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

# Payments & EMI

Trilobyte uses an **Equated Monthly Instalment (EMI)** model for loan repayments. Each payment is a fixed amount calculated at disbursement, covering both principal and interest.

## EMI Calculation

The EMI is calculated using the standard amortisation formula:

$$
EMI = P \times \frac{r(1+r)^n}{(1+r)^n - 1}
$$

Where:

* $P$ = Principal (loan amount)
* $r$ = Monthly interest rate (annual rate ÷ 12)
* $n$ = Number of monthly payments (loan term)

{% hint style="info" %}
All math is **integer-only** — Soroban has no floating-point support. Trilobyte uses 10¹² internal precision scaling and ceiling-rounds the final EMI to ensure the borrower always repays at least the full amount owed.
{% endhint %}

## Payment Split

Each payment is split into two pools based on the vault's **split ratio**:

| Pool          | Purpose                                                 | Accessible By                |
| ------------- | ------------------------------------------------------- | ---------------------------- |
| **EMI Pool**  | Investor yield — proportional to split ratio (e.g. 80%) | Investors via `claim_yield`  |
| **Cash Pool** | Borrower operating capital — remainder (e.g. 20%)       | Borrower via `withdraw_cash` |

For example, with a split ratio of 80, a **gross** payment of 10,000 USDC splits:

* **8,000 USDC** → EMI pool (investor yield)
* **2,000 USDC** → Cash pool — from which the 0.5% protocol fee is taken (→ \~1,950 USDC to the borrower)

Because only the EMI share repays the loan, the borrower **grosses up** the payment so that `split_ratio%` of it covers one investor instalment — i.e. `gross = ceil(EMI × 100 / split_ratio)`. The contract exposes `get_required_payment` / `get_current_period_payment` for the exact amount due.

## Payment Schedule

* Payments are due every **30 days** (30/360 day-count convention)
* The first payment is due 30 days after disbursement
* Each payment advances the `next_due` date by 30 days
* The loan term sets the EMI schedule, but the loan **completes when the outstanding balance reaches zero** — not on a fixed payment count

## Principal Amortisation

Each EMI payment contains both an interest component and a principal component:

$$
\text{interest} = \text{outstanding} \times \frac{\text{annual\_rate}}{12}
$$

$$
\text{principal} = \text{EMI} - \text{interest}
$$

The outstanding principal decreases with each payment. Early payments are interest-heavy, while later payments are principal-heavy — standard amortisation behaviour.

## Protocol Fee

A **0.5% protocol fee** applies to every repayment — but **after the split, and only from the borrower's cash share**. Investor (EMI) yield is never reduced by the fee:

1. Gross payment received (e.g. 10,000 USDC)
2. Split by ratio first (e.g. 8,000 → EMI pool, 2,000 → cash share)
3. The 0.5% fee (50 USDC) is taken from the cash share → 1,950 to the cash pool, 50 to the treasury

See [Fees](/protocol-mechanics/fees.md) for the full model (including the fee clamp).

## Yield Claiming

Investors claim their share of the EMI pool proportionally:

$$
\text{claimable} = \frac{\text{balance}}{\text{total\_supply}} \times \text{emi\_pool} - \text{already\_claimed}
$$

* `balance` = Investor's debt token balance
* `total_supply` = Total debt token supply
* `emi_pool` = Total accumulated EMI pool
* `already_claimed` = Amount the investor has already claimed

Claims can be made at any time during the **Active** or **FullyRepaid** phases.

## Token Precision

All amounts use **7 decimal places** (Stellar standard). For example:

* 1 USDC = `10_000_000` (10⁷)
* 0.5% fee = `50_000` in 7-decimal format