> For the complete documentation index, see [llms.txt](https://docs.ethosis.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ethosis.org/protocol/interest-and-repayment.md).

# Accrual and paying back

Interest in Ethosis is simple interest at a rate fixed when the loan is originated. It does not compound, it does not follow a utilisation curve, and nothing can move it once the loan exists.

## The accrual formula

Every slice accrues interest each second:

```
interest = principal × aprBps / 10_000 × elapsedSeconds / 31_536_000
```

`elapsedSeconds` counts from the slice's start timestamp and is read from `block.timestamp`. The protocol never derives time from `block.number`, because on Arbitrum-stack chains that value tracks the L1 block.

Slices accrue independently at their own APRs. What the borrower owes at any instant is the sum, across slices, of principal plus interest accrued so far.

## Minimum charge

Each loan has a minimum interest period of **3 days**. The borrower may repay sooner, but the interest charged is what the minimum period would have produced. Without this rule lenders could be used as free intraday liquidity, and standing offers would not be worth keeping up.

## Paying everything off

Calling `repay(loanId)` with the full outstanding balance:

1. Draws principal plus accrued interest, in USDG, from the borrower.
2. Pays each slice its principal and its own accrued interest, less the protocol's share of that interest.
3. Burns the slice tokens.
4. Returns all collateral to the borrower.
5. Emits `LoanRepaid`.

Nothing can pause repayment. If new loans and auctions are halted under an emergency pause, borrowers can still repay and take their collateral back.

## Paying part of it

Calling `repay(loanId, amount)` with less than the full balance:

1. Applies the payment to accrued interest across the slices first, then to principal, in proportion to slice principal.
2. Keeps the collateral where it is.
3. Lowers the loan's LTV and lifts its health factor to match.
4. Emits `LoanPartiallyRepaid`.

Alongside adding collateral, this is the borrower's other lever when a health-factor warning arrives.

## Repaying when the sequencer is down

If the sequencer is unreachable or refusing transactions, a borrower can route `repay` through Arbitrum's L1 delayed inbox, where it is force-included after the 24-hour delay. The protocol's post-outage liquidation grace period exists precisely so that this route is a real option rather than a theoretical one. See [Sequencer and chain risk](/risk/sequencer-and-chain.md).

## Thirty days in numbers

A borrower holds a 20,000 USDG loan made of three slices (5,000 at 8.50%, 10,000 at 8.90%, 5,000 at 9.00%) and repays everything exactly 30 days in.

| Slice | Principal | APR   | Interest over 30 days |
| ----- | --------- | ----- | --------------------- |
| 1     | 5,000     | 8.50% | 34.93                 |
| 2     | 10,000    | 8.90% | 73.15                 |
| 3     | 5,000     | 9.00% | 36.99                 |
| Total | 20,000    |       | 145.07                |

The borrower sends 20,145.07 USDG. Of the interest, 10% (14.51 USDG) goes to the protocol; each lender receives principal plus 90% of the interest their slice earned. The collateral is released in the same transaction.


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