# FAQs ## Overview 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](#platform-basics) * [Trading Operations](#trading-operations) * [Risk Management](#risk-management) * [Advanced Features](#advanced-features) ## 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 **Related:** [Platform Overview](https://github.com/Secured-Finance/secured-finance-docs/blob/main/overview/README.md)
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 **Related:** [ZC Bond Mechanics](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/standardization/zero-coupon-bonds.md)
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 **Related:** [Tokenization](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/tokenization.md)
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. **Related:** [Tokenization](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/tokenization.md)
## Trading Operations
How do I buy or sell a ZC Bond on Secured Finance? To trade ZC Bonds on Secured Finance: 1. **Connect your wallet** to the platform 2. **Browse the order book** for your desired maturity and asset 3. **Place your order** (market or limit order) 4. **Confirm the transaction** in your wallet 5. **Receive your ZC Bond** automatically via smart contract The platform uses smart contracts to ensure automatic execution and settlement. For detailed instructions, see our [Trading Guide](https://github.com/Secured-Finance/secured-finance-docs/blob/main/getting-started/platform-guide/trading/README.md). **Related:** [Platform Guide](https://github.com/Secured-Finance/secured-finance-docs/blob/main/getting-started/platform-guide/README.md)
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. **Related:** [Order Life Cycle](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/order-book-system/order-life-cycle/README.md)
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):** 1. Deposit assets into your collateral vault 2. Browse available borrowing orders 3. Buy ZC Bonds at your desired rate 4. Receive principal + yield at maturity **To Borrow (Sell ZC Bonds):** 1. Deposit collateral (must exceed borrowing amount) 2. Create a ZC Bond sell order 3. Receive borrowed funds when order is filled 4. Repay at maturity or face liquidation **Related:** [Core Mechanics](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/README.md)
What is the user journey for lending assets? The complete lending journey involves: 1. **Wallet Connection**: Connect your Web3 wallet to the platform 2. **Deposit Collateral**: Add assets to your collateral vault for gas and potential margin 3. **Select Order Book**: Choose your preferred maturity date and asset 4. **Place Lending Order**: Buy ZC Bonds at your desired rate 5. **Receive ZC Bonds**: Get tokenized proof of your lending position 6. **Monitor Position**: Track performance in your portfolio 7. **Maturity Settlement**: Manually unwind position to receive principal + yield, or trade before maturity **Related:** [Lending Assets Guide](https://github.com/Secured-Finance/secured-finance-docs/blob/main/getting-started/lending-assets.md)
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. **Related:** [Order Life Cycle](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/order-book-system/order-life-cycle/README.md)
Why is my unwinding order 'Blocked' or 'Partially Blocked'? Unwinding orders may become **'Blocked'** for two main reasons: 1. **Insufficient liquidity**: Not enough matching orders available on the order book 2. **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. **Related:** [Circuit Breaker](https://github.com/Secured-Finance/secured-finance-docs/blob/main/advanced-topics/safety-measures/circuit-breaker/README.md)
## 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 margin **For lenders**: Collateral provides confidence in loan repayment **Related:** [Collateralization](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/collateralization.md)
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. **Related:** [Supported Currencies](https://github.com/Secured-Finance/secured-finance-docs/blob/main/getting-started/platform-guide/trading/supported-currencies.md)
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: 1. **Warning phase**: Your position becomes at-risk 2. **Liquidation trigger**: Automated liquidators can close your position 3. **Asset sale**: Collateral is sold to repay the debt 4. **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 **Related:** [Liquidation Process](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/liquidation/README.md)
## 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: 1. **Collecting orders**: Gathering all initial buy and sell orders 2. **Finding equilibrium**: Determining the price that maximizes trading volume 3. **Batch execution**: Executing all compatible orders simultaneously 4. **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 **Related:** [Itayose Process](https://github.com/Secured-Finance/secured-finance-docs/blob/main/advanced-topics/market-dynamics/new-market-listing-and-delisting/itayose-fair-price-discovery.md)
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:** 1. **Position maturity**: Your ZC Bond reaches its maturity date 2. **Automatic reinvestment**: Funds are automatically placed in the next available market 3. **Rate determination**: New rate is set based on current market conditions 4. **Continuous compounding**: Your returns continue growing without interruption **Related:** [Auto-Rolling](https://github.com/Secured-Finance/secured-finance-docs/blob/main/advanced-topics/market-dynamics/auto-rolling/README.md)
## Related Resources * [Getting Started Guide](https://github.com/Secured-Finance/secured-finance-docs/blob/main/getting-started/README.md) * [Core Mechanics Documentation](https://github.com/Secured-Finance/secured-finance-docs/blob/main/core-mechanics/README.md) * [Advanced Topics](https://github.com/Secured-Finance/secured-finance-docs/blob/main/advanced-topics/README.md) * [Platform Guide](https://github.com/Secured-Finance/secured-finance-docs/blob/main/getting-started/platform-guide/README.md) * [Developer Portal](https://docs.secured.finance/developer-portal/introduction)