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Lets say I add 1000 aUST as collateral for a

short positon on mAMD using a 200% collateral ratio, it will give me about 3.949749 mAMD and tells me that 589.44 UST will be returned in 2 weeks

From my understanding this is basically buying the mAMD and then selling it instantly on the market but the ust wont be released to me for 2 weeks - during this 2 week time i will be earning mirror based on the apr?

what about my aUST? will i get it back minus the 589.44 ust?

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You will earn the short farm APR till the time your short position is opened. The asset you short is sold immediately after opening position, and you will get UST after selling of that shorted mAsset which will be locked for 2 weeks and you can claim that UST after 2 weeks.

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