Self-Repayment Loan System

The Self-Repayment System allows veDUST holders to automatically use their governance rewards to reduce outstanding debt positions. When enabled, rewards that would normally be claimable to the user’s wallet are redirected to a dedicated UserVault contract. The vault swaps these rewards into the relevant debt asset and repays the user’s loan automatically.

The vault swaps these rewards into the debt asset using the API provided by Monorail.

The process is entirely non-custodial and can be enabled or disabled at any time.

Overview

Self-repayment provides a way for active participants to improve their loan health passively. By routing earned rewards directly into repayment, borrowers maintain lower utilization, reduced liquidation risk, and a smoother compounding experience.

Once enabled, all veDUST enrolled in self-repayment will automatically send their rewards to the user’s vault until the feature is turned off.

How It Works

1. Enable Self-Repay The user enables self-repayment for their veDUST. The system deploys a UserVault to that wallet (one vault per user).

2. Reward Redirection Rewards generated from the veDUST enabled for the self-repay system are sent to the user’s vault instead of their wallet. Each veDUST can independently opt in or out of self-repayment.

3. Automated Execution

   A protocol executor once per epoch:

   Claims rewards to the vault

   Swaps reward tokens into the chosen debt asset

   Repays the user’s loan on their behalf

4. Disable at Any Time

   Disabling self-repay restores the default reward flow directly to the wallet.

   All future rewards bypass the vault until the feature is re-enabled.

System Architecture

The user retains full ownership of both their veDUST and UserVault at all times. The executor only has permission to perform the predefined automated functions.

Security and Safeguards

Non-custodial: Users remain owners of both the veDUST and the vault. Slippage protected: Swaps use Neverland oracle pricing to verify fair execution. Whitelisted aggregators: Only approved DEX aggregators are permitted. Auto cleanup: Self-repay is automatically disabled if the veDUST is transferred or merged. Split inheritance: If a veDUST is split, both resulting tokens retain self-repay status. Recovery functions: Users can recover ERC20 or MON from their vault at any time.

Behavior Summary

Operational Flow

Key Properties

1. One vault per user – All enrolled veDUST share the same UserVault.

2. Non-custodial design – Ownership of rewards and loans never leaves the user.

3. Automatic cleanup – Self-repay is cleared on transfers or merges.

4. Inherited splits – New tokens after a split maintain self-repay status.

5. Verified swaps – All swaps are validated against oracle prices with capped slippage.

6. Controlled access – Only the authorized executor can trigger automation.

Why It Matters

The Self-Repayment System connects governance rewards and lending behavior into a single automated cycle. It rewards users who actively participate in governance with real financial benefits, while reducing overall protocol risk by improving borrower health.

Self-repay creates a continuous, closed loop: Governance rewards are earned by veDUST lockers. Those rewards automatically flow into the user’s vault. The vault repays debt, improving loan metrics and freeing borrowing capacity.

The result is a sustainable, incentive-aligned mechanism where governance participation strengthens both the individual and the protocol.