee. 50% of this part of reserve will be used as high Provision for underwater liquidation in the event of fluctuations in the market.


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