# Key Features of the Protocol

**Interest-Free Liquidity**

Palladium offers users the ability to mint PUSD stablecoins without imposing any interest or recurring fees. BTC holders can access liquidity against their collateral at no cost. However, as an algorithmically controlled monetary instrument, Palladium implements a one-time Borrowing Fee for newly drawn liquidity, which is essential for maintaining the peg with the USD.

**Censorship Resistant** 

Palladium is a protocol rather than a platform. There is no administrator with special privileges that could interfere with, alter, or halt the operation of the protocol.  Frontend operation can be done by anyone and contracts are resistant to any censorship.

**Scalable & Capital Efficient**

To maintain a fully backed stablecoin supply, a borrowing system needs to take prompt action when the collateral ratio of an individual position falls below a specific threshold. Palladium addresses this concern through a two-step liquidation mechanism designed to instantly liquidate positions that are undercollateralized. This approach eliminates the need to find a buyer for a collateral buyout in real-time when a position becomes undercollateralized, as the acquirers are predetermined.

This innovative approach not only allows for a significant reduction in the collateral ratio but also ensures high stability within the system. Instead of relying on the collateral of individual positions, Palladium emphasizes the aggregate collateralization of all positions. This collective approach contributes to the strength and reliability of the system, safeguarding the stability of the stablecoin supply.

**Hard Price Floor**

$PUSD holders have the option to return PUSD tokens to the protocol (redeem) in exchange for a Bitcoin (BTC) amount equivalent to the face value of the returned PUSD, with a deduction of a Redemption Fee. This mechanism serves as a direct anchor for price stability, establishing a price floor at $1. When the exchange rate deviates below this floor, arbitrageurs can capitalize on the opportunity by redeeming PUSD for BTC and selling the BTC at a higher dollar price. This incentivizes arbitrageurs, who play a crucial role in restoring the peg, as the Redemption Fees are designed to ensure profitable arbitrage opportunities whenever the peg is disrupted.

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