This FAQ covers the Fixed-Rate Lending protocol, from basic trading concepts to advanced features and risk management. Whether you're new to fixed-rate lending or looking for specific technical details, you'll find comprehensive answers here.
What You'll Learn
How zero-coupon bonds and fixed-rate lending work on Secured Finance
Trading operations, order management, and platform navigation
Collateral requirements and liquidation processes
Advanced features like auto-rolling, Itayose, and market dynamics
Risk management and troubleshooting common issues
Quick Navigation
Platform Basics
What is Secured Finance?
Secured Finance is a decentralized finance platform that facilitates peer-to-contract lending and derivatives trading. Built on multiple blockchains including Ethereum, Arbitrum, and Filecoin, it offers a transparent, robust, and cost-effective alternative to traditional financial institutions.
The platform consists of two main products:
Fixed-Rate Lending Protocol: Enables fixed-rate, fixed-term lending and borrowing through zero-coupon bonds
USDFC Stablecoin: A dollar-pegged stablecoin backed by Filecoin collateral
What is a Zero-Coupon Bond (ZC Bond)?
A Zero-Coupon Bond is a debt instrument sold at a discount and redeemed at face value at maturity, providing guaranteed returns.
Example: Buy for 950 USDC, receive 1,000 USDC at maturity = 5.26% return
What is the underlying asset for zero-coupon bonds?
The underlying asset for zero-coupon bonds is the specific digital asset lent by the user. For example, lending ETH in the "September 2026 Order Book" mints a bond called "ZC ETH SEP2026", representing the loaned ETH and its maturity date.
Each ZC Bond is:
Asset-specific: Denominated in the currency being lent (ETH, USDC, etc.)
Maturity-specific: Includes the exact maturity date in the token name
Transferable: Can be traded or used as collateral on other DeFi protocols
Can zero-coupon bonds be used outside the Secured Finance platform?
Yes, zero-coupon bonds are tokenized and fully transferable ERC-20 tokens. They can be used on other DeFi protocols for:
Trading: Sell your position on secondary markets
Collateral: Use ZC Bonds as collateral for other loans
Yield optimization: Integrate with other DeFi strategies
Portfolio management: Track and manage across multiple platforms
This composability is a key advantage of Secured Finance's tokenized approach to fixed-rate lending.
Trading Operations
How do I buy or sell a ZC Bond on Secured Finance?
To trade ZC Bonds on Secured Finance:
Connect your wallet to the platform
Browse the order book for your desired maturity and asset
Place your order (market or limit order)
Confirm the transaction in your wallet
Receive your ZC Bond automatically via smart contract
Is my money locked until maturity?
No, there is no lock-up period involved. Similar to spot transactions, our platform facilitates the trading of Zero Coupon Bonds (ZC Bonds) 24/7.
As a lender (ZC Bond holder):
Unwind: Sell your ZC Bond back to the market anytime
Transfer: Move your ZC Bond to another wallet or platform
Use as collateral: Leverage your ZC Bond in other DeFi protocols
As a borrower (with outstanding orders):
Cancel orders: Withdraw funds from unfilled limit orders anytime
Partial fills: Access funds from partially filled orders immediately
Note: Users must manually unwind their positions when bonds reach maturity. The protocol does not automatically settle positions at maturity.
How does lending and borrowing work on Secured Finance?
Secured Finance uses a peer-to-peer order book system where lending and borrowing happen through ZC Bond creation and trading:
To Lend (Buy ZC Bonds):
Deposit assets into your collateral vault
Browse available borrowing orders
Buy ZC Bonds at your desired rate
Receive principal + yield at maturity
To Borrow (Sell ZC Bonds):
Deposit collateral (must exceed borrowing amount)
Create a ZC Bond sell order
Receive borrowed funds when order is filled
Repay at maturity or face liquidation
What is the user journey for lending assets?
The complete lending journey involves:
Wallet Connection: Connect your Web3 wallet to the platform
Deposit Collateral: Add assets to your collateral vault for gas and potential margin
Select Order Book: Choose your preferred maturity date and asset
Place Lending Order: Buy ZC Bonds at your desired rate
Receive ZC Bonds: Get tokenized proof of your lending position
Monitor Position: Track performance in your portfolio
Maturity Settlement: Manually unwind position to receive principal + yield, or trade before maturity
What happens to my outstanding order when the order book matures?
When an order book reaches maturity:
Unfilled orders are automatically sent to your Collateral Vault
Filled positions are settled according to the contract terms
Funds become available for withdrawal or new trades
From your Collateral Vault, you can:
Withdraw funds to your wallet
Place new orders in active order books
Transfer to other assets or maturities
This automatic process ensures you never lose access to your funds due to market maturity.
Note: For filled positions, users must manually unwind their ZC Bonds when they reach maturity to receive their principal and yield.
Why is my unwinding order 'Blocked' or 'Partially Blocked'?
Unwinding orders may become 'Blocked' for two main reasons:
Insufficient liquidity: Not enough matching orders available on the order book
Circuit Breaker limits: Available orders are outside the acceptable price range
'Partially Blocked' means only part of your unwinding order was executed, with the remainder still seeking matches.
Solutions:
Wait for liquidity: New orders may appear that match your requirements
Place a limit order: Set your own price and wait for execution
Adjust your price: Move closer to market rates if acceptable
The Circuit Breaker is a safety feature that prevents price manipulation by limiting deviations from the mark price.
Risk Management
What is collateral and why is it needed?
Collateral is an asset that borrowers deposit to secure their loans. It serves as protection for lenders and ensures the integrity of the lending process.
Key functions:
Security: Protects lenders against borrower default
Liquidation source: Provides assets to cover unpaid debts
Risk management: Enables automated position monitoring
For borrowers: Collateral must exceed the borrowed amount by a safety marginFor lenders: Collateral provides confidence in loan repayment
What types of assets can be used as collateral?
Secured Finance currently accepts these assets as collateral:
Ethereum & Arbitrum:
ETH: Native Ethereum
WBTC: Wrapped Bitcoin
USDC: USD Coin stablecoin
Filecoin:
FIL: Native Filecoin
iFIL: Interest-bearing FIL (FVM only)
These assets were chosen for their:
Liquidity: High trading volumes and market depth
Stability: Established track record and wide acceptance
Oracle support: Reliable price feeds for liquidation calculations
Secured Finance continuously evaluates additional assets based on community demand and risk assessment.
What happens if the value of my collateral falls?
If your collateral value falls and your loan-to-value (LTV) ratio exceeds the liquidation threshold:
Warning phase: Your position becomes at-risk
Liquidation trigger: Automated liquidators can close your position
Asset sale: Collateral is sold to repay the debt
Remaining funds: Any surplus is returned to you
Prevention strategies:
Monitor your LTV ratio regularly in your portfolio
Add more collateral when approaching limits
Reduce debt by repaying part of your loan
Set up alerts for position health monitoring
Advanced Features
What is the Itayose process?
Itayose is a fair price discovery mechanism used when new order books start trading. It ensures efficient order matching by:
Collecting orders: Gathering all initial buy and sell orders
Finding equilibrium: Determining the price that maximizes trading volume
Batch execution: Executing all compatible orders simultaneously
Fair pricing: Ensuring all participants get the same fair market price
This process prioritizes the highest bid and lowest ask prices while maximizing the number of successful trades.
Benefits:
Fair price discovery: Prevents manipulation during market opening
Maximum liquidity: Enables the most trades possible
Equal treatment: All participants get the same execution price
What is Auto-Rolling?
Auto-Rolling is a feature that automatically reinvests your funds when positions mature, helping you:
Benefits:
Mitigate reinvestment risk: Avoid gaps between investment periods
Ensure cost-efficiency: Reduce transaction costs through automation
Promote continuous growth: Maintain your investment strategy seamlessly
Save time: Eliminate manual reinvestment processes
How it works:
Position maturity: Your ZC Bond reaches its maturity date
Automatic reinvestment: Funds are automatically placed in the next available market
Rate determination: New rate is set based on current market conditions
Continuous compounding: Your returns continue growing without interruption
Related Resources
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The platform uses smart contracts to ensure automatic execution and settlement. For detailed instructions, see our .
