# About Secured Finance Welcome and Starter Guide Secured Finance is a Decentralized Finance (DeFi) protocol that empowers you to engage directly with next-generation financial infrastructure. By connecting your wallet, you can access our services without intermediaries like banks or brokers—no third-party custodians required. With Secured Finance, you hold the keys to permissionless financial freedom. Our vision emerged in the aftermath of the LIBOR scandal, guided by the belief that blockchain technology can reshape financial systems with transparency and reliability. We're building a bridge between traditional finance and the boundless possibilities of DeFi. ## Our Core Protocols Our platform is built on three innovative products: * **Fixed-Rate Lending:** A fully on-chain, fixed-rate, fixed-term lending and borrowing platform operating across Ethereum, Arbitrum, and Filecoin chains. At its core is our unique Zero-Coupon Bond instrument, which powers secure and efficient crypto asset lending and borrowing with predictable returns. * **SF Yield Vault:** Curated yield strategies that put deposited assets to work through the protocol, including a JPYC lending strategy, for users who prefer a managed alternative to placing their own orders. * **USDFC Stablecoin:** A dollar-pegged token on the Filecoin blockchain that provides liquidity for Filecoin stakeholders, miners, and DeFi users alike. As the first decentralized stablecoin fully collateralized by Filecoin, USDFC strengthens liquidity across the Filecoin network and establishes a solid foundation for expanded DeFi development. ## Getting Started Ready to experience the future of decentralized finance? Choose your path: * **Fixed-Rate Lending:** Lend and borrow at fixed rates with tokenized debt - [Beginners Guide](/fixed-rate-lending/getting-started) * **SF Yield Vault:** Deposit into curated yield strategies - [Beginners Guide](/sf-yield-vault/getting-started) * **USDFC Stablecoin:** Mint, borrow, and manage your USDFC by opening a Trove - [Beginners Guide](/usdfc-stablecoin/getting-started/getting-started) Visit our [app](https://app.secured.finance/) to start your journey with Secured Finance today! # Protocol at a Glance Traction, security, and technology — the three-minute read for investors, researchers, and partners ## What Secured Finance is Secured Finance operates two complementary DeFi protocols with a third product line built on top: | Product | What it does | Networks | | ---------------------- | ---------------------------------------------------------------------------------- | ---------------------------- | | **Fixed-Rate Lending** | Fully on-chain order book for fixed-rate, fixed-term lending via Zero-Coupon bonds | Ethereum, Arbitrum, Filecoin | | **SF Yield Vault** | Curated yield strategies, including a JPYC lending strategy | Ethereum | | **USDFC Stablecoin** | The first decentralized stablecoin fully collateralized by FIL | Filecoin (FVM) | ## Traction * **$50M+ cumulative volume** on the Fixed-Rate Lending apps (as of July 2026) — verified on [DefiLlama](https://defillama.com/protocol/dexs/secured-finance) * Quarterly market launches (Itayose auctions + Auto-Roll) running continuously since mainnet, with [public reports every quarter](https://medium.com/secured-finance) * **RWA collateral live**: the tokenized money-market fund uMINT is accepted as on-chain collateral on Ethereum (partnership with DigiFT, February 2026 — [announcement](https://medium.com/secured-finance/umint-as-eligible-on-chain-collateral-bringing-tokenized-money-markets-into-defi-financing-edfb46bf8346)) * **JPYC markets**: the first fixed-rate JPY-stablecoin lending markets, live on Ethereum (November 2025), plus a Yearn V3 JPYC strategy vault (2026 Q1) * **x402-ready USDFC**: community-contributed EIP-3009 support merged and audited (2025 Q3), enabling x402 / HTTP 402 payment flows — gateway launch TBD See the [Roadmap](/introduction/roadmap) for the full delivery history. ## Why fixed rates matter Most DeFi lending is variable-rate: yields change block by block, which makes planning impossible for treasuries, funds, and storage providers. Secured Finance brings the market structure of traditional fixed income on-chain — order-book price discovery, standardized quarterly maturities, and tradable Zero-Coupon bonds — so both sides of a loan know their exact rate for the entire term, and a genuine crypto yield curve emerges. ## Technical differentiation * **Full on-chain order book** — made economical with Red-Black Trees, lazy evaluation, and Genesis Value accounting. [Deep dive](/fixed-rate-lending/advanced-topics/orderbook-deep-dive) * **Composability** — lending positions can be tokenized as ERC-20 [ZC Tokens](/fixed-rate-lending/core-concepts/tokenization) and used across DeFi * **Exchange-grade market safety** — [Itayose opening auctions](/fixed-rate-lending/advanced-topics/itayose), [circuit breakers](/fixed-rate-lending/advanced-topics/circuit-breaker), and [mark-to-market valuation](/fixed-rate-lending/core-concepts/liquidation/mark-to-market) ## Security * **Audits**: Quantstamp (Fixed-Rate Lending, 2023 & 2024), Hexens and Decurity (USDFC, 2025) — reports in [Contracts & Security](/fixed-rate-lending/contracts-and-security) * Active [Bug Bounty](/developer-portal/bug-bounty) program * [Emergency Global Settlement](/fixed-rate-lending/advanced-topics/emergency-global-settlement) as a last-resort safeguard for user funds ## Where next | You are… | Start here | | ------------------------- | -------------------------------------------------------------------------------------------------------- | | New to the protocol | [Quick Start: Lend](/fixed-rate-lending/getting-started/quick-start-lend) | | A borrower | [Quick Start: Borrow](/fixed-rate-lending/getting-started/quick-start-borrow) | | Looking for passive yield | [SF Yield Vault: Getting Started](/sf-yield-vault/getting-started) | | A developer | [Developer Portal](/developer-portal/introduction) | | A researcher or investor | [Research & Papers](/fixed-rate-lending/overview/research-and-papers) · [Roadmap](/introduction/roadmap) | | Running a liquidation bot | [Liquidator's Guide](/fixed-rate-lending/core-concepts/liquidation/liquidators-guide) | # Vision & Mission A New Dawn in Financial Integrity and Accessibility Dear Fellow Navigators of the Financial Future, In the aftermath of the [LIBOR scandal](https://en.wikipedia.org/wiki/Libor_scandal), a hopeful vision emerged amidst the challenges of centralized power in financial intermediaries. Secured Finance wasn’t merely born; it arose, guided by an unwavering belief that through the blockchain, we can reshape our financial destiny, constructing a future where every transaction is not just a procedure but a testament to transparency and reliability. Here, our smart contracts diligently manage the entire financial trade lifecycle, orchestrating every step from bond issuance to redemption. But at Secured Finance, we see beyond transactions; we envision a bridge that seamlessly connects the reliability of traditional finance with the boundless possibilities of decentralized finance. ### **Vision and Mission** We dream of a world where financial systems are not just robust but are pillars of democratization and equality, where every individual, regardless of their background or location, can unreservedly access financial services. Our mission is not merely to create a platform but to sculpt a universe where a suite of financial services, from the simplest transactions to the most complex financial products, are underpinned by transparency, security, and inclusivity. At Secured Finance, we’re not just building; we’re nurturing a [genuine yield curve](https://app.secured.finance/) for decentralized finance, crafting an ecosystem that is not just efficient but radiates fairness and equal opportunity. ### **Our Team** Steering this venture is our team, a dynamic coalition of seasoned financial experts, software engineers, and visionary digital strategists, each contributing profound expertise in both traditional finance and blockchain technology. We are more than a team; we are pioneers of a revolutionary spirit, passionately and unrelentingly navigating toward innovative financial solutions that resonate with the vibrant rhythms of our global economy. Our steadfast commitment to transparency and continuous learning is reflected luminously in our [regular updates](https://x.com/secured_fi) and the [insightful articles](https://medium.com/secured-finance) we thoughtfully share with our community. Join us as we sail towards a future where finance is not merely a system but a steadfast ally, ensuring every transaction is not only secure and inclusive but also radiates unbridled innovative potential. In the Spirit of the Hopeful Forward Movement,\ \ Secured Finance Team {% embed url="" %} Special Thanks to Protocol Labs and GSR {% endembed %} # Roadmap The Secured Finance Roadmap {% hint style="info" %} Token Launch timing will be TBD Product Release Notes on [GitHub](https://github.com/Secured-Finance/secured-finance-app/releases) {% endhint %} ### 2026 Q3+ * [ ] Vault Integration for USDFC on FVM * [ ] PoC announcement * [ ] SFC Launch & DAO Governance * [ ] SFC Token Sale (TBD: Private & Public) * [ ] SFC Tokenomics Announcement ### 2026 Q2 * [x] Joined Progmat / DCC Tokenized JGB On-Chain Repo Working Group ([Link](https://progmat.co.jp/en/news/2026-5-8-press_en/) and [Medium article](https://medium.com/secured-finance/secured-finance-joins-progmat-dcc-working-group-on-tokenized-jgb-on-chain-repo-d4a29ab34f56)) * [x] Lending App UX & Infrastructure Upgrade * [x] USDFC Mobile UI Improvements * [x] Quarterly Markets Launch via Itayose & Auto-roll * [x] Cumulative Volume surpassed 50 million dollar on Lending Apps ([DeFi Llama](https://defillama.com/protocol/dexs/secured-finance)) ### 2026 Q1 * [x] RWA Token Collateralization & Partnership with DigiFT ([Article](https://medium.com/secured-finance/umint-as-eligible-on-chain-collateral-bringing-tokenized-money-markets-into-defi-financing-edfb46bf8346)) * [x] Yearn V3 Strategy Vault Launch for JPYC on Ethereum * [x] Filecoin ProPGF Grants program - approved * [x] USDFC App UI V2 * [x] Quarterly Markets Launch via Itayose & Auto-roll ([Report](https://medium.com/secured-finance/itayose-auto-rolling-report-q1-2026-6282978f68bc)) * [x] Cumulative Volume surpassed 40 million dollar on Lending Apps ([DeFi Llama](https://defillama.com/protocol/dexs/secured-finance)) # Roadmap 2025 ### 2025 Q4 * [x] JPYC Integration on Lending Apps * [x] Quarterly Markets Launch via Itayose & Auto-roll ([Report](https://medium.com/secured-finance/itayose-auto-rolling-report-q4-2025-02dece8e1abb)) * [x] Cumulative Volume surpassed 20 million dollar on Lending Apps ([DeFi Llama](https://defillama.com/protocol/dexs/secured-finance)) ### 2025 Q3 * [x] USDFC x402-Ready EIP-3009 Support Merged & Audited ([Report](https://github.com/Secured-Finance/stablecoin-contracts/blob/develop/audits/2025-08-Hexens.pdf)) * [x] PL Genesis Hackathon ([recap](https://medium.com/secured-finance/hack-the-decentralized-economy-with-usdfc-on-filecoin-f52c095928b1)) * [x] Cumulative Volume surpassed 3.0 million dollar on Lending Apps ([DeFi Llama](https://defillama.com/protocol/dexs/secured-finance)) * [x] Quarterly Markets Launch via Itayose & Auto-roll ### 2025 Q2 * [x] USDFC Stablecoin Beta Launch on Filecoin Mainnet * [x] USDFC Stablecoin Official Launch on Filecoin Mainnet ([Report](https://medium.com/secured-finance/usdfc-is-about-to-go-public-b3f4f82f64a3)) * [x] Secured Finance Product Roadmap Update * [x] JUN2025 Markets Itayose & Auto-roll (Pre-Order 6/20-6/26: [Report](https://medium.com/secured-finance/itayose-auto-rolling-report-q2-2025-026c959056b4)) * [x] Cumulative Volume surpassed 1.5 million dollar on Lending Apps ([DeFi Llama](https://defillama.com/protocol/dexs/secured-finance)) ### 2025 Q1 * [x] USDFC Stablecoin Alpha Launch on Filecoin Mainnet * [x] USDFC Fixed-Rate Lending Market Launch * [x] USDFC Stablecoin Smart Contract 2nd Audit ([Report](https://github.com/Secured-Finance/stablecoin-contracts/blob/develop/audits/2025-03-Decurity.pdf)) * [x] USDFC Stablecoin Smart Contract 1st Audit ([Report](https://github.com/Secured-Finance/stablecoin-contracts/blob/develop/audits/2025-01-Hexens.pdf)) * [x] [Collaboration Announcement](https://medium.com/secured-finance/secured-finances-fixed-income-lending-stablecoin-protocol-collaborate-with-parasail-for-liquid-7626766bfd5b) with Parasail * [x] [Partnership Announcement](https://medium.com/secured-finance/secured-finance-defi-2-0-1538041ec31a) with Lighthouse * [x] Parasail's wpFIL integration * [x] MAR2025 Markets Itayose & Auto-roll (Pre-Order 3/21-3/27: [Report](https://medium.com/secured-finance/itayose-and-auto-rolling-report-q1-2025-1c718c2004f4)) # Roadmap 2024 ### 2024 Q4 * [x] Stablecoin Testnet Launch * [x] Trade Campaign ([Earn Yield Quest #1](https://app.galxe.com/quest/securedfi/GCytGtVP2U)) * [x] Stablecoin Smart Contract Internal Audit * [x] DEC2024 [Markets Itayose & Auto-roll](https://medium.com/secured-finance/itayose-and-auto-rolling-report-q4-2024-88fd9925d655) (Pre-Order 12/20-12/27) {% hint style="success" %} Achieved 1.5 Million TVL, 5.7k users {% endhint %} *** ### 2024 Q3 * [x] Stablecoin Development (like DAI on Filecoin Chain) * [x] Zero-Coupon Bond Tokenization * [x] UI/UX Major Upgrade * [x] Cross-Chain Bridge Integration * [x] Partnership announcement with GLIF * [x] SEP2024 Markets Itayose & Auto-roll (Pre-Order 9/20-9/27) {% hint style="success" %} Achieved 750k TVL, 5k users, and 1.5k Itayose participants {% endhint %} *** ### 2024 Q2 **June**: * [x] FVM Launch (Filecoin mainnet deployment) * [x] SFP Launch (Filecoin, Ethereum, Arbitrum, Avalanche, Polygon zkEVM) * [x] Filecoin Infinity Quest Stage 1 - Deposit FIL/iFIL * [x] Filecoin Infinity Quest Stage 2 - Limit Orders and Active Positions * [x] JUN2024 Markets Itayose & Auto-roll (Pre-Order 6/21-6/28) **May**: * [x] FVM launch is ready * [x] UI/UX major upgrade done & ready for development * [x] Secured Finance Point (SFP) incentive design & system development **April**: * [x] UI/UX audit for the advanced trading terminal (24 improvements) * [x] FVM support and testnet deployment *** ### 2024 Q1 **March**: * [x] Historical chart deployment * [x] Zero-Coupon Bond Tokenization Deployment * [x] MAR2024 Markets Itayose & Auto-roll **February**: * [x] Subgraph revamp for improving order state and historical charts * [x] Incorporate ERC-2612 to combine approval & transfer to enhance UX **January**: * [x] Multi-chain Strategy & Launch (Arbitrum, Avalanche, Polygon zkEVM) # Roadmap 2023 Q4 Road to Mainnet Launch

Q4 Roadmap

### September 2023 * **Week 1-3**: * [x] Development & Launch Version 0.6.0 on Testnet\ \&#xNAN;*Major UI & smart contract upgrades* * **Week 4**: * [x] SEP25 Itayose & Auto-roll Simulation *** ### October 2023 * **Week 1**: * [x] Orderbook Test * **Week 2**: * [x] Delisting & Liquidation Simulation on Dev * **Week 3**: * [x] Launch V0.6.5 * [x] Global Emergency Settlement Test * **Week 4**: * [x] Launch V0.7.0 *** ### November 2023 * **Week 1**: * [x] Global Itayose Simulation * **Week 2**: * [x] Open Sourcing & Trading Strategy AMA * **Week 3**: * [x] Security & Attack Simulation * **Week 4**: * [x] Market Vulnerability Testing *** ### December 2023 * **Week 1-2**: * [x] Market Readiness & Onboarding Campaign * **Week 3-4**: * [x] Mainnet Launch V1.0.0 🚀 * [x] Official Global Pre-Open Market & Itayose 🚀🚀 * [x] Trading Live! 🚀🚀🚀 # DeFi Starter Guide Essential guide for DeFi beginners ## Overview This DeFi Starter Guide provides essential knowledge for newcomers to decentralized finance. Whether you're completely new to blockchain technology or transitioning from traditional finance, this guide will help you understand the fundamental concepts, tools, and practices needed to navigate the DeFi ecosystem safely and effectively. ## What You'll Learn * The key differences between traditional finance (CeFi) and decentralized finance (DeFi) * How to set up and manage cryptocurrency wallets securely * Understanding blockchain transaction fees and gas costs * How to interact with decentralized applications (DApps) * The role of Decentralized Autonomous Organizations (DAOs) in the ecosystem ## Key Components The DeFi ecosystem consists of several interconnected components that work together to provide self-controlled financial solutions without intermediaries: * **Wallets**: Digital tools for storing and managing your crypto assets * **Smart Contracts**: Self-executing code that powers DeFi applications * **Decentralized Exchanges (DEXs)**: Platforms for trading assets without intermediaries * **Lending Protocols**: Systems that enable borrowing and lending without banks * **Stablecoins**: Cryptocurrencies designed to maintain stable value ## Related Resources * [About Secured Finance](/) * [USDFC Stablecoin Overview](/usdfc-stablecoin/overview) * [Fixed-Rate Lending Overview](/fixed-rate-lending/overview) # DeFi vs CeFi Understanding the differences between centralized and decentralized finance ## Overview Centralized Finance (CeFi) and Decentralized Finance (DeFi) represent two fundamentally different approaches to financial services. Understanding the differences between these paradigms is essential for anyone entering the blockchain ecosystem, as it helps clarify the unique value propositions and trade-offs of decentralized systems. ## How It Works ### Centralized Finance (CeFi) Centralized Finance refers to traditional financial services that operate through central authorities like banks, brokerages, and exchanges. These institutions: * Act as trusted intermediaries for all transactions * Maintain centralized control over user funds and data * Implement Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures * Operate under regulatory frameworks established by governments * Provide customer support and dispute resolution services ### Decentralized Finance (DeFi) Decentralized Finance refers to financial services built on blockchain networks that operate without central authorities. These systems: * Use smart contracts (self-executing code) to automate financial operations * Operate on permissionless networks accessible to anyone with an internet connection * Maintain transparency with all transactions recorded on public blockchains * Function without requiring identity verification in most cases * Allow direct peer-to-peer transactions without intermediaries ## Key Parameters | Parameter | CeFi | DeFi | | ------------ | ------------------------ | ------------------------------------ | | Control | Centralized entities | Smart contracts & protocols | | Access | Requires approval & KYC | Open to anyone with a wallet | | Custody | Institution holds assets | User retains full custody | | Transparency | Limited visibility | Full on-chain transparency | | Regulation | Comprehensive oversight | Limited or evolving regulation | | Speed | Fast for approved users | Variable based on network congestion | | Cost | Fixed fees | Variable gas fees | ## Examples ### CeFi Applications * Traditional banks and credit unions * Centralized cryptocurrency exchanges (Coinbase, Binance) * Payment processors (PayPal, Visa) * Investment platforms with managed funds ### DeFi Applications * Decentralized exchanges (DEXs) * Lending and borrowing protocols * Stablecoin systems * Automated market makers * Yield farming platforms ## Common Questions **Is one system better than the other?**\ Neither system is inherently superior—each has advantages for different use cases. CeFi offers familiarity, customer support, and regulatory protection, while DeFi provides greater financial autonomy, innovation, and accessibility. **Can I use both CeFi and DeFi?**\ Yes, many users employ a hybrid approach, using CeFi services for fiat on/off ramps and DeFi for specific financial activities that benefit from decentralization. **What are the main risks of each system?**\ CeFi risks include counterparty risk, censorship, and potential data breaches. DeFi risks include smart contract vulnerabilities, user error, and market liquidity. **Do I need technical knowledge to use DeFi?**\ While basic blockchain knowledge is helpful, user interfaces have improved significantly. However, understanding the underlying concepts helps users make informed decisions and avoid common pitfalls. ## Related Resources * [Understanding Gas](/introduction/defi-starter-guide/gas-fees) * [Wallet Setup & Management](/introduction/defi-starter-guide/wallet-setup) * [Interacting with DApps](/introduction/defi-starter-guide/dapps) # Wallet Setup Setting up and securing your cryptocurrency wallet ## Overview A cryptocurrency wallet is your gateway to the decentralized finance ecosystem. Unlike traditional wallets, crypto wallets don't actually store your assets—instead, they store the private keys that give you access to your assets on the blockchain. This guide will help you understand different wallet types, set up your first wallet, and implement best practices for security. ## How It Works Cryptocurrency wallets function through a pair of cryptographic keys: 1. **Public Key**: Acts as your address that others can use to send you assets (similar to an email address) 2. **Private Key**: The secret code that gives you control over the assets (similar to a password, but cannot be reset if lost) When you "create a wallet," you're generating these keys and establishing an interface to interact with them. Your assets always remain on the blockchain, with your wallet providing the authorization to move or manage them. ### Types of Wallets There are several types of wallets, each with different security and convenience tradeoffs: * **Hardware Wallets**: Physical devices that store private keys offline (highest security) * **Software Wallets**: Applications installed on computers or smartphones * **Web Wallets**: Browser-based interfaces that can be accessed from any device * **Paper Wallets**: Physical documents containing printed keys (rarely used now) * **Custodial Wallets**: Services where a third party holds your keys (like exchange accounts) ## Step-by-Step Wallet Setup ### 1. Choose Your Wallet Type \[THIS IS WHERE AN IMAGE WOULD SHOW DIFFERENT WALLET OPTIONS] For beginners interacting with Secured Finance, we recommend starting with a non-custodial software wallet like MetaMask, which supports both Ethereum and Filecoin networks. ### 2. Install the Wallet \[THIS IS WHERE AN IMAGE WOULD SHOW THE INSTALLATION PROCESS] Visit the official website or app store to download the wallet application. Always verify you're downloading from the authentic source to avoid scams. ### 3. Create a New Wallet \[THIS IS WHERE AN IMAGE WOULD SHOW THE WALLET CREATION SCREEN] Follow the wallet's setup process, which typically involves: * Creating a password for the application * Generating a new wallet * Backing up your recovery phrase ### 4. Secure Your Recovery Phrase \[THIS IS WHERE AN IMAGE WOULD SHOW A RECOVERY PHRASE BEING WRITTEN DOWN] Your recovery phrase (also called seed phrase or mnemonic) is a series of 12-24 words that can restore access to your wallet. This is extremely important: * Write it down on paper (multiple copies) * Store in secure, private locations * Never store digitally or take photos of it * Never share it with anyone ### 5. Configure Network Settings \[THIS IS WHERE AN IMAGE WOULD SHOW NETWORK CONFIGURATION] To interact with Secured Finance on Ethereum or Filecoin: * Open your wallet settings * Add the Ethereum or Filecoin network * Verify the network details (RPC URL, Chain ID, etc.) ### 6. Fund Your Wallet \[THIS IS WHERE AN IMAGE WOULD SHOW SENDING FUNDS TO THE WALLET] You'll need some ETH or FIL (Ethereum or Filecoin's native token) to pay for transaction fees. You can acquire these from cryptocurrency exchanges. ## Security Best Practices * **Use Hardware Wallets** for storing significant amounts * **Enable Two-Factor Authentication** when available * **Regularly Update** your wallet software * **Verify All Transactions** before confirming * **Use Different Wallets** for different purposes (daily use vs. long-term storage) * **Be Cautious of Phishing** attempts requesting your private keys or seed phrase * **Test with Small Amounts** before making large transfers ## Common Questions **What happens if I lose my recovery phrase?**\ If you lose both your device and recovery phrase, your funds will be permanently inaccessible. There is no "forgot password" option in decentralized systems. **Can I have multiple wallets?**\ Yes, you can create and use multiple wallets for different purposes or networks. **Do I need different wallets for different cryptocurrencies?**\ Many modern wallets support multiple cryptocurrencies, but some assets may require specific wallet types. **Are mobile wallets safe?**\ Mobile wallets can be secure if your device is free from malware and you follow security best practices. **What's the difference between custodial and non-custodial wallets?**\ In custodial wallets, a third party (like an exchange) controls your private keys. In non-custodial wallets, only you control your keys—giving you full ownership but also full responsibility. ## Related Resources * [Understanding Gas](/introduction/defi-starter-guide/gas-fees) * [Interacting with DApps](/introduction/defi-starter-guide/dapps) * [USDFC Stablecoin Overview](/usdfc-stablecoin/overview) # Gas Fees Understanding transaction fees in blockchain networks ## Overview Gas fees are the transaction costs paid to execute operations on blockchain networks like Ethereum and Filecoin. These fees compensate validators (miners or stakers) for the computational resources required to process and verify transactions. Understanding gas is essential for anyone interacting with decentralized applications, as it directly affects transaction costs and determines how quickly your transactions are processed. ## How It Works When you perform any action on a blockchain network—whether sending tokens, interacting with a smart contract, or deploying a new application—you're requesting network validators to process your transaction and include it in a block. Since blockchain networks have limited capacity, gas fees serve as a market mechanism to: 1. **Measure Computational Effort**: Each operation has a fixed gas cost based on its complexity 2. **Allocate Network Resources**: During high demand, higher gas prices prioritize urgent transactions 3. **Prevent Network Abuse**: The gas system prevents infinite loops and denial-of-service attacks On the Filecoin network, which Secured Finance uses, gas works similarly to Ethereum but with some differences in terminology and pricing mechanisms. ### Gas Components The gas fee system consists of several components: * **Gas Units**: Each operation in a transaction requires a specific amount of computational work measured in gas units * **Gas Limit**: The maximum amount of computational work you're willing to pay for * **Gas Price**: How much you're willing to pay per unit of gas (typically in gwei, where 1 gwei = 0.000000001 ETH or attoFIL for Filecoin) Your total transaction fee is calculated as: $$ \text{Transaction Fee} = \text{Gas Used} \times \text{Gas Price} $$ Where Gas Used is the actual amount of gas consumed by your transaction (which cannot exceed your specified Gas Limit). ### Fee Market Mechanisms Different blockchain networks implement various fee mechanisms: * **Ethereum's EIP-1559**: Includes a base fee that gets burned and a priority fee (tip) that goes to validators * **Filecoin's Gas Model**: Uses a similar approach with base fees adjusted based on network congestion ## Key Parameters | Parameter | Description | Recommendation | | ------------ | ----------------------------------- | ------------------------------------------------ | | Gas Limit | Maximum computational units allowed | Set 10-20% higher than estimated requirement | | Gas Price | Cost per unit of gas | Check current network conditions | | Priority Fee | Optional tip to validators | Higher during network congestion | | Base Fee | Network-determined minimum fee | Automatically set by the network based on demand | | Max Fee | Maximum total fee willing to pay | Set based on urgency of transaction | ## Examples ### Simple Token Transfer A basic token transfer typically requires around 21,000 gas units. If the current gas price is 20 gwei: $$ \text{Fee} = 21,000 \times 20 \text{ gwei} = 420,000 \text{ gwei} = 0.00042 \text{ ETH} $$ ### Complex DeFi Transaction Interacting with DeFi protocols like Secured Finance can require significantly more gas: * Approving a token: \~45,000 gas units * Swapping tokens: \~100,000-200,000 gas units * Providing liquidity: \~150,000-300,000 gas units ## Common Questions **Why do gas prices fluctuate?**\ Gas prices vary based on network demand. During periods of high activity (NFT drops, market volatility), users compete for limited block space by offering higher gas prices. **What happens if I set my gas limit too low?**\ If your gas limit is too low, your transaction will fail when it runs out of gas, but you'll still be charged for the computational resources used up to that point. **Where can I check the current gas price?**\ You can check current gas prices on various websites like Etherscan.io, Ethgas.watch, or GasNow for Ethereum, and Filfox.info for Filecoin. Many wallets also display current gas prices directly in their interfaces. **How do I convert gas costs to USD value?**\ To calculate the USD value of gas fees: 1. Calculate the fee in the native token: Gas Units × Gas Price = Fee in ETH/FIL 2. Multiply by the current token price: Fee in ETH/FIL × Current Price in USD = Fee in USD\ For example, if gas costs 0.002 ETH and ETH is $3,000, the fee would be $6. **How can I reduce gas costs?** * Execute transactions during periods of lower network activity * Use gas price estimator tools to avoid overpaying * Batch multiple operations into a single transaction when possible * Consider layer-2 solutions or sidechains for frequent transactions **Is gas refundable?**\ You're only charged for the actual gas used, even if you set a higher gas limit. However, failed transactions still consume gas and incur fees without completing the intended action. **Do all blockchains use gas?**\ Not all blockchains use the exact gas model, but most have some form of transaction fee mechanism to prevent spam and allocate resources. ## Related Resources * [Wallet Setup & Management](/introduction/defi-starter-guide/wallet-setup) * [Interacting with DApps](/introduction/defi-starter-guide/dapps) * [DeFi vs CeFi](/introduction/defi-starter-guide/defi-vs-cefi) # DApps Guide to using decentralized applications ## Overview Decentralized Applications (DApps) are digital applications that run on blockchain networks rather than centralized servers. Unlike traditional web applications, DApps operate on peer-to-peer networks and don't require intermediaries to function. This guide will help you understand how to safely and effectively interact with DApps in the DeFi ecosystem. ## How It Works DApps consist of two main components: 1. **Smart Contracts**: Self-executing code deployed on the blockchain that contains the application's logic 2. **Frontend Interface**: The user interface that allows you to interact with the underlying smart contracts When you use a DApp, you're essentially sending transactions to these smart contracts through your wallet. The process typically works as follows: 1. You connect your wallet to the DApp's interface 2. You initiate an action through the interface 3. Your wallet presents a transaction for you to review and sign 4. Once signed, the transaction is broadcast to the blockchain 5. Miners/validators process the transaction and update the blockchain state 6. The DApp interface updates to reflect the new state ## Step-by-Step Guide to Using DApps ### 1. Connect Your Wallet \[THIS IS WHERE AN IMAGE WOULD SHOW THE WALLET CONNECTION INTERFACE] Most DApps feature a "Connect Wallet" button in the top corner of their interface. Clicking this will prompt you to select your wallet provider and approve the connection. **Security Note**: When connecting your wallet, verify you're on the correct website to avoid phishing attacks. Always check the URL carefully. ### 2. Review Permissions \[THIS IS WHERE AN IMAGE WOULD SHOW THE PERMISSION REQUEST SCREEN] When connecting for the first time, your wallet will ask you to approve certain permissions. Read these carefully—they determine what the DApp can do with your wallet. ### 3. Navigate the Interface \[THIS IS WHERE AN IMAGE WOULD SHOW A TYPICAL DAPP INTERFACE] DApp interfaces typically include: * Dashboard showing your assets or positions * Action buttons for key functions (swap, deposit, borrow, etc.) * Information panels displaying rates, fees, and other important data ### 4. Initiate Transactions \[THIS IS WHERE AN IMAGE WOULD SHOW A TRANSACTION BEING INITIATED] When you click an action button, you'll typically see a form to fill out with transaction details (amount, recipient, etc.). ### 5. Review and Confirm \[THIS IS WHERE AN IMAGE WOULD SHOW A TRANSACTION CONFIRMATION SCREEN] Before executing any transaction: * Double-check all details * Review the estimated gas fee * Understand the potential impact on your portfolio ### 6. Sign the Transaction \[THIS IS WHERE AN IMAGE WOULD SHOW A WALLET SIGNING PROMPT] Your wallet will prompt you to sign the transaction. This is your final chance to review before committing. ### 7. Wait for Confirmation \[THIS IS WHERE AN IMAGE WOULD SHOW A PENDING TRANSACTION] After signing, your transaction will be submitted to the blockchain. Confirmation times vary based on network congestion and the gas price you set. ## Common DApp Interactions ### Token Approvals Before interacting with a DApp that will handle your tokens, you'll need to approve it to spend those tokens on your behalf. This is a security feature of the token standard. {% hint style="warning" %} **Important**: Approvals give DApps permission to move specified tokens from your wallet. Only approve trusted DApps, and consider limiting approval amounts when possible. {% endhint %} ### Transaction Batching Some DApps offer transaction batching, which combines multiple actions into a single transaction to save on gas fees. This is particularly useful for complex operations. ### Canceling Transactions If you submit a transaction with a low gas price during network congestion, it might remain pending for a long time. Most wallets allow you to: * Cancel the transaction (by sending a 0-value transaction with the same nonce) * Speed up the transaction (by resubmitting with a higher gas price) ## Security Considerations * **Verify Smart Contract Addresses**: Check that you're interacting with legitimate contracts * **Start with Small Amounts**: Test new DApps with minimal funds first * **Check for Audits**: Prioritize DApps with security audits from reputable firms * **Be Wary of High APYs**: Unusually high returns often indicate higher risk * **Understand the Risks**: DeFi involves various risks including smart contract vulnerabilities, market volatility, and liquidation ## Common Questions **What if a transaction fails?**\ Failed transactions still consume gas for the computational resources used, but don't change the blockchain state. Check error messages for troubleshooting. **Do I need to connect my wallet every time?**\ Most DApps will remember your connection between sessions, but you may need to reconnect after clearing browser data or using a different device. **Can DApps access all my funds once connected?**\ Connecting only gives DApps the ability to request transactions—you still need to approve each transaction individually. However, token approvals can grant spending permissions, so be careful with these. **What's the difference between DApps and websites?**\ Traditional websites run on centralized servers and typically rely on a company to maintain them. DApps run on decentralized blockchain networks and can continue to function even if the original developers disappear. **How can I tell if a DApp is legitimate?**\ Research the project's team, check for security audits, look for community feedback, and verify smart contract addresses against official sources. ## Related Resources * [Wallet Setup & Management](/introduction/defi-starter-guide/wallet-setup) * [Understanding Gas](/introduction/defi-starter-guide/gas-fees) * [USDFC Stablecoin Overview](/usdfc-stablecoin/overview) * [Fixed-Rate Lending Overview](/fixed-rate-lending/overview) # DEX Understanding decentralized exchanges and their role in DeFi ## Overview Decentralized Exchanges (DEXs) are blockchain-based platforms that enable peer-to-peer trading of cryptocurrencies and digital assets without intermediaries. Unlike centralized exchanges (CEXs), DEXs operate using smart contracts and automated protocols, allowing users to maintain custody of their assets throughout the trading process. DEXs represent a fundamental component of the DeFi ecosystem, embodying the core principles of decentralization, transparency, and user autonomy. ## How It Works DEXs facilitate trading through various mechanisms, with the most common being: ### Automated Market Makers (AMMs) The most popular DEX model uses liquidity pools and mathematical formulas to determine asset prices: 1. **Liquidity Pools**: Users deposit pairs of assets into smart contract-controlled pools 2. **Price Determination**: Asset prices are calculated using formulas like x\*y=k (constant product) 3. **Trading**: Users trade against these pools rather than with other users directly 4. **Liquidity Provision**: Contributors earn fees proportional to their share of the pool ### Order Book DEXs Some DEXs maintain on-chain or hybrid order books similar to traditional exchanges: 1. **Order Matching**: Buy and sell orders are matched based on price and time priority 2. **On-Chain Settlement**: All trades are settled directly on the blockchain 3. **Price Discovery**: Market prices are determined by the highest bid and lowest ask ### Secured Finance's Approach Secured Finance combines elements of order book systems with innovative fixed-rate lending mechanisms: 1. **Zero-Coupon Bond Trading**: Assets are tokenized as zero-coupon bonds with fixed maturities 2. **Order Book System**: Orders are matched based on price-time priority 3. **On-Chain Settlement**: All transactions are settled on the blockchain (Ethereum, Arbitrum, or Filecoin) 4. **Standardized Contracts**: Fixed maturities and standardized terms enable efficient markets ## Key Differences: DEX vs CEX | Parameter | Centralized Exchange (CEX) | Decentralized Exchange (DEX) | | --------------- | ------------------------------------- | --------------------------------------------- | | Custody | Exchange holds user funds | Users maintain custody of assets | | Privacy | Enhanced KYC/AML with no transparency | Minimal exposure with full transparency | | Control | Central authority makes decisions | Governed by smart contracts and often DAOs | | Security | Vulnerable to exchange hacks | Vulnerable to smart contract exploits | | Speed | High throughput, instant trades | Variable speed based on blockchain congestion | | Cost | Fixed trading fees | Variable gas fees plus trading fees | | Asset Range | Typically more trading pairs | Limited to blockchain-compatible assets | | User Experience | Generally more intuitive | Often requires technical knowledge | ## Benefits of DEXs ### Sovereignty and Control DEXs allow users to maintain custody of their assets throughout the trading process, eliminating counterparty risk associated with centralized exchanges. This aligns with the core DeFi principle that users should have full control over their financial assets. ### Censorship Resistance By operating on decentralized networks, DEXs are resistant to censorship and regulatory shutdowns. This ensures global accessibility regardless of local financial regulations or restrictions. ### Transparency All transactions on DEXs are recorded on public blockchains, creating an immutable audit trail. This transparency helps build trust in the system as all operations can be independently verified. ### Permissionless Innovation The open-source nature of most DEXs encourages innovation and allows developers to build new features and applications on top of existing protocols, creating a composable financial ecosystem. ### Reduced Counterparty Risk By eliminating the need to trust a central entity with funds, DEXs significantly reduce counterparty risk—the possibility that the exchange might become insolvent, be hacked, or freeze withdrawals. ## Secured Finance as a DEX Platform Secured Finance operates as a specialized DEX focused on fixed-rate lending and stablecoin issuance: ### USDFC Stablecoin The USDFC stablecoin system functions as a decentralized exchange where: * Users can mint and borrow USDFC by depositing FIL (Filecoin) as collateral * The system maintains price stability through algorithmic mechanisms * Anyone can participate without permission * All operations are transparent and verifiable on-chain ### Fixed-Rate Lending Protocol Secured Finance's lending protocol operates as a specialized DEX for time-value assets: * Lenders and borrowers are matched through an order book system * Zero-coupon bonds are traded representing future value * Fixed rates are discovered through market mechanisms * The protocol is accessible to anyone with a compatible wallet ## Common Questions **How do DEXs make money if they're decentralized?**\ Most DEXs charge trading fees that are distributed to liquidity providers and/or token holders. Some protocols also direct a portion of fees to a treasury controlled by governance. **Are DEXs completely safe from hacks?**\ While DEXs eliminate the risk of exchange hacks, they can still be vulnerable to smart contract exploits. Reputable DEXs undergo multiple security audits, but risks remain. Secured Finance prioritizes security through comprehensive audits and formal verification. **Do I need technical knowledge to use a DEX?**\ Modern DEXs have significantly improved their user interfaces, making them more accessible to non-technical users. However, understanding basic blockchain concepts is still helpful for making informed decisions. **How does Secured Finance differ from other DEXs?**\ While most DEXs focus on spot trading of cryptocurrencies, Secured Finance specializes in fixed-rate lending and stablecoin issuance, bringing institutional-grade financial instruments to DeFi in a decentralized manner. **Can traditional financial institutions use Secured Finance?**\ Yes, Secured Finance's protocols are designed to be accessible to both individual users and institutions. The standardized nature of the products makes them compatible with traditional financial frameworks while maintaining decentralization. ## Related Resources * [DeFi vs CeFi](/introduction/defi-starter-guide/defi-vs-cefi) * [Interacting with DApps](/introduction/defi-starter-guide/dapps) * [USDFC Stablecoin Overview](/usdfc-stablecoin/overview) * [Fixed-Rate Lending Overview](/fixed-rate-lending/overview) # Smart Contracts Understanding the building blocks of DeFi applications ## Overview Smart contracts are self-executing programs that run on blockchain networks and automatically enforce agreements between parties without requiring intermediaries. They serve as the foundation for decentralized applications (DApps) and are essential building blocks of the DeFi ecosystem. Smart contracts enable complex financial operations to be executed transparently, securely, and without relying on traditional financial institutions. ## How It Works Smart contracts function based on predefined conditions coded into their logic. When these conditions are met, the contract automatically executes the specified actions. The process typically works as follows: 1. **Creation**: Developers write code that defines the rules and conditions of the contract 2. **Deployment**: The code is deployed to a blockchain network where it receives a unique address 3. **Interaction**: Users interact with the contract by sending transactions to its address 4. **Execution**: When triggered by a transaction, the contract executes its code across all nodes in the network 5. **State Change**: The blockchain's state is updated to reflect the outcome of the execution Smart contracts are: * **Immutable**: Once deployed, their code cannot be changed (though upgradeable patterns exist) * **Deterministic**: Given the same input, they always produce the same output * **Transparent**: Their code and all interactions are visible on the blockchain * **Trustless**: They execute exactly as programmed without relying on trusted third parties ### Common Smart Contract Languages Different blockchain platforms support different programming languages for smart contract development: * **Solidity**: The primary language for Ethereum and EVM-compatible chains * **Rust**: Used for Solana and Near Protocol * **Move**: Developed for the Diem blockchain and adopted by Aptos and Sui * **Vyper**: An alternative language for Ethereum focused on security * **Ink**: Used for Polkadot's parachain smart contracts ## Key Parameters | Parameter | Description | Importance | | --------------------- | --------------------------------------- | ---------------------------------------------------------- | | Gas Limit | Maximum computational resources allowed | Prevents infinite loops and DoS attacks | | State Variables | Data stored in the contract | Determines contract's memory footprint and gas costs | | Access Controls | Permissions for different functions | Critical for security and privilege management | | External Dependencies | Calls to other contracts | Potential security vulnerabilities if not handled properly | | Upgradeability | Ability to modify contract logic | Trade-off between flexibility and security | ## Examples ### Token Contracts The most common smart contracts in DeFi are token contracts that implement standards like ERC-20 (fungible tokens) or ERC-721 (non-fungible tokens). These contracts define: * Token supply and distribution * Transfer mechanisms * Approval systems for third-party spending * Optional features like minting, burning, or pausing ```solidity // Simplified ERC-20 token example contract SimpleToken { mapping(address => uint256) balances; function transfer(address to, uint256 amount) external { require(balances[msg.sender] >= amount, "Insufficient balance"); balances[msg.sender] -= amount; balances[to] += amount; } } ``` ### DeFi Protocol Contracts More complex smart contracts power DeFi protocols: * **Lending Protocols**: Manage deposits, loans, interest rates, and liquidations * **Automated Market Makers**: Facilitate token swaps using mathematical formulas * **Staking Contracts**: Handle token delegation and reward distribution * **Governance Systems**: Enable decentralized decision-making through voting ## Common Questions **What happens if there's a bug in a smart contract?**\ Unlike traditional software, smart contracts cannot be directly patched once deployed. If a bug is discovered, developers typically must deploy a new contract and migrate users to it. Serious vulnerabilities can lead to loss of funds, as seen in several high-profile DeFi hacks. **Are smart contracts legally binding?**\ The legal status of smart contracts varies by jurisdiction. Some regions have begun recognizing them as legally binding agreements, while others consider them technological tools rather than legal contracts. **How are smart contracts verified?**\ Smart contract verification involves publishing the source code alongside the deployed bytecode so users can confirm they match. Projects often undergo security audits by specialized firms and may use formal verification techniques to mathematically prove correctness. **Can smart contracts access real-world data?**\ Smart contracts cannot directly access external data. They rely on oracles—trusted data feeds that bring off-chain information onto the blockchain—for real-world data like price information or weather conditions. **What are the limitations of smart contracts?**\ Smart contracts face several limitations including: * High execution costs for complex operations * Limited storage capacity * Inability to maintain secrets (all data is public) * Challenges with upgradeability and bug fixes * Dependency on external oracles for off-chain data ## Related Resources * [Understanding DeFi vs CeFi](/introduction/defi-starter-guide/defi-vs-cefi) * [Decentralized Exchanges (DEX)](/introduction/defi-starter-guide/dex) * [Interacting with DApps](/introduction/defi-starter-guide/dapps) * [Understanding Gas Fees](/introduction/defi-starter-guide/gas-fees) * [Understanding DAOs](/introduction/defi-starter-guide/dao) # Governance Tokens Understanding the role of governance tokens in DeFi protocols ## Overview Governance tokens are cryptographic assets that grant holders voting rights and influence over the development and operation of decentralized protocols. Unlike utility tokens that primarily serve functional purposes within applications, governance tokens specifically empower community members to participate in decision-making processes. These tokens form the backbone of decentralized governance systems, enabling protocols to evolve based on stakeholder consensus rather than centralized authority. ## How It Works Governance tokens operate through a combination of token distribution, proposal mechanisms, and voting systems: ### Token Distribution Protocols distribute governance tokens through various mechanisms: 1. **Airdrops**: Tokens sent directly to user wallets based on past participation 2. **Liquidity Mining**: Rewards for providing liquidity to protocol pools 3. **Initial Offerings**: Token sales to early investors and community members 4. **Protocol Usage**: Rewards for active users of the protocol 5. **Contributor Rewards**: Allocations to developers and contributors ### Proposal and Voting Process The typical governance process follows these steps: 1. **Proposal Creation**: Token holders with a minimum threshold of tokens can submit formal proposals 2. **Discussion Period**: Community members debate the proposal's merits in forums and social channels 3. **Voting Period**: Token holders cast votes, with voting power typically proportional to token holdings 4. **Execution**: If approved, the proposal is implemented through smart contract execution or manual changes ### Voting Mechanisms Different protocols implement various voting mechanisms: * **Token-Weighted Voting**: One token equals one vote * **Quadratic Voting**: Voting power scales as the square root of tokens held * **Time-Locked Voting**: Tokens must be locked for a period to vote * **Delegation**: Token holders can delegate voting power to trusted representatives ## Key Parameters | Parameter | Description | Common Implementation | | ------------------ | ---------------------------------------------- | ------------------------- | | Proposal Threshold | Minimum tokens needed to submit proposals | 0.1-1% of total supply | | Quorum | Minimum participation required for valid votes | 4-20% of total supply | | Voting Period | Time allowed for voting on proposals | 3-14 days | | Time Lock | Delay between approval and execution | 1-7 days | | Delegation | Ability to delegate voting power | Supported in most systems | ## Examples ### Protocol Governance Tokens * **Uniswap (UNI)**: Governance token for the leading decentralized exchange * **Aave (AAVE)**: Governance token for the decentralized lending protocol * **Compound (COMP)**: One of the first governance tokens in DeFi * **MakerDAO (MKR)**: Governance token that also absorbs risk in the DAI system ### Governance Token Use Cases * **Parameter Adjustments**: Modifying interest rates, fees, or collateral requirements * **Protocol Upgrades**: Implementing new features or security improvements * **Treasury Management**: Allocating protocol revenues and reserves * **Incentive Programs**: Creating new reward mechanisms for users * **Partnerships**: Approving integrations with other protocols ## Common Questions **Do governance tokens have monetary value?**\ Yes, governance tokens typically trade on exchanges and have market value. Their price often reflects the perceived value of having influence over the protocol, expected future cash flows from protocol fees, and speculative interest. **How do I participate in governance if I only hold a small amount of tokens?**\ Most governance systems allow token holders to delegate their voting power to other addresses. This enables smaller holders to amplify their voice by delegating to community members whose views align with theirs. **Can governance tokens be staked for rewards?**\ Many protocols offer staking rewards for governance tokens, either as an incentive for long-term holding or as part of the governance process itself. Staking often increases voting power or provides additional benefits. **What prevents wealthy entities from controlling governance?**\ This is a challenge known as "plutocracy" in token governance. Some protocols implement safeguards like quadratic voting, time-locked voting, or reputation-based systems to reduce the influence of large token holders. **How do governance tokens differ from security tokens?**\ Governance tokens primarily confer voting rights rather than ownership rights. While security tokens represent investment contracts with expectations of profit from others' efforts, governance tokens represent participation rights in a protocol. However, the regulatory classification can be complex and varies by jurisdiction. ## Related Resources * [Smart Contracts](/introduction/defi-starter-guide/smart-contracts) * [DAOs](/introduction/defi-starter-guide/dao) * [DeFi vs CeFi](/introduction/defi-starter-guide/defi-vs-cefi) * [USDFC Stablecoin Overview](/usdfc-stablecoin/overview) # DAOs Understanding Decentralized Autonomous Organizations ## Overview A Decentralized Autonomous Organization (DAO) is a blockchain-based governance structure that enables collective decision-making without traditional hierarchical management. DAOs represent a fundamental shift in how organizations can be structured and operated in the digital age, allowing for transparent, community-driven governance of shared resources and protocols. ## How It Works DAOs operate through smart contracts that establish the rules for governance and automatically execute decisions made by the community. The typical workflow includes: 1. **Formation**: A DAO begins with developers creating smart contracts that define the organization's rules 2. **Funding**: Members acquire governance tokens, often through direct purchase or by contributing to the project 3. **Proposal Submission**: Any token holder can submit proposals for changes or actions 4. **Voting**: Members vote on proposals, with voting power typically proportional to token holdings 5. **Execution**: Approved proposals are automatically executed through the smart contract This process creates a self-governing system where decisions are made collectively rather than by a central authority. All activities are recorded on the blockchain, ensuring transparency and immutability. ### Organizational Structure: DAO, Foundation, and DevCo Most mature DeFi protocols operate with a three-part organizational structure: #### DAO * **Purpose**: Community governance and protocol direction * **Structure**: Decentralized collection of token holders * **Legal Status**: Often unincorporated association or DAO LLC in some jurisdictions * **Decision Making**: Token-weighted voting on major protocol changes #### Foundation * **Purpose**: Legal entity that supports the DAO * **Structure**: Non-profit organization with board of directors or supervisors * **Legal Status**: Typically incorporated in crypto-friendly jurisdictions * **Functions**: Treasury management, grants distribution, legal representation, regulatory compliance #### DevCo (Development Company) * **Purpose**: Technical development of the protocol * **Structure**: For-profit company with traditional corporate structure * **Legal Status**: Incorporated business entity * **Functions**: Code development, protocol maintenance, implementation of DAO-approved updates This separation of concerns helps manage legal and regulatory risks while ensuring the protocol can continue to develop in a decentralized manner. ## Key Differences: DAO vs Foundation vs DevCo | Aspect | DAO | Foundation | DevCo | | -------------- | ---------------------------------------- | ----------------------------------- | ------------------------- | | Governance | Community-driven through token voting | Board-directed with community input | Corporate management | | Decision Speed | Slower (days to weeks) | Medium (days) | Faster (hours to days) | | Transparency | Fully transparent on-chain | Partially transparent | Often private | | Risk Exposure | Distributed across token holders | Limited liability | Corporate liability | | Funding Source | Protocol fees, token reserves | DAO treasury grants | Service contracts, equity | | Primary Focus | Strategic direction, treasury allocation | Legal compliance, ecosystem growth | Technical implementation | ## Examples ### DeFi Protocol DAOs * MakerDAO: Governs the DAI stablecoin system * Uniswap: Community governance of the decentralized exchange protocol * Aave: Manages parameters and upgrades for the lending protocol ### Investment DAOs * BitDAO: One of the largest DAOs focused on supporting DeFi development * FlamingoDAO: Collective focused on NFT investments * MetaCartel: Funds early-stage decentralized applications ## Common Questions **How do I join a DAO?**\ Typically, you join a DAO by acquiring its governance tokens, either through direct purchase on exchanges or by contributing to the project in some way. **What rights do DAO members have?**\ Members can typically propose changes, vote on proposals, and receive a share of any profits generated by the DAO, depending on its structure. **Are DAOs legally recognized?**\ Legal recognition varies by jurisdiction. Some regions like Wyoming in the US have created legal frameworks for DAOs, while in most places they operate in a regulatory gray area. **What happens if a DAO is hacked?**\ Unlike traditional organizations, DAOs may have limited recourse if exploited. The immutable nature of blockchain means that hacks can be difficult to reverse without community consensus for extraordinary measures. **Can DAOs replace traditional companies?**\ While DAOs excel at certain functions like treasury management and open-source development, they currently face challenges in areas requiring rapid decision-making or confidentiality. ## Related Resources * [DeFi vs CeFi](/introduction/defi-starter-guide/defi-vs-cefi) * [Interacting with DApps](/introduction/defi-starter-guide/dapps) * [Wallet Setup & Management](/introduction/defi-starter-guide/wallet-setup) # Overview Fixed-rate, fixed-term lending and borrowing — fully on-chain ## Why fixed rates? In most DeFi lending markets, interest rates float block by block. That works for short-term liquidity, but it makes real financial planning impossible: a treasury can't budget borrowing costs, and an investor can't lock in a yield. The **Fixed-Rate Lending Protocol** solves this with an instrument that traditional finance has used for centuries: the **Zero-Coupon (ZC) bond**. You buy a bond at a discount today and it is worth its full face value at maturity — the discount *is* your interest, fixed at the moment of the trade. * **Lending = buying a ZC bond.** Pay 97.50 today, hold a claim worth 100 at maturity. * **Borrowing = selling a ZC bond.** Receive 97.50 today against collateral, repay 100 at maturity. All trades are matched on a **fully on-chain order book** — a rarity in DeFi, made economical by our gas-optimization architecture — with standardized quarterly maturities from 3 months to 2 years. The result is transparent price discovery and a genuine yield curve for crypto assets, live on **Ethereum, Arbitrum, and Filecoin**. ## How it works in five steps 1. **Deposit** assets into the protocol from the [app](https://app.secured.finance/). 2. **Choose a market**: a currency and a quarterly maturity (e.g. USDC DEC2026). 3. **Place an order**: Lend (buy) or Borrow (sell), as a limit or market order. Borrowers post [collateral](/fixed-rate-lending/core-concepts/collateral) first. 4. **Hold or trade** your position. Positions can be unwound anytime, or tokenized as ERC-20 [ZC Tokens](/fixed-rate-lending/core-concepts/tokenization). 5. **At maturity**, positions [auto-roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) into the next quarterly market — or unwind to withdraw your funds. ## Key advantages * **Predictable returns** — rates are fixed for the full term at execution * **On-chain transparency** — order matching, pricing, and settlement all happen in smart contracts * **Capital efficiency** — multi-asset collateral, ZC bonds usable as collateral, partial liquidations * **Composability** — tokenized positions travel across the DeFi ecosystem ## Where to go next | Goal | Page | | --------------------------- | ----------------------------------------------------------------------------- | | Lend and earn fixed yield | [Quick Start: Lend](/fixed-rate-lending/getting-started/quick-start-lend) | | Borrow at a fixed cost | [Quick Start: Borrow](/fixed-rate-lending/getting-started/quick-start-borrow) | | Understand the mechanics | [Core Concepts](/fixed-rate-lending/core-concepts) | | Look up any protocol number | [Protocol Parameters](/fixed-rate-lending/protocol-parameters) | | Study the architecture | [Advanced Topics](/fixed-rate-lending/advanced-topics) | | Verify contracts and audits | [Contracts & Security](/fixed-rate-lending/contracts-and-security) | {% hint style="info" %} Secured Finance began at a 2020 hackathon with the goal of building an order-book-based rates market for DeFi. Read the background in [Research & Papers](/fixed-rate-lending/overview/research-and-papers). {% endhint %} # Research & Papers The research foundations of the Fixed-Rate Lending Protocol ## White Paper — A Decentralized Solution to Long-Term Capital Markets Secured Finance provides peer-to-contract lending and derivatives trading for fixed-income investment and hedging. A smart-contract-based platform removes intermediaries and delivers transparent, censorship-resistant, low-cost transactions, while standardized plain-vanilla products, order-book price discovery, on-chain matchmaking, smart-contract collateral management, and auto-rolling give long-term investors and borrowers a hassle-free fixed-income experience. 📄 [Read the full white paper](https://blog.secured.finance/secured-finance-protocol-6cee22f571b4) ## Concept Paper — The Intersection of Eurocurrency and Cryptocurrency Markets Eurocurrency (offshore, non-regulated fiat) and cryptocurrency share defining traits: both are stateless and sit outside domestic regulatory perimeters. This paper argues that the convergence of the two markets creates the conditions for decentralized OTC capital markets, and proposes industry-wide standardization, embedded supervision, and a peer-to-contract architecture as the path to a safer trading environment that preserves the core benefits of blockchain systems. 📄 [Read the full concept paper](https://blog.secured.finance/the-intersection-of-the-eurocurrency-and-cryptocurrency-markets-f933418ae349) {% hint style="info" %} These papers describe the founding thesis (2020–2023). For the current protocol design, see [Core Concepts](/fixed-rate-lending/core-concepts); for the current product line-up and traction, see [Protocol at a Glance](/introduction/protocol-at-a-glance). {% endhint %} # Getting Started Start lending or borrowing in minutes New to the Fixed-Rate Lending Protocol? Pick your path:
Quick Start: LendEarn a fixed yield by buying Zero-Coupon bonds. Start lending →
Quick Start: BorrowLock in a fixed borrowing cost against your collateral. Start borrowing →
Managing Your PositionsMonitor, add to, reduce, and unwind positions. Manage positions →
Platform GuideTab-by-tab tour of the web app. Explore the app →
## Before you start You'll need: 1. **A Web3 wallet** (MetaMask, WalletConnect-compatible wallets, etc.) — see the [Wallet Setup guide](/introduction/defi-starter-guide/wallet-setup) if you're new to this 2. **Assets to lend, or collateral to borrow against** — see [supported assets by network](/fixed-rate-lending/core-concepts/collateral) 3. **Native tokens for gas** (ETH on Ethereum/Arbitrum, FIL on Filecoin) — the in-app [Swap](/fixed-rate-lending/getting-started/platform-guide/bridge) can help you obtain them {% hint style="info" %} **One concept to understand first:** on this protocol, *lending* means *buying* a Zero-Coupon bond at a discount, and *borrowing* means *selling* one. The discount determines your fixed rate. Two minutes on [Zero-Coupon Bonds](/fixed-rate-lending/core-concepts/zero-coupon-bonds) will make everything else intuitive. {% endhint %} # Quick Start: Lend Earn a fixed, predictable yield in five steps Lending on Secured Finance means **buying a Zero-Coupon (ZC) bond at a discount** — you pay less than face value today, and the position is worth full face value at maturity. The difference is your yield, locked in at execution. **You'll need:** a Web3 wallet, assets to lend, and a small amount of the network's native token for gas. ## Step 1 — Connect and deposit 1. Open [app.secured.finance](https://app.secured.finance/) and click **Connect Wallet**. 2. Go to the **Portfolio** tab and click **Deposit**. 3. Choose the asset and amount you want to lend, then confirm in your wallet. ## Step 2 — Choose a market 1. Open the **Fixed Income** tab (the trading interface). 2. Select the currency and the maturity date. Markets mature quarterly — the last Friday of March, June, September, and December. 3. Check the current yield for that maturity on the order book, or compare maturities on the [Stats](https://app.secured.finance/stats/) yield curve. ## Step 3 — Place your lend order 1. Select **Lend**. 2. Pick an order type: * **Market order** — fills immediately at the best available price. A taker fee applies (see [Fees](/fixed-rate-lending/core-concepts/fees)). * **Limit order** — you set the price (rate) and wait to be matched. Volume that rests on the book pays **no fee**; any portion that fills immediately pays the taker fee. 3. Enter the amount, review the implied APR and estimated fee, and click **Place Order**. 4. Confirm in your wallet. ## Step 4 — What happens next * **Filled order** → you now hold a ZC bond position, visible in **Portfolio → Active Positions**. Its value accrues toward face value (100) as maturity approaches. * **Open limit order** → it stays on the order book until matched, canceled, or the market matures. Track it under **Open Orders**. ## Step 5 — At maturity (important) {% hint style="warning" %} There is **no automatic settlement**. At maturity your position is automatically rolled into the nearest 3-month market (**Auto-Roll** — a protocol-wide mechanism that cannot be configured or disabled). If you want your funds back instead, **unwind your position manually**: Portfolio → select the position → **Unwind**. You can unwind at any time before or after maturity, subject to market liquidity. {% endhint %} Your three options as maturity approaches: | You want to… | Do this | | ----------------------------------- | ------------------------------------------------------------------------------------------------------- | | Keep earning at the new market rate | Nothing — Auto-Roll handles it (a roll fee applies, see [Fees](/fixed-rate-lending/core-concepts/fees)) | | Exit and withdraw | **Unwind**, then **Withdraw** from Portfolio | | Move the position elsewhere | Tokenize it as a [ZC Token](/fixed-rate-lending/core-concepts/tokenization) (ERC-20) | ## Troubleshooting * **Limit order not filling** — your rate may be off-market; adjust the price, or use a market order for immediate execution. * **Transaction fails** — check that you hold native tokens for gas and have sufficient deposited balance. * **Unwind blocked or partially filled** — the order book may lack liquidity at an acceptable price (see [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker)); wait for liquidity and retry, or place an opposite (borrow) **limit order** at your acceptable price — filled amounts net against your position. ## Next steps * [Managing Your Positions](/fixed-rate-lending/getting-started/managing-positions) — add, reduce, unwind * [Fixed Maturity & Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) — how quarterly markets work * [Zero-Coupon Bonds](/fixed-rate-lending/core-concepts/zero-coupon-bonds) — price ↔ APR mechanics # Quick Start: Borrow Lock in a fixed borrowing cost in five steps Borrowing on Secured Finance means **selling a Zero-Coupon (ZC) bond**: you receive funds today and repay the bond's face value at maturity. Your borrowing cost is fixed at execution — no floating-rate surprises. **You'll need:** a Web3 wallet, collateral assets, and a small amount of the network's native token for gas. ## Step 1 — Connect and deposit collateral 1. Open [app.secured.finance](https://app.secured.finance/) and click **Connect Wallet**. 2. Go to the **Portfolio** tab and click **Deposit**. 3. Deposit an accepted collateral asset (see [Collateral](/fixed-rate-lending/core-concepts/collateral) for the list per network) and confirm in your wallet. Borrowing requires **over-collateralization** — your collateral must be worth significantly more than the amount you borrow. Current thresholds are listed in [Protocol Parameters](/fixed-rate-lending/protocol-parameters). ## Step 2 — Choose a market 1. Open the **Fixed Income** tab (the trading interface). 2. Select the currency you want to borrow and a maturity date (quarterly — the last Friday of Mar/Jun/Sep/Dec). 3. Check the current borrow rate on the order book. ## Step 3 — Place your borrow order 1. Select **Borrow**. 2. Pick an order type: * **Market order** — fills immediately at the best available price. A taker fee applies (see [Fees](/fixed-rate-lending/core-concepts/fees)). * **Limit order** — you set your maximum rate and wait to be matched. Volume that rests on the book pays **no fee**; any portion that fills immediately pays the taker fee. 3. Enter the amount, review the implied APR, repayment amount at maturity, and collateral usage, then click **Place Order**. 4. Confirm in your wallet. Borrowed funds are credited to your protocol account, ready to withdraw or reuse. ## Step 4 — Watch your position health After borrowing, monitor your **collateral coverage** in the Portfolio tab: * Your position can be **liquidated** if your Loan-to-Value ratio reaches the liquidation threshold (see [Liquidation](/fixed-rate-lending/core-concepts/liquidation)). * Both a fall in collateral value **and** a rise in the borrowed asset's value push your LTV up. * To reduce risk: deposit more collateral, or reduce the borrow — unwind it, or place an opposite (lend) order for part of the amount ([Managing Positions](/fixed-rate-lending/getting-started/managing-positions)). ## Step 5 — Repaying (important) {% hint style="warning" %} There is **no automatic settlement**. At maturity your debt is automatically rolled into the nearest 3-month market (**Auto-Roll** — protocol-wide, not configurable), and the rolled debt accrues the new market rate plus a roll fee. To close your debt, **unwind the position manually**: Portfolio → select the position → **Unwind** (buy back the bond). {% endhint %} | You want to… | Do this | | -------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Extend the loan at the new market rate | Nothing — Auto-Roll handles it (roll fee applies) | | Repay and close | **Unwind** the position, then withdraw remaining collateral | | Repay part of the loan | Place an opposite (lend) **order** for the amount to repay — filled amounts net against your debt ([Managing Positions](/fixed-rate-lending/getting-started/managing-positions)) | ## Troubleshooting * **"Insufficient collateral" error** — deposit more collateral, reduce the borrow amount, or check the asset's haircut in [Protocol Parameters](/fixed-rate-lending/protocol-parameters). * **Order not filling** — your limit rate may be below market; adjust it or use a market order. * **Unwind blocked** — order book liquidity may be thin at an acceptable price; wait for liquidity and retry, or place an opposite (lend) **limit order** at your acceptable price. ## Next steps * [Collateral](/fixed-rate-lending/core-concepts/collateral) — accepted assets and haircuts per network * [Liquidation](/fixed-rate-lending/core-concepts/liquidation) — thresholds, fees, and how to stay safe * [Managing Your Positions](/fixed-rate-lending/getting-started/managing-positions) — day-to-day position management # Managing Your Positions Monitor, adjust, and exit your lending and borrowing positions ## Viewing your positions 1. Open the [Portfolio](https://app.secured.finance/portfolio/) tab with your wallet connected. 2. **Active Positions** shows each position's asset, size, maturity, present value, and P\&L. 3. **Open Orders**, **Order History**, and **My Transactions** cover everything that hasn't become (or is no longer) a position. ## For borrowers: watch your collateral coverage * Check the **collateral utilization / liquidation risk indicator** regularly — it moves from green to red as your Loan-to-Value ratio approaches the liquidation threshold ([current values](/fixed-rate-lending/protocol-parameters)). * Remember that ZC bond prices move with interest rates: your debt's present value changes even when spot prices don't. * To reduce risk, deposit more collateral, or reduce the borrow — unwind it, or place an opposite (lend) order for part of the amount. Details: [Liquidation](/fixed-rate-lending/core-concepts/liquidation). ## Adding to a position 1. Open the **Fixed Income** tab and select the same currency, maturity, and side (Lend/Borrow) as the existing position. 2. Place a new order for the additional amount — it merges into the same position. ## Reducing or closing a position **Closing (Unwind)** 1. In **Portfolio → Active Positions**, click **Unwind** on the position. 2. The position is closed against the order book at the best available price. Review the estimated price and fee, then confirm — a taker fee applies ([Fees](/fixed-rate-lending/core-concepts/fees)). **Reducing a position partially** The Unwind action closes the whole position. To reduce it partially, place an **opposite order** for the amount you want to reduce (e.g. a lend order against a borrow position) in the same currency and maturity — filled amounts net against your position. {% hint style="info" %} Unwinding before maturity realizes the position at the *current* market price, which may be better or worse than holding to maturity, depending on how rates have moved. {% endhint %} ## What happens at maturity At maturity, every position is handled the same way — this is protocol-wide behavior, not a setting: 1. **Auto-Roll**: the position is automatically rolled into the nearest 3-month market at the [auto-roll price](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll/auto-roll-price-discovery). A roll fee applies ([Fees](/fixed-rate-lending/core-concepts/fees)). 2. **No automatic settlement**: the protocol never pushes funds back to your wallet. To exit, unwind the position (before or after maturity) and then withdraw. 3. **Liquidity note**: unwinding requires counterparties on the order book. In thin markets an unwind may only partially fill ([Order Life Cycle](/fixed-rate-lending/core-concepts/order-book/order-life-cycle)); you can retry later, or place an opposite limit order at your acceptable price. More on the mechanics: [Fixed Maturity & Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll). ## Troubleshooting * **Unwind not executing or only partially filling** — insufficient order-book liquidity within the allowed price range; retry in a later block, wait for liquidity, or place an opposite limit order at your acceptable price. * **Values look stale** — refresh the page and confirm your wallet is on the right network. * **Position missing after maturity** — it has rolled into the next maturity; look for the new maturity date in Active Positions. ## Related * [Quick Start: Lend](/fixed-rate-lending/getting-started/quick-start-lend) · [Quick Start: Borrow](/fixed-rate-lending/getting-started/quick-start-borrow) * [Tokenization](/fixed-rate-lending/core-concepts/tokenization) — move a position out as an ERC-20 token * [Liquidation](/fixed-rate-lending/core-concepts/liquidation) — risk management for borrowers # Platform Guide A tab-by-tab guide to the Secured Finance web app The [Secured Finance app](https://app.secured.finance/) has five main tabs: | Tab | What it's for | | ------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | | [**Fixed Income**](/fixed-rate-lending/getting-started/platform-guide/trading) | Place lend/borrow orders on the ZC bond order book | | [**Stats**](/fixed-rate-lending/getting-started/platform-guide/markets) | Yield curves, market stats, and chain status — no wallet needed | | [**Portfolio**](/fixed-rate-lending/getting-started/platform-guide/portfolio) | Deposits, withdrawals, collateral, positions, and history | | [**Swap**](/fixed-rate-lending/getting-started/platform-guide/bridge) | Move assets between supported networks (powered by Squid Router, built on Axelar) | | [**Points**](/fixed-rate-lending/getting-started/platform-guide/points-and-campaigns) | Earn Secured Finance Points (SFP) for platform activity | {% hint style="info" %} Want to trade right away? Follow the [Quick Start: Lend](/fixed-rate-lending/getting-started/quick-start-lend) or [Quick Start: Borrow](/fixed-rate-lending/getting-started/quick-start-borrow) tutorials instead — they walk through only the steps you need. {% endhint %} # Fixed Income (Trading) The order book interface for lending and borrowing The **Fixed Income** tab is the trading interface where you lend and borrow by trading Zero-Coupon bonds. If the terms *buy/sell* and *lend/borrow* feel interchangeable here, that's because they are: | Action | Order book side | What it means | | ---------- | --------------- | ------------------------------------------------------------------------ | | **Lend** | Buy a ZC bond | Pay a discounted price now, hold a claim on face value (100) at maturity | | **Borrow** | Sell a ZC bond | Receive funds now (requires collateral), owe face value at maturity | ## Layout * **Market selector** — currency and quarterly maturity (e.g. USDC DEC2026) * **Order book** — live lend and borrow orders by price, with depth * **Yield curve** — rates across all maturities for the selected currency * **Order form** — side, order type, amount, price * **Open Orders / Positions panel** — your resting orders and filled positions ## Placing an order 1. Choose the market (currency + maturity). 2. Choose **Lend** or **Borrow**. Borrowing requires deposited [collateral](/fixed-rate-lending/core-concepts/collateral). 3. Choose the order type: * **Market order** — executes immediately at the best available price; pays the taker fee ([Fees](/fixed-rate-lending/core-concepts/fees)) * **Limit order** — executes only at your price or better. Volume that rests on the book pays **no fee**; if your price crosses existing orders, the part that fills immediately pays the taker fee ([Fees](/fixed-rate-lending/core-concepts/fees)) 4. Enter the amount. The form shows the implied APR, estimated fee, and (for borrows) collateral usage. 5. **Place Order** → confirm in your wallet. Orders are matched by price-time priority, fully on-chain. Execution prices are bounded each block by the [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker). ## Managing open orders Limit orders with volume still resting on the book — unfilled, or partially filled with a live remainder — sit in **Open Orders**. You can cancel them anytime; funds allocated to unfilled orders return to your deposit balance. Order states (Open, Partially Filled, Filled, Killed, Blocked, Cancelled, Expired) are explained in [Order Life Cycle](/fixed-rate-lending/core-concepts/order-book/order-life-cycle). ## Exiting a position Use **Unwind** in the [Portfolio](/fixed-rate-lending/getting-started/platform-guide/portfolio) tab — see [Managing Your Positions](/fixed-rate-lending/getting-started/managing-positions). At maturity, positions [auto-roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) into the nearest 3-month market; Auto-Roll is protocol-wide and has no user settings. ## Troubleshooting * **Order not executing** — uncompetitive limit price or thin liquidity; adjust price or switch to a market order. * **Insufficient collateral** — deposit more, reduce size, or check asset haircuts in [Protocol Parameters](/fixed-rate-lending/protocol-parameters). * **Order shows "Blocked"** — execution would breach the circuit breaker's per-block price range; retry in the next block or use a limit order. # Stats Yield curves and market data — no wallet required The [**Stats**](https://app.secured.finance/stats/) tab is the protocol's data dashboard. It works without connecting a wallet. ## What you'll find * **Yield curves** — fixed rates across all quarterly maturities per currency. Select a currency to view its curve; compare currencies to spot relative-value opportunities. * **Key metrics** — total value locked, trading volume (24h/7d/30d), number of traded assets, and active users. * **Chain status** — health of each supported network. ## Reading the yield curve * **Upward-sloping (steep)** — the market demands a premium for longer terms; lenders may find better rates at longer maturities. * **Flat or inverted** — near-term rates equal or exceed long-term rates, often signaling expectations of falling rates or near-term stress. * Click any market to jump straight into the [trading interface](/fixed-rate-lending/getting-started/platform-guide/trading) for that currency and maturity. {% hint style="info" %} During the 7-day pre-open window before a new market launches, the curve shows the **estimated opening APR** derived from the [Itayose](/fixed-rate-lending/advanced-topics/itayose) order book. {% endhint %} ## Troubleshooting * **Data not loading** — refresh; check your connection; try another browser. * **Curve not displaying** — ensure JavaScript is enabled and no extension is blocking charts. # Portfolio Your assets, collateral, positions, and history in one place The [**Portfolio**](https://app.secured.finance/portfolio/) tab is your account home: deposits, withdrawals, collateral health, positions, and full history. ## Overview metrics * **Net Asset Value** — total value of your deposits and positions on the platform * **Active Contracts** — count of your open lending/borrowing positions * **Lending PV / Borrowing PV** — present value of each side of your book ## Assets * **Collateral balance** — deposited assets backing your borrows, and their utilization * **Non-collateral assets** — deposited assets not eligible (or not used) as collateral * **Deposit / Withdraw** buttons — move assets between your wallet and the protocol ## Risk panel (borrowers) * **Collateral utilization** — how much of your capacity is in use * **Liquidation risk indicator** — green → yellow → red as your LTV approaches the liquidation threshold ([current values](/fixed-rate-lending/protocol-parameters)) When the indicator trends red: deposit more collateral or partially [unwind](/fixed-rate-lending/getting-started/managing-positions) borrow positions. See [Liquidation](/fixed-rate-lending/core-concepts/liquidation). ## Transactions Four tabs cover your full activity: **Active Positions** (open positions, with Unwind actions), **Open Orders** (resting limit orders, cancellable), **Order History**, and **My Transactions**. ## Related * [Managing Your Positions](/fixed-rate-lending/getting-started/managing-positions) — unwind, add, reduce * [Tokenization](/fixed-rate-lending/core-concepts/tokenization) — withdraw a lending position as an ERC-20 ZC Token # Swap (Bridge) Move assets between networks with the in-app Swap, powered by Squid Router (built on Axelar) The [**Swap**](https://app.secured.finance/swap/) tab performs cross-chain swaps inside the app — for example, swapping USDC on Ethereum into FIL on Filecoin — without using an external exchange. It is powered by **Squid Router**, built on the Axelar network. Typical uses: obtaining native gas tokens for another network (e.g. FIL for Filecoin transactions), or moving collateral to the chain where you want to trade. ## How to bridge 1. Connect your wallet and open the **Swap** tab. 2. Choose the **From** network and token, and the **To** network and token. 3. Enter the amount and review the estimated output after fees, the rate, and the estimated completion time. 4. First time with this token? Approve it when prompted and confirm in your wallet. 5. Confirm the swap and approve the transaction in your wallet. Transfers usually complete within minutes. 6. Verify the tokens arrived on the destination network (switch your wallet's network to check). ## Under the hood The in-app Swap uses **Squid Router** to route transfers over the **Axelar** network: your tokens are locked in a smart contract on the source chain, a proof is generated and verified on the destination chain, and the equivalent tokens are minted or released there. ## Troubleshooting * **Pending for a long time** — check the transaction on Axelar's explorer; congestion can add delays. Contact [support](/community/support-and-contacts) if nothing moves after \~30 minutes. * **Tokens not visible** — confirm your wallet is on the destination network and the token is added to the wallet's token list. * **Gas errors** — keep enough native tokens on the source chain; reduce the swap amount if needed. # Points Track your Secured Finance Points (SFP) in the app The [**Points**](https://app.secured.finance/points/) dashboard tracks the **Secured Finance Points (SFP)** you have earned by using the protocol. {% hint style="warning" %} **The current phase of Secured Finance Points ended after April 30, 2026 (UTC).** Points earned to date are retained. For the program details and what happens next, see [Secured Finance Points (SFP) v2](/community/tokenomics/secured-finance-points-sfp-v2). {% endhint %} ## What the dashboard shows **Total Points** — your overall SFP balance, broken down by how it was earned: | Metric | What it represents | | -------------------------- | -------------------------------------------------- | | **Deposit Points** | Points from assets deposited in the protocol | | **Open Order Points** | Points from limit orders resting on the order book | | **Active Position Points** | Points from open lend and borrow positions | | **Refer Friend Points** | Your share of points earned by users you referred | | **Daily Login Points** | Points from connecting your wallet each day | Alongside the breakdown, the panel shows **Your Rank**, any **Point Boost** applied to your earnings, and your **Referral Code** to share. **Active Quests** lists any quests currently running. **Leaderboard** shows the community rankings and is visible without connecting a wallet. ## How points were earned The full rules, calculations, and program history are documented in [Secured Finance Points (SFP) v2](/community/tokenomics/secured-finance-points-sfp-v2). For how SFP relates to the upcoming **Secured Finance Coin (SFC)**, see [Tokenomics](/community/tokenomics). ## Troubleshooting * **Balance looks wrong or is missing** — make sure your wallet is connected on a supported network, and that you are checking the same address you used to earn the points. * **Refer Friend Points missing** — the invitee must have used your exact referral link and earned their first points before your share appears. # Core Concepts How the Fixed-Rate Lending Protocol works This section explains the mechanics of the protocol. If you read the pages in order, each builds on the last: 1. [**Zero-Coupon Bonds**](/fixed-rate-lending/core-concepts/zero-coupon-bonds) — the instrument everything is built on: how a discounted price becomes a fixed rate 2. [**Order Book & Order Types**](/fixed-rate-lending/core-concepts/order-book) — how lend and borrow orders meet, and when to use limit vs. market orders 3. [**Fixed Maturity & Auto-Roll**](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) — quarterly markets, and what happens to positions at maturity 4. [**Collateral**](/fixed-rate-lending/core-concepts/collateral) — accepted assets per network, and how collateral secures loans 5. [**Liquidation**](/fixed-rate-lending/core-concepts/liquidation) — what happens when collateral coverage falls short 6. [**Tokenization**](/fixed-rate-lending/core-concepts/tokenization) — turning positions into transferable ERC-20 ZC Tokens 7. [**Fees**](/fixed-rate-lending/core-concepts/fees) — the complete fee structure ## Terminology used throughout | Term | Meaning | | -------------------- | ---------------------------------------------------------------------------------------- | | **Lend / Buy** | Buying a ZC bond at a discount — you are the lender | | **Borrow / Sell** | Selling a ZC bond against collateral — you are the borrower | | **Face value / Par** | 100 — the value every ZC bond reaches at maturity | | **Unwind** | Closing a position by taking the opposite side in the same market | | **Auto-Roll** | The protocol-wide mechanism that rolls matured positions into the nearest 3-month market | | **Itayose** | The opening auction that sets a fair price when a new market starts | All numeric parameters (fees, thresholds, limits) live in one place: [Protocol Parameters](/fixed-rate-lending/protocol-parameters). # Zero-Coupon Bonds The instrument behind every fixed rate — price, discount factor, and APR in one page A **Zero-Coupon (ZC) bond** pays no periodic interest. It trades at a discount and is redeemed at its full face value at maturity — the discount *is* the interest. On Secured Finance, every ZC bond has a face value (par) of **100**, so a bond's price directly expresses its market-implied rate. The ZC structure was chosen deliberately: only two cash flows (entry and maturity) means minimal gas, no coupon tracking or reinvestment, and transparent yield math. ## Price, discount factor, and value The bond price *is* the discount factor, scaled by 100: $$ \text{ZC Bond Price} = \text{Discount Factor} \times 100 $$ From any position you can compute present and future value: $$ FV = PV \times \frac{100}{\text{Bond Price}} $$ **Example:** Bob buys 1,000 FIL notional of a ZC bond at 96.90. He pays 969 FIL today (PV) and holds a claim worth 1,000 FIL at maturity (FV) — a 3.2% return over the term, fixed at execution. ## Converting price to APR Trades execute on **price**; the app displays the implied **APR** as a reference, using the Act/365 day-count convention. **Maturities under 1 year** (linear): $$ APR = \left(\frac{100}{\text{Bond Price}} - 1\right)\times\frac{\text{seconds per year}}{\text{seconds to maturity}} $$ *Example:* a 3-month bond at 98.50 → (100/98.50 − 1) × 4.055 ≈ **6.17% APR**. **Maturities over 1 year** (annual compounding): $$ APR = \left(\frac{100}{\text{Bond Price}}\right)^{1/\text{years to maturity}} - 1 $$ *Example:* an 18-month bond at 85.00 → (100/85)^(1/1.5) − 1 ≈ **11.44% APR**. {% hint style="info" %} **Pre-open markets:** during the 7-day [Itayose](/fixed-rate-lending/advanced-topics/itayose) window, the displayed APR uses the *estimated opening price* and measures time from the trading start date (not the current date) to maturity. {% endhint %} ## Price bounds Orders are capped at a price of **100.00** — the protocol does not allow negative yields. Prices are quoted to 2 decimal places. Per-block price movement is bounded by the [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker). ## Buying and selling in practice * **Lend = buy the bond.** Your yield is locked if you hold to maturity. * **Borrow = sell the bond.** You receive the discounted amount now and owe 100 per bond at maturity. Requires [collateral](/fixed-rate-lending/core-concepts/collateral). * **Exit anytime** by unwinding — taking the opposite side in the same market at the current price. Rates may have moved for or against you. * **At maturity** the position [auto-rolls](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll); there is no automatic settlement. Unwind to withdraw funds. ## Common questions
Why use ZC bonds instead of interest-bearing loans? Two cash flows are cheaper and safer on-chain than many: less gas, no reinvestment risk for lenders, and clear upfront terms. The discount-to-par structure also makes yields directly comparable across maturities.
How is my yield affected if I sell before maturity? Your realized yield depends on the price you sell at. If rates have fallen since you bought, the bond price has risen and you gain; if rates have risen, you may realize less than the original APR.
Where can I see the exact math used by the contracts? The contracts compute durations in seconds (seconds-per-year = 31,536,000). See the [Developer Portal](/developer-portal/introduction) for SDK and subgraph access to raw prices.
## Related * [Order Book & Order Types](/fixed-rate-lending/core-concepts/order-book) — how bonds actually trade * [APR vs APY](/fixed-rate-lending/advanced-topics/apr-vs-apy) — why we quote APR * [Tokenization](/fixed-rate-lending/core-concepts/tokenization) — ZC bonds as ERC-20 tokens # Order Book & Order Types How lend and borrow orders meet — fully on-chain Secured Finance runs a **fully on-chain order book** for every market (currency × maturity). An order book lists buy (lend) and sell (borrow) orders by price level, giving transparent price discovery and depth — the market structure used by traditional exchanges, rarely achieved on-chain because of gas costs. {% hint style="info" %} **Why is an on-chain order book hard?** Order data grows with every order, and Solidity storage is expensive. Most DeFi protocols use liquidity pools instead, but pool rates lack the transparency and composability of an order book. Secured Finance made the order book economical with Red-Black Trees and lazy evaluation — see the [Orderbook Deep Dive](/fixed-rate-lending/advanced-topics/orderbook-deep-dive). {% endhint %} ## The two sides | Side | Equivalent | What happens | | ----------------- | ------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------- | | **Lend (Buy)** | Buying a ZC bond at a discount | You pay the discounted amount now; hold a claim on par (100) at maturity | | **Borrow (Sell)** | Selling a ZC bond | You receive the discounted amount now (after posting [collateral](/fixed-rate-lending/core-concepts/collateral)); owe par at maturity | Orders are matched by **price-time priority**: the best-priced orders fill first; at the same price, earlier orders fill first. ## Order types ### Limit orders You specify the price (rate). The order executes at your price or better. Any remainder that does not execute rests on the book until filled, cancelled, or the market matures (unfilled orders expire at maturity and the allocated funds return to your deposit balance). A remainder stopped by insufficient liquidity or the [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker) instead terminates immediately and the funds return to your deposit balance — see [Order Life Cycle](/fixed-rate-lending/core-concepts/order-book/order-life-cycle). * Volume that rests on the book makes you a **maker**, adding liquidity — it pays **no trading fee** * If your price overlaps existing orders, the overlapping part executes immediately. That portion makes you a **taker** and pays the [taker fee](/fixed-rate-lending/core-concepts/fees); only the remainder rests on the book * Orders cannot be modified — cancel and re-place to change price or size ### Market orders You specify only the amount; the order executes immediately at the best available prices. * You act as a **taker**, consuming liquidity — the taker fee applies ([Fees](/fixed-rate-lending/core-concepts/fees)) * Execution is bounded by the [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker); portions that can't execute inside the allowed price range are killed * If liquidity is insufficient, the order fills partially and the remainder is killed ### Which should I use? | Priority | Use | | ---------------------------------------------------------------- | ---------------- | | Exact rate control, willing to wait (resting volume pays no fee) | **Limit order** | | Immediate execution, accepting current rates | **Market order** | ## Worked example A lender wants 2,000 USDC to earn at least 4% APR for 6 months: 1. Target price: 100 / (1 + 0.04 × 0.5) ≈ **98.04** 2. They place a **limit lend order** at 98.04 for 2,000 USDC. 3. When matched, they lend 2,000 USDC and open a lending position with a face value of approximately 2,039.98 USDC. 4. Held to maturity, the position earns approximately 39.98 USDC in fixed interest, with no trading fee because it was a limit order. ## Related * [Order Life Cycle](/fixed-rate-lending/core-concepts/order-book/order-life-cycle) — every state an order can be in, with examples * [Zero-Coupon Bonds](/fixed-rate-lending/core-concepts/zero-coupon-bonds) — price ↔ APR conversion * [Itayose](/fixed-rate-lending/advanced-topics/itayose) — how prices are discovered when a market opens # Order Life Cycle Every state an order can be in, and how transitions happen Track your orders' states in the **Order History** tab of the [Portfolio](/fixed-rate-lending/getting-started/platform-guide/portfolio) page. An order passes through one or more of seven states: | State | Applies to | Meaning | | ----------------------- | ----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | | **Open** | Limit | Resting on the book, waiting for a match | | **Partially Filled** | Both | Part executed; remainder rests (limit priced inside the circuit-breaker range) or is terminated (market, or limit priced beyond the range) | | **Filled** *(final)* | Both | Fully executed — now a position | | **Killed** *(final)* | Market / crossing limit | Could not fully execute due to insufficient liquidity | | **Blocked** *(final)* | Market / crossing limit | Execution stopped by the [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker) price range | | **Cancelled** *(final)* | Limit | Cancelled by you before full execution | | **Expired** *(final)* | Limit | Still unfilled when the market reached maturity; allocated funds return to your deposit balance | Combined states such as *Partially Filled & Killed* or *Partially Filled & Cancelled* record that part of an order executed before the remainder terminated.

Order status transitions

Behind the scenes: a filled order becomes a position (Future Value), and an auto-rolled position is tracked in Genesis Value terms

## Scenario walkthrough Consider this order book (last price 90; circuit-breaker range for the next block: 88–92, simplified for illustration): ``` Price | Amount --------------- 93 | 0 92 | 0 <- upper limit (this block) 91 | 10 90 -- last price 89 | 5 88 | 0 <- lower limit (this block) 87 | 10 ``` **Market orders** * *Buy 10 at market* → fills 10 at 91 → **Filled** * *Buy 20 at market* → fills 10 at 91; no more liquidity within the limit → **Partially Filled & Killed** * *Sell 10 at market* → fills 5 at 89; the rest would execute below the lower limit → **Partially Filled & Blocked** **Limit orders (overlapping — price crosses existing orders)** * *Buy 10 at 91* → **Filled** immediately * *Buy 15 at 92* (at the upper limit) → fills 10 at 91; the remaining 5 rest on the book at 92 → **Partially Filled**, then later Filled / Cancelled / Expired * *Buy 15 at 93* (beyond the upper limit) → fills 10 at 91; the remaining 5 would execute beyond the circuit-breaker limit, so they are **blocked** and the allocated funds return to your deposit balance → **Partially Filled & Blocked** **Limit orders (non-overlapping)** * *Buy 10 at 89* → **Open**, waiting for a counterparty * Market matures with the order unfilled → **Expired**, funds returned ## Common questions
What's the difference between Killed and Blocked? **Killed** = not enough liquidity to fill the remainder. **Blocked** = the remainder would have executed outside the circuit breaker's allowed price range. Both are final states for the taker side of an execution — market orders, or limit orders that cross the book; the filled portion (if any) remains as a position.
What happens to open orders when the market matures? They expire automatically and the allocated funds return to your deposit balance. Filled portions become positions and are subject to [Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll).
Can I modify an order? No. Cancel the order and place a new one — this preserves fair price-time priority for everyone.
# Fixed Maturity & Auto-Roll Quarterly markets, and exactly what happens to your position at maturity ## Quarterly markets Each currency trades in up to **eight order books** at once, with maturities from 3 months to 2 years spaced 3 months apart. Eight is the standard full set; depending on liquidity, a market may offer fewer maturities (the app shows what is currently open). Maturity falls on the **last Friday of March, June, September, and December**, aligning with listed futures conventions so rates are easy to reference and hedge. Markets are named by contract month: **DEC2026** matures on the last Friday of December 2026. Standardized maturities concentrate liquidity: instead of fragmenting orders across arbitrary dates, everyone trades the same eight points on the curve — which is also what makes a readable [yield curve](/fixed-rate-lending/getting-started/platform-guide/markets) possible.

Fixed Maturity Standard of 8 distinct order books ranging from 3 months to 2 years

## The quarterly cycle When the nearest market matures, three things happen at once: 1. The maturing order book is **deactivated** and recycled. 2. A **new 2-year order book** opens via the [Itayose](/fixed-rate-lending/advanced-topics/itayose) opening auction (pre-orders accepted for 7 days prior). 3. All positions in the matured market **Auto-Roll** into the nearest 3-month market. Technical details of the rotation: [Orderbook Rotation](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/orderbook-rotation). ## Auto-Roll {% hint style="warning" %} **Auto-Roll is protocol-wide.** Every matured position rolls automatically into the nearest 3-month market — it cannot be enabled, disabled, or configured per user. The protocol has **no automatic settlement**: to get funds back, [unwind](/fixed-rate-lending/getting-started/managing-positions) your position manually (possible before or after maturity). {% endhint %}

Auto-Roll moves an open position into the nearest 3-month order book at maturity

### Why Auto-Roll exists * **No reinvestment gap** — in traditional fixed income, a matured bond sits idle until you reinvest. Auto-Roll keeps capital working at a fair, close-to-mid price. * **No counterparty hunt** — you don't need to find a new match on the order book at maturity. * **Gas efficiency** — the roll is computed lazily via [Genesis Value accounting](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/genesis-value-and-compound-factor), not per-position transactions. ### What it costs Each roll charges the auto-roll fee (same rate as the taker fee, prorated — see [Fees](/fixed-rate-lending/core-concepts/fees)), embedded in the roll price. The roll price itself is determined by a transparent waterfall — see [Auto-Roll Price Discovery](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll/auto-roll-price-discovery). ### Worked example 1. In January, Alice lends 1,000 USDC in the MAR2027 market (3-month maturity). 2. On the last Friday of March, MAR2027 matures. Alice does nothing. 3. Her position rolls into **JUN2027** — now the nearest 3-month market — at the auto-roll price, minus the roll fee. 4. If Alice wants her USDC instead, she unwinds the JUN2027 position (or unwinds before the March maturity) and withdraws. ## Your choices at maturity | You want to… | Action | | ------------------------------------ | --------------------------------------------------------------------------------------------------- | | Stay invested at the new market rate | Nothing — Auto-Roll continues each quarter | | Exit | **Unwind** (before or after maturity), then withdraw | | Choose a *different* maturity | Unwind, then place a new order in the market you prefer | | Use the position elsewhere in DeFi | [Tokenize](/fixed-rate-lending/core-concepts/tokenization) it as an ERC-20 ZC Token before maturity | ## Related * [Auto-Roll Price Discovery](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll/auto-roll-price-discovery) — how the roll price is set * [Itayose](/fixed-rate-lending/advanced-topics/itayose) — how new markets open * [Fees](/fixed-rate-lending/core-concepts/fees) — roll fee details # Auto-Roll Price Discovery How the quarterly roll price is determined — fairly, in any liquidity condition The auto-roll price determines the rate at which matured positions roll into the nearest 3-month market. It is calculated by a **waterfall** designed to produce a fair, manipulation-resistant price whatever the liquidity conditions: | Condition | Price source | | ----------------------------------------- | --------------------------------------------------------------------------------------- | | **Normal liquidity** | Volume-weighted average price (VWAP) of trades in the **6-hour window** before maturity | | **No trades in the window** | Current **Mark Price**, adjusted for duration | | **No trades for 3 months** | The **previous roll price** | | **First roll of a new market, no trades** | The market's **opening price**, adjusted for duration | ## Example (normal conditions) Trades in the 6-hour window before a market matures: | Volume (USDC) | Price | | ------------- | ----- | | 10,000 | 99.20 | | 25,000 | 99.15 | | 15,000 | 99.25 | $$ \text{VWAP} = \frac{10{,}000 \times 99.20 + 25{,}000 \times 99.15 + 15{,}000 \times 99.25}{50{,}000} = 99.19 $$ Positions roll at 99.19 (before the roll fee — see [Fees](/fixed-rate-lending/core-concepts/fees)). ## Manipulation resistance * The **6-hour window** makes it expensive to hold prices at an artificial level long enough to matter. * **Volume weighting** means influencing the price requires real size, at real risk. * The fallbacks (Mark Price, previous roll) are themselves protected by the [minimum volume threshold](/fixed-rate-lending/core-concepts/liquidation/mark-to-market) and the [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker). ## Related * [Fixed Maturity & Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) — the roll mechanism itself * [Mark to Market](/fixed-rate-lending/core-concepts/liquidation/mark-to-market) — how Mark Price is computed * [Genesis Value & Compound Factor](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/genesis-value-and-compound-factor) — how rolls are applied without per-position gas costs # Collateral Accepted assets per network, and how collateral secures every loan Borrowing on the Fixed-Rate Lending Protocol requires **over-collateralization**: you deposit assets worth more than you borrow. This replaces credit checks — anyone can borrow, and lenders are protected because under-collateralized positions are [liquidated](/fixed-rate-lending/core-concepts/liquidation). ## Supported assets by network | Network | Lend / Borrow | Accepted as collateral | | ------------------ | ----------------------------- | ---------------------------- | | **Ethereum** | WBTC, ETH, USDC, axlFIL, JPYC | WBTC, ETH, USDC, JPYC, uMINT | | **Arbitrum** | WBTC, ETH, USDC | WBTC, ETH, USDC | | **Filecoin (FVM)** | FIL, USDFC | FIL, iFIL, wpFIL, USDFC | {% hint style="info" %} Asset availability last confirmed with the team on 2026-07-16 (JPYC lending markets: Ethereum only; wpFIL collateral: Filecoin only; uMINT/RWA collateral: Ethereum only). The live list can be read per network from `CurrencyController.getCurrencies()`. {% endhint %} {% hint style="warning" %} Avalanche support is **deprecated**. Polygon zkEVM has been **sunset and is no longer operational**. Legacy deployment addresses are retained for historical reference only: [Contracts & Security](/fixed-rate-lending/contracts-and-security). {% endhint %} Current haircuts, thresholds, and the authoritative asset list: [Protocol Parameters](/fixed-rate-lending/protocol-parameters). ## Asset notes * **USDFC** — Secured Finance's own FIL-backed stablecoin, minted via CDP on FVM. [Learn more](/usdfc-stablecoin/overview). * **iFIL / wpFIL (liquid staking tokens)** — represent staked FIL that keeps earning staking rewards *while* serving as collateral. For example, stake FIL on [GLIF](https://glif.io/) to receive iFIL, then deposit the iFIL as collateral — a dual-yield position. Both are accepted on Filecoin. * **axlFIL** — Axelar-bridged FIL on Ethereum. * **JPYC** — JPY-pegged stablecoin; fixed-rate JPY lending markets are live on **Ethereum** (as of July 2026). * **RWA collateral** — tokenized money-market fund collateral (uMINT, via DigiFT), accepted as collateral on **Ethereum** (as of July 2026). ## How collateral is monitored * The protocol values collateral continuously using **Chainlink price feeds**, plus [Mark-to-Market](/fixed-rate-lending/core-concepts/liquidation/mark-to-market) pricing for ZC bond positions. * Your **Loan-to-Value (LTV)** ratio — debt value over collateral value — is visible in the [Portfolio](/fixed-rate-lending/getting-started/platform-guide/portfolio) risk panel. * If LTV reaches the liquidation threshold, the position can be [liquidated](/fixed-rate-lending/core-concepts/liquidation). **Multi-collateral is supported**: you can back a single borrowing book with several asset types, diversifying against any one asset's volatility. ## Common questions
What happens if my collateral value drops? Your LTV rises. If it reaches the liquidation threshold, 50% of your debt can be liquidated — or **100%** if LTV deteriorates past the full-liquidation threshold — with a fee taken from your collateral. Prevent this by adding collateral or reducing debt early (unwind the position, or place an opposite order for part of the amount) — see [Liquidation](/fixed-rate-lending/core-concepts/liquidation).
Can I withdraw collateral while I have open borrows? Yes, as long as the remaining collateral keeps your LTV safely below the threshold. The app blocks withdrawals that would put your position at immediate risk.
Can ZC bonds themselves be used as collateral? Yes — lending positions can serve as collateral for borrowing in the same currency, enabling yield-spread strategies. See [ZC Bonds as Collateral](/fixed-rate-lending/core-concepts/collateral/zc-bonds-as-collateral).
# ZC Bonds as Collateral Use your lending positions as collateral for yield-spread strategies Your Zero-Coupon bond holdings (lending positions) can serve as **collateral for borrowing** — you don't need to sell a position to unlock liquidity from it. This is the foundation of yield-spread strategies: lend at one maturity, borrow against the position at another, and capture the spread. ## Valuation rules | Situation | Haircut | | ------------------------------------------------- | ----------------------------------------------------------------- | | Borrowing in the **same currency** as the ZC bond | **20%** — the bond counts for up to 80% of its present value | | Borrowing in a **different currency** | **100%** — cross-currency ZC collateral is not currently accepted | ZC bonds are consumed as collateral **first**, before your cash collateral, up to 80% of their PV. The system tracks this as the **ZC utilization ratio**: $$ \text{ZC Utilization} = \frac{\text{Obligation}}{\text{Total ZC}} $$ When ZC collateral is in play, LTV incorporates it alongside cash: $$ \text{LTV} = \frac{\text{Obligation}}{\text{Cash Collateral} + \text{Consumed ZC Collateral}} $$ {% hint style="info" %} You can borrow in the same currency **without any cash collateral at all** — a ZC bond alone supports borrowing up to 80% of its PV. {% endhint %} ## Worked example User A holds a ZC bond with a present value of 1,000 USDC and no cash collateral: 1. Maximum borrow: 800 USDC (80% of PV). They borrow the full 800 USDC. 2. ZC utilization: 800 / 1,000 = **80%**. 3. The borrowed 800 USDC itself sits in the protocol vault, so overall collateral utilization is 800 / (1,000 + 800) ≈ **44%** — a more comfortable overall position than the ZC utilization alone suggests. **Liquidation scenario:** if the ZC bond's price falls and utilization exceeds the threshold, 50% of the obligation (400 USDC) can be liquidated — or **100%** if utilization deteriorates past the full-liquidation threshold — with the standard liquidation fee taken from the ZC collateral. The same rules apply as for any other collateral ([Liquidation](/fixed-rate-lending/core-concepts/liquidation), current values in [Protocol Parameters](/fixed-rate-lending/protocol-parameters)). ## Risks to understand * **Rate risk** — ZC bond prices move inversely to yields; a rate spike lowers your collateral value. * **Cross-currency liquidation** — liquidators may choose which obligation and which collateral currency to act on. A breach triggered in one currency can result in liquidation involving another. * **Maturity drift** — as bonds approach maturity their price rises toward par, which generally *helps* collateral value, but rolls restate positions at market rates. ## Related * [Collateral](/fixed-rate-lending/core-concepts/collateral) — the general collateral framework * [Liquidation](/fixed-rate-lending/core-concepts/liquidation) — thresholds and process * [Fixed Maturity & Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) — what happens to collateralized positions at maturity # Liquidation How under-collateralized positions are handled — the single source of truth Liquidation keeps the protocol solvent. When a borrower's collateral no longer sufficiently covers their debt, anyone may repay part of that debt in exchange for the borrower's collateral plus a fee. This protects lenders from default risk without credit checks or intermediaries. {% hint style="info" %} This page covers the **Fixed-Rate Lending Protocol**. The USDFC Stablecoin Protocol uses a different mechanism (Stability Pool) — see [USDFC Liquidation](/usdfc-stablecoin/core-mechanics/liquidation). {% endhint %} ## When does liquidation happen? A position becomes liquidatable when its **Loan-to-Value (LTV)** ratio reaches the liquidation threshold (current value in [Protocol Parameters](/fixed-rate-lending/protocol-parameters) — 80% at time of writing): $$ LTV = \frac{\text{Value of Debt}}{\text{Value of Collateral}} \times 100% $$ Two situations push LTV up: 1. **Collateral value falls** — e.g. you borrowed USDC against ETH and ETH drops. 2. **Debt value rises** — e.g. you borrowed FIL against USDC and FIL rallies. Positions are valued with [Mark to Market](/fixed-rate-lending/core-concepts/liquidation/mark-to-market) pricing for ZC bonds and Chainlink oracle feeds for spot prices.

LTV and liquidation risk visualization

## What happens during liquidation 1. A liquidator repays **50%** of the outstanding debt — or **100%** if the position has deteriorated past the **full-liquidation threshold** (≈ LTV 85%; see [Protocol Parameters](/fixed-rate-lending/protocol-parameters)). 2. Collateral equal to the repaid debt **plus the liquidation fee** is transferred from the borrower. The fee — currently **7% total: 5% to the liquidator, 2% to the protocol's Reserve Fund** ([Protocol Parameters](/fixed-rate-lending/protocol-parameters)) — compensates liquidators and builds the protocol's safety buffer. 3. After a 50% liquidation, the position returns to a healthier LTV, typically around 70%. Past the full-liquidation threshold, the entire debt is closed out instead. ### Worked example Alice deposits 10 ETH ($20,000) and borrows 12,000 USDC (LTV 60%). | Event | Collateral value | LTV | Status | | ------------ | ---------------- | --- | ---------------- | | Entry | $20,000 | 60% | Healthy | | ETH → $1,600 | $16,000 | 75% | At risk | | ETH → $1,500 | $15,000 | 80% | **Liquidatable** | A liquidator repays 6,000 USDC (50% of debt). Collateral seized: 6,000 × 1.07 = $6,420 of ETH (4.28 ETH). Alice keeps 5.72 ETH against 6,000 USDC of debt — LTV back to \~70%. More scenarios, including liquidation caused by the *borrowed* asset rallying: [Liquidation Case Study](/fixed-rate-lending/core-concepts/liquidation/liquidation-case-study). ## How to avoid liquidation * Watch the **risk indicator** in [Portfolio](/fixed-rate-lending/getting-started/platform-guide/portfolio) — green → yellow → red as LTV climbs. * **Add collateral** or **reduce debt** before the threshold — unwind the position, or place an opposite order for part of the amount ([Managing Positions](/fixed-rate-lending/getting-started/managing-positions)). * Remember ZC bond prices move with rates — your debt's present value changes even when spot prices don't. * Leave a buffer around quarterly [Auto-Rolls](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll), which restate positions at the roll price. * The [Base Price Adjustment](/fixed-rate-lending/advanced-topics/base-price-adjustment) mechanism sets minimum collateral requirements that rise as bonds approach par — factor it into long-dated borrows. ## For liquidators Liquidation is **permissionless** — any address or contract can liquidate an eligible position and earn the liquidator fee. See the [Liquidator's Guide](/fixed-rate-lending/core-concepts/liquidation/liquidators-guide) for the contract-level flow and a reference bot implementation. ## In this section * [Mark to Market](/fixed-rate-lending/core-concepts/liquidation/mark-to-market) — how positions are valued * [Liquidation Case Study](/fixed-rate-lending/core-concepts/liquidation/liquidation-case-study) — full numerical scenarios * [Liquidator's Guide](/fixed-rate-lending/core-concepts/liquidation/liquidators-guide) — running liquidations, technically # Mark to Market How ZC bond positions are valued for P\&L and LTV Positions are valued at current market prices — not book value — for both P\&L display and [liquidation](/fixed-rate-lending/core-concepts/liquidation) LTV calculations. The reference price is called the **Mark Price**. ## How Mark Price is computed The Mark Price is a **volume-weighted average price (VWAP) per block**, computed on a **Future Value basis**: each trade's contribution is weighted by what it will be worth at maturity, not just its present value. This matches the economics of discount instruments. **Example** — two trades in one block: | Trade | PV amount | Price | FV amount | | --------- | --------- | ----- | ------------ | | A | 1,000 | 94.00 | 1,063.83 | | B | 1,000 | 92.00 | 1,086.96 | | **Total** | **2,000** | | **2,150.79** | $$ \text{Mark Price} = \frac{\text{Total PV}}{\text{Total FV}} \times 100 = \frac{2{,}000}{2{,}150.79} \times 100 = 92.99 $$ (A naive price-weighted average would give 93.00 — the FV basis corrects for the discount structure.) ## Manipulation protection: minimum volume threshold A block's trades only update the Mark Price if their volume meets a **minimum threshold** (currently 100 USD equivalent, reviewed periodically — see [Protocol Parameters](/fixed-rate-lending/protocol-parameters)). Below the threshold, the previous valid Mark Price carries forward. This prevents dust trades from moving valuations that drive liquidations. ## Fallback waterfall When no VWAP-eligible trades exist, the protocol falls back in strict order: 1. **Itayose opening price** — when a market has just opened 2. **Auto-roll price** — when no block price exists since the last roll 3. **Last traded price / VWAP without the volume threshold** — when no Mark Price has ever been set This guarantees a valid valuation exists in every market at all times. ## Related * [Liquidation](/fixed-rate-lending/core-concepts/liquidation) — where Mark Price is consumed * [Auto-Roll Price Discovery](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll/auto-roll-price-discovery) — a related but distinct pricing process * [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker) — bounds the trades that feed the VWAP # Liquidation Case Study Two full numerical liquidation scenarios Both triggers of liquidation, worked end-to-end. Current threshold and fee values: [Protocol Parameters](/fixed-rate-lending/protocol-parameters) (this page uses 80% threshold, 50% liquidation amount, 7% fee). ## Scenario 1 — Collateral value falls **Setup:** Alice deposits 10 ETH at $2,000/ETH ($20,000) and borrows 12,000 USDC. | Event | Collateral | Debt | LTV | | ------------ | ---------- | ------- | ---------------------- | | Entry | $20,000 | $12,000 | 60% | | ETH → $1,600 | $16,000 | $12,000 | 75% | | ETH → $1,500 | $15,000 | $12,000 | **80% → liquidatable** | **Liquidation:** * Liquidator repays 6,000 USDC (50% of debt) * Collateral seized: 6,000 × 1.07 / $1,500 = **4.28 ETH** ($6,420) * Alice's remaining position: 5.72 ETH ($8,580) collateral, 6,000 USDC debt * Post-liquidation LTV: 6,000 / 8,580 ≈ **70%** ## Scenario 2 — Borrowed asset rallies Liquidation can also strike when the *debt* appreciates, even if your collateral is a stablecoin. **Setup:** Charlie deposits 1,000,000 USDC and borrows 10 BTC at $60,000/BTC ($600,000 debt). | Event | Collateral | Debt | LTV | | ------------- | ---------- | -------- | ---------------------- | | Entry | $1,000,000 | $600,000 | 60% | | BTC → $75,000 | $1,000,000 | $750,000 | 75% | | BTC → $80,000 | $1,000,000 | $800,000 | **80% → liquidatable** | **Liquidation:** * Liquidator repays 5 BTC ($400,000 — 50% of debt) * Collateral seized: $400,000 × 1.07 = **$428,000 USDC** * Charlie's remaining position: $572,000 USDC collateral, 5 BTC ($400,000) debt * Post-liquidation LTV: 400,000 / 572,000 ≈ **70%** ## Takeaways * **Watch both sides**: collateral falling *and* debt rallying raise LTV. Borrowing a volatile asset against stablecoins is not a "safe" configuration. * **Usually partial — not always**: at the 80% threshold, liquidation takes 50% of debt and the corresponding collateral + fee, and the position survives at a safer LTV. If LTV deteriorates past the **full-liquidation threshold** (≈ 85% — [Protocol Parameters](/fixed-rate-lending/protocol-parameters)), the **entire debt** is liquidated in one call. Don't treat the 50% figure as your worst case. * **The fee is avoidable**: adding collateral or unwinding early costs far less than the 7% liquidation fee. ## Related * [Liquidation](/fixed-rate-lending/core-concepts/liquidation) — mechanism overview * [ZC Bonds as Collateral](/fixed-rate-lending/core-concepts/collateral/zc-bonds-as-collateral) — liquidation specifics for ZC collateral # Liquidator's Guide Running liquidations — permissionless, incentivized, automatable Anyone — an EOA or a smart contract — can execute liquidations and earn the liquidator's share of the liquidation fee (currently 5% of the liquidated value; the remaining 2% goes to the protocol Reserve Fund — see [Protocol Parameters](/fixed-rate-lending/protocol-parameters)). No registration or permission is required. ## The flow ### 1. Find eligible positions (off-chain) Call `TokenVault.getCoverage(user)` for candidate accounts. A position is liquidatable when coverage returns **greater than 8000** (= LTV above 80%). Candidate discovery is typically done via the [subgraph](/developer-portal/api-reference/fixed-rate-lending-subgraph) or by indexing protocol events. ### 2. Choose what to liquidate `LendingMarketController.executeLiquidationCall()` requires you to specify the **collateral currency to receive**, the **debt currency to liquidate**, and its **maturity**. If the target has multiple collateral or debt currencies, estimate each combination off-chain and pick the most profitable — only one combination executes per call. ### 3. Execute — optionally with callbacks If you liquidate from a contract, two callbacks let you handle the received assets atomically: * `executeOperationForCollateral()` — e.g. swap the received collateral on a DEX * `executeOperationForDebt()` — e.g. unwind the received debt position A reference implementation is available at [`Liquidator.sol`](https://github.com/Secured-Finance/contracts/blob/develop/contracts/external/liquidation/Liquidator.sol). ```mermaid sequenceDiagram autonumber actor Bot as Liquidator (bot) participant L as Liquidator contract participant LMC as LendingMarketController participant TV as TokenVault participant FV as FutureValueVault Bot->>TV: getCoverage(target) > 8000? Bot->>L: liquidate(target, ccy pair, maturity) L->>LMC: executeLiquidationCall() LMC->>TV: transfer collateral + liquidator fee LMC->>L: executeOperationForCollateral() LMC->>FV: transfer debt to liquidator LMC->>L: executeOperationForDebt() LMC->>LMC: verify liquidator's own coverage ``` {% hint style="warning" %} The call **reverts** if, at the end of the process, the liquidator's own collateral coverage would exceed 80%. Size your liquidations and manage your own book accordingly. {% endhint %} ## Economics For a liquidation repaying debt worth `D`: * You pay: `D` (in the debt currency, or unwind via callback) * You receive: collateral worth `D × 1.05` (debt value + 5% liquidator fee) * Gross profit: `D × 0.05`, minus gas and any swap/unwind slippage **Example:** target has 10,000 USDC collateral and 8,200 USDC debt (coverage 82%). You liquidate 50% of the debt (4,100 USDC) and receive 4,305 USDC of collateral — 205 USDC gross profit. ## Practical risks * **Races** — liquidations are competitive; speed and gas strategy matter * **Price movement** — collateral value can move between detection and execution * **Callback complexity** — DEX swaps inside callbacks add slippage and failure modes; simulate before deploying ## Related * [Liquidation](/fixed-rate-lending/core-concepts/liquidation) — mechanism and borrower's view * [Contracts & Security](/fixed-rate-lending/contracts-and-security) — contract addresses * [Developer Portal](/developer-portal/introduction) — subgraph and SDK # Tokenization (ZC Tokens) Turn lending positions into transferable ERC-20 ZC Tokens Lending positions can be **tokenized as standard ERC-20 tokens** — called **ZC Tokens** — and withdrawn from the platform. A ZC Token is a portable claim on the underlying position: transfer it to another wallet, trade it on secondary markets, or use it in other DeFi protocols. Deposit it back at any time to manage the position inside the app again. ## How it works * **Withdraw as token**: select a lending position and mint the corresponding ZC Token to your wallet. Partial amounts are supported. * **Deposit back**: the token is burned and the position is credited to your protocol account. * **Two token types**: * **ZC Tokens** carry a specific maturity (e.g. *ZC ETH DEC2026*) and are minted from the FutureValueVault. * **ZC perpetual tokens** (maturity = 0, e.g. *ZC ETH*) represent auto-rolled positions in [Genesis Value](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/genesis-value-and-compound-factor) terms and are minted from the GenesisValueVault.

ZC Token minting process

ZC Token burning process

## Naming conventions Example for a December 2026 expiry: | Asset | ZC Token name | Symbol | Perpetual name | Perpetual symbol | | ----- | --------------- | :------------: | :------------: | :--------------: | | ETH | ZC ETH DEC2026 | zcETH-2026-12 | ZC ETH | zcETH | | WBTC | ZC WBTC DEC2026 | zcWBTC-2026-12 | ZC WBTC | zcWBTC | | USDC | ZC USDC DEC2026 | zcUSDC-2026-12 | ZC USDC | zcUSDC | Wallets with short symbol limits (e.g. MetaMask, 11 characters) display a compact form: `zcETH26D` (month codes: M=Mar, J=Jun, S=Sep, D=Dec). If a token doesn't appear automatically, import it manually using the contract address shown in the app. ## What happens at maturity A ZC Token's claim reaches par at maturity, but — as everywhere in the protocol — **there is no automatic settlement**. Deposit the token back into the platform, where the position follows the standard [Auto-Roll / unwind](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) flow. ## Common questions
Can I tokenize part of a position? Yes. Mint ZC Tokens for any portion; the remainder stays as a regular position in your account.
Are ZC Tokens tradable outside Secured Finance? They are standard ERC-20s, so yes — subject to whatever liquidity exists on external venues. They can also serve as collateral in protocols that choose to accept them.
What's the difference between a ZC Token and a ZC perpetual token? A ZC Token references one maturity and converges to par on that date. A perpetual ZC token represents a continuously auto-rolled position (accounted in Genesis Value), with no single maturity date.
## Related * [Zero-Coupon Bonds](/fixed-rate-lending/core-concepts/zero-coupon-bonds) — the underlying instrument * [Genesis Value & Compound Factor](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/genesis-value-and-compound-factor) — perpetual token accounting # Fees Every fee in the protocol, and how to minimize them The protocol charges three fees. Current values are maintained in [Protocol Parameters](/fixed-rate-lending/protocol-parameters); the structure is explained here. ## 1. Trading fee (takers only) **The fee depends on how your order executes, not on the order type.** Volume that rests on the order book and waits (**maker**) pays nothing. Volume that takes an existing order and executes immediately (**taker**) pays the fee — this includes the portion of a **limit order** that crosses the book and fills right away. The fee is **1% per annum of the notional, prorated by time to maturity**, and is charged in Future Value terms: | Time to maturity | Fee | | ---------------- | ----- | | 3 months | 0.25% | | 6 months | 0.50% | | 9 months | 0.75% | | 12 months | 1.00% | *Example:* borrowing 100 ETH for 6 months with a market order costs 0.50 ETH; the same trade as a limit order that rests on the book costs nothing, while any portion that crosses and fills immediately pays the taker fee. {% hint style="info" %} Orders filled during the [Itayose](/fixed-rate-lending/advanced-topics/itayose) opening auction are also **fee-free** — an incentive to participate in price discovery for new markets. {% endhint %} ## 2. Auto-Roll fee Each quarterly [Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) charges the same rate as the taker fee (0.25% per 3-month roll), embedded in the roll price. In exchange, positions are re-invested at a close-to-mid price with no manual action and no counterparty search. ## 3. Liquidation fee Charged to liquidated borrowers: **7% of the liquidated value**, taken from collateral — **5% to the liquidator, 2% to the protocol Reserve Fund**. Details: [Liquidation](/fixed-rate-lending/core-concepts/liquidation). ## Where fees go Trading fees and Auto-Roll fees accrue to the protocol's **Reserve Fund**, the buffer that protects the protocol in extreme events. Of the liquidation fee, only the **2% protocol share** goes to the Reserve Fund; the 5% goes to the liquidator who executed the call. The Reserve Fund contract address is listed in [Contracts & Security](/fixed-rate-lending/contracts-and-security). ## Minimizing fees * Use **limit orders** priced so they rest on the book rather than cross it — resting volume pays no trading fee, and it earns [SFP points](/fixed-rate-lending/getting-started/platform-guide/points-and-campaigns) for providing liquidity * Participate in **Itayose** pre-open windows — zero fee fills * If you don't want quarterly roll fees, **unwind before maturity** rather than letting positions roll * Avoid liquidation entirely by managing your [collateral](/fixed-rate-lending/core-concepts/collateral) — the 7% fee is by far the most expensive in the protocol # Protocol Parameters The single source of truth for every protocol number This page is the authoritative reference for all Fixed-Rate Lending Protocol parameters. Other pages link here instead of restating values. **Last verified: 2026-07-16** (liquidation configuration, Base Price values, Mark Price minimum volume, and the supported asset list confirmed with the engineering team against production; remaining values match the contracts repository). {% hint style="info" %} Parameters may change through protocol governance. For integrations, always confirm critical values on-chain — addresses in [Contracts & Security](/fixed-rate-lending/contracts-and-security). {% endhint %} ## Trading fees | Parameter | Value | Notes | | -------------------------------------------- | ------------------------------------------ | ---------------------------------------------------------------------------------- | | Taker fee (volume that executes immediately) | 1.00% p.a., prorated by duration | 0.25% for 3 months, 0.50% for 6 months, … | | Maker fee (volume that rests on the book) | 0% | A limit order pays the taker fee on any portion that crosses and fills immediately | | Itayose (pre-open) fill | 0% | Waived for orders matched at market opening | | Auto-Roll fee | Same as taker fee (0.25% per 3-month roll) | Charged in Future Value at each quarterly roll | ## Collateral & liquidation | Parameter | Value | Notes | | -------------------------------- | -------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | Liquidation threshold | LTV above 80% (`getCoverage()` > 8000) | Position becomes liquidatable | | Liquidation amount | 50% of outstanding debt | While LTV is between the liquidation and full-liquidation thresholds; targets \~70% post-liquidation LTV | | Full liquidation threshold | ≈ LTV 85% (`fullLiquidationThresholdRate` = 11765) | Past this point, **100% of the outstanding debt** is liquidated in a single call. Protocol-wide setting — identical across networks and currencies (production value confirmed 2026-07-16; on-chain getter: `TokenVault.getLiquidationConfiguration()`) | | Liquidation fee (total) | 7% of liquidated value | Slashed from borrower's collateral | | — Liquidator share | 5% | Paid to the liquidator | | — Protocol reserve share | 2% | Sent to the Reserve Fund | | ZC bond haircut (same currency) | 20% | ZC bonds count for up to 80% of PV | | ZC bond haircut (cross currency) | 100% | Cross-currency ZC collateral not accepted | ## Circuit breaker (per block) | Parameter | Value | | -------------------------- | -------------------------------------------- | | Max downward move | 5% below MA of last 5 reliable block prices | | Max upward move | 10% above MA of last 3 reliable block prices | | Minimum downward allowance | 2.00 (absolute price) | | Minimum upward allowance | 7.00 (absolute price) | ## Market structure | Parameter | Value | | ------------------------- | --------------------------------------------------------------------------------------- | | Order books per currency | 8 active + 1 inactive (pre-open) — standard full set; some markets run fewer maturities | | Maturity cycle | Quarterly — last Friday of Mar / Jun / Sep / Dec | | Longest tenor | 2 years | | Itayose pre-open period | 7 days; order book frozen 1 hour before opening | | Bond par value | 100 | | Maximum order price | 100.00 (no negative yields) | | Price precision | 2 decimal places | | Mark Price minimum volume | 100 USD equivalent per block | ## Minimum collateral base price (by yield category) Interpolated linearly by time to maturity — see [Base Price Adjustment](/fixed-rate-lending/advanced-topics/base-price-adjustment). | Category | Yield range | BP at maturity | BP at 1y duration | | :------: | :---------: | :------------: | :---------------: | | A | 0–3% | 96.00 | 93.00 | | B | 3–5% | 96.00 | 91.00 | | C | 5–7.5% | 96.00 | 89.00 | | D | 7.5–10% | 96.00 | 87.00 | | E | 10–15% | 96.00 | 84.00 | | F | 15%+ | 96.00 | 81.00 | **Current category assignment** (reviewed quarterly; production values confirmed 2026-07-16): BTC — A · ETH — B · JPYC — B · USDC — C · USDFC — C · FIL / axlFIL — F ## Supported assets by network | Network | Lend / Borrow | Accepted as collateral | | -------------- | ----------------------------- | ---------------------------- | | Ethereum | WBTC, ETH, USDC, axlFIL, JPYC | WBTC, ETH, USDC, JPYC, uMINT | | Arbitrum | WBTC, ETH, USDC | WBTC, ETH, USDC | | Filecoin (FVM) | FIL, USDFC | FIL, iFIL, wpFIL, USDFC | {% hint style="info" %} Asset availability last confirmed with the team on 2026-07-16 (JPYC lending markets: Ethereum only; wpFIL collateral: Filecoin only; uMINT/RWA collateral: Ethereum only). The live list can be read per network from `CurrencyController.getCurrencies()`. {% endhint %} {% hint style="warning" %} Avalanche support is **deprecated**. Polygon zkEVM has been **sunset and is no longer operational**. Legacy deployment addresses are retained for historical reference only: [Contracts & Security](/fixed-rate-lending/contracts-and-security). {% endhint %} ## Verifying on-chain * Liquidation configuration: `TokenVault.getLiquidationConfiguration()` * Order fee rate: `LendingMarket.getOrderFeeRate()` * Circuit breaker range: `LendingMarket.getCircuitBreakerLimitRange()` * Coverage of any account: `TokenVault.getCoverage(address)` # Advanced Topics Market microstructure and the engineering behind the on-chain order book These pages go beyond day-to-day usage into how the protocol's markets operate and how the on-chain order book is engineered. Nothing here is required to lend or borrow — but if you're evaluating the protocol's design, integrating against it, or just curious, this is the good part. ## Market operations * [**Itayose: Fair Price Discovery**](/fixed-rate-lending/advanced-topics/itayose) — the opening auction that prices every new market * [**Market Listing & Delisting**](/fixed-rate-lending/advanced-topics/market-listing-and-delisting) — how assets join and leave the platform ## Safety mechanisms * [**Circuit Breaker**](/fixed-rate-lending/advanced-topics/circuit-breaker) — per-block price limits that blunt manipulation and flash-loan attacks * [**Base Price Adjustment**](/fixed-rate-lending/advanced-topics/base-price-adjustment) — duration-aware minimum collateral requirements * [**Emergency Global Settlement**](/fixed-rate-lending/advanced-topics/emergency-global-settlement) — the last-resort shutdown that returns user funds ## Engineering * [**Orderbook Deep Dive**](/fixed-rate-lending/advanced-topics/orderbook-deep-dive) — why a full on-chain order book is hard, and the three techniques that make it economical: [Red-Black Trees](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/red-black-tree), [Lazy Evaluation](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/lazy-evaluation), and [Genesis Value & Compound Factor](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/genesis-value-and-compound-factor) ## Finance background * [**APR vs APY**](/fixed-rate-lending/advanced-topics/apr-vs-apy) — why the protocol quotes APR, and how to compare rates across venues # Itayose: Fair Price Discovery The opening auction that sets a fair price for every new market **Itayose** (板寄せ — the call-auction method used by Japanese exchanges) determines the opening price whenever a new order book starts trading. Instead of letting the first trade set an arbitrary price, all pre-open orders are matched simultaneously at a single fair price. ## The three phases ### Before opening (pre-open period) * Starting **7 days** before a new order book opens, users may place **limit orders only**, and only on **one side** (you can't quote both sides — a manipulation guard). * The app displays the **estimated opening APR** based on the evolving pre-open book. * **1 hour** before opening, the book freezes — no placing, amending, or canceling. ### During Itayose The smart contract consolidates all overlapping bids and offers and computes the opening price to **maximize executed volume**, considering total lend amount, total borrow amount, and the imbalance between them. With no imbalance, the mid-price is taken; with an imbalance, the price moves toward the heavier side. If no orders overlap, the market simply opens without an opening price. {% hint style="info" %} **Fees are waived for all orders filled during Itayose** — an incentive to participate in price discovery. {% endhint %} ### After opening Orders executed by Itayose all fill at the single opening price. Unfilled orders remain on the book as normal limit orders when continuous trading begins. ## Worked examples **Balanced book:** lend orders total 100,000 USDC and borrow orders total 100,000 USDC in the overlapping range 98.10–98.40 → the opening price is the mid, **98.25**, and everything fills. **Imbalanced book (more lenders):** 180,000 USDC of lend orders vs 120,000 USDC of borrow orders overlap in 97.60–97.90 → the price settles toward the lend side at **97.70**; all 120,000 of borrows fill, lend orders fill 120,000 by time priority, and the remaining 60,000 rest on the book at open. **No overlap:** highest borrow price 95.80 < lowest lend price 96.00 → no matching; the market opens with all pre-orders resting. ## Why it matters * **Fair access** — everyone who participates gets the same opening price * **Liquidity from block one** — new markets open with a populated book, not a void * **Manipulation resistance** — single-side quoting, the freeze window, and volume-maximizing pricing make the open hard to game ## Related * [Market Listing & Delisting](/fixed-rate-lending/advanced-topics/market-listing-and-delisting) — when Itayose runs * [Orderbook Rotation](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/orderbook-rotation) — the quarterly cycle it belongs to * [Fees](/fixed-rate-lending/core-concepts/fees) — the Itayose fee waiver # Market Listing & Delisting How assets join and leave the platform in an orderly way ## Listing a new asset 1. **Pre-open orders** — 7 days before the new asset's markets launch, users can place one-sided limit orders. The book freezes 1 hour before opening. 2. **Itayose** — the opening auction sets a fair initial price. See [Itayose](/fixed-rate-lending/advanced-topics/itayose). 3. **Order book expansion** — a newly listed asset typically starts with **four order books** (\~1 year of maturities). One additional 3-month book is added **each week** until the full set of eight books (2 years) is reached, matching other assets. The starting count is decided per market: depending on liquidity, a market may open with fewer books (for example two, covering six months). ## Delisting an asset Delisting is gradual — no forced closures: 1. **Auto-Roll stops** for the asset: matured positions no longer roll into the next market. 2. **Loans expire naturally** at their maturity dates. 3. **Repayment window** — after maturity, borrowers have **1 week** to repay. Unrepaid debt is then covered by liquidating the borrower's collateral, protecting lenders. 4. **Redemption** — after the repayment window, lenders redeem their principal plus interest in full. {% hint style="info" %} Trading remains available throughout the delisting process so users can unwind or clean up positions at any point. {% endhint %} ## Related * [Itayose](/fixed-rate-lending/advanced-topics/itayose) — opening price discovery * [Fixed Maturity & Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) — normal maturity behavior * [Protocol Parameters](/fixed-rate-lending/protocol-parameters) — currently supported assets # Circuit Breaker Per-block price limits that blunt manipulation and flash-loan attacks The Circuit Breaker limits how far prices can move **within a single block**, for both market and limit orders. Order volume that would execute outside the allowed range is [blocked](/fixed-rate-lending/core-concepts/order-book/order-life-cycle) rather than filled — an order executes up to the boundary and the remainder is killed. Because the limit binds per block, a flash-loan attacker cannot move the price dramatically inside one transaction — the core defense this mechanism provides. ## The three thresholds | Rule | Value | | ------------------------- | -------------------------------------------------------------------------------------------------------- | | Maximum **downward** move | 5% below the moving average of the last **5** reliable block prices | | Maximum **upward** move | 10% above the moving average of the last **3** reliable block prices | | Minimum allowance | The market may always move at least **2.00 down / 7.00 up** in absolute price, regardless of percentages | Formally: ``` Upper bound = Max( MA3 × 1.10, MA3 + 7.00 ) — capped at the maximum price of 100.00 Lower bound = Min( MA5 × 0.95, MA5 − 2.00 ) ``` A taker order executes only at prices within these bounds. An order priced beyond a bound is not rejected outright — it fills **up to** the bound, and any remainder that would cross it is killed (shown as **Blocked** in the app). The asymmetry (tighter downside) is deliberate: ZC bonds naturally drift **up** toward par as maturity approaches, so sharp downward moves are more likely to be anomalous — and downward spikes are what trigger unjust liquidations. A **reliable block price** is a block VWAP that met the [minimum volume threshold](/fixed-rate-lending/core-concepts/liquidation/mark-to-market); low-volume blocks don't contaminate the moving averages. ## Worked examples **Standard case:** last 5 reliable block prices 80.60, 80.40, 80.30, 80.10, 79.60. * MA5 = 80.20 → lower bound = 80.20 × 0.95 = **76.19** * MA3 = (80.30 + 80.10 + 79.60)/3 = 80.00 → upper bound = 80.00 × 1.10 = **88.00** * Next block, orders execute only within 76.19–88.00. **Low-price market (allowance kicks in):** MA5 = 16.00. The 5% rule would allow only −0.80, but the minimum downward allowance guarantees the market can move to 16.00 − 2.00 = **14.00**. Percentage limits never choke a low-priced book. ## What you'll see as a trader * Typical orders execute normally — most users never notice the mechanism. * A very large order may **partially fill** up to the boundary; the remainder is killed and shown as **Blocked** (or *Partially Filled & Blocked*) in the app. * Blocked orders can simply be retried in a later block, or replaced with limit orders inside the range. ## Related * [Order Life Cycle](/fixed-rate-lending/core-concepts/order-book/order-life-cycle) — Blocked/Killed states with examples * [Mark to Market](/fixed-rate-lending/core-concepts/liquidation/mark-to-market) — reliable block prices * [Protocol Parameters](/fixed-rate-lending/protocol-parameters) — current values # Base Price Adjustment Duration-aware minimum collateral requirements Zero-Coupon bonds start at a deep discount and converge to par (100) at maturity — which means a borrower's obligation *grows* in present-value terms over time. To keep positions safely collateralized along that path (and to stop attackers from using artificially low prices to compute collateral requirements), the protocol enforces a **minimum collateral base price (BP)**: when an order's price is below the BP, required collateral is computed from the BP instead. ## The formula BP is linearly interpolated by time to maturity *t* between two reference points — the BP at maturity and the BP at 1-year duration: $$ BP(t) = P\_{M} - \frac{t}{\text{secondsPerYear}} \times (P\_{M} - P\_{1Y}) $$ Reference points depend on the asset's **yield category**: | Category | Yield range | BP at maturity | BP at 1y duration | | :------: | :---------: | :------------: | :---------------: | | A | 0–3% | 96.00 | 93.00 | | B | 3–5% | 96.00 | 91.00 | | C | 5–7.5% | 96.00 | 89.00 | | D | 7.5–10% | 96.00 | 87.00 | | E | 10–15% | 96.00 | 84.00 | | F | 15%+ | 96.00 | 81.00 | Current category assignments (BTC — A, ETH/JPYC — B, USDC/USDFC — C, FIL/axlFIL — F) are reviewed **quarterly** and revised with community input based on observed APRs. Live values: [Protocol Parameters](/fixed-rate-lending/protocol-parameters). ## Examples * **Category A, 3 months to maturity:** BP = 96.00 − 0.25 × (96.00 − 93.00) = **95.25** * **Category C, 1 year:** BP = 96.00 − 1.0 × (96.00 − 89.00) = **89.00** * **Category F, 18 months:** BP = 96.00 − 1.5 × (96.00 − 81.00) = **73.50** (Illustrative annualized math; contracts compute in seconds.) ## What it means for borrowers * Your **minimum collateral** is computed from BP when market prices are below it — a spike-proof floor. * As maturity approaches, BP rises toward 96.00, so **collateral requirements gradually increase**. Plan buffers for long-dated, high-yield (high-category) borrows. * The formula is deterministic — you can project your future requirements exactly. ## Related * [Collateral](/fixed-rate-lending/core-concepts/collateral) · [Liquidation](/fixed-rate-lending/core-concepts/liquidation) * [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker) — complementary per-block price protection # Emergency Global Settlement The last-resort shutdown that returns user funds Emergency Global Settlement is the protocol's last-resort safeguard for catastrophic events — a critical exploit, an unrecoverable bug, or a systemic oracle failure. When executed by the protocol admin, **all markets halt permanently** and the protocol enters a redemption-only state. ## The process 1. **Halt** — all markets and the Token Vault stop. Price feeds are snapshotted for reference. 2. **Redemption** — each user's total assets and positions are valued (in present value, using the snapshotted prices) and replaced with a **proportional basket of the collateral tokens held in the Token Vault**. This applies to everyone, including users with deposits but no positions. 3. **Withdrawal** — users withdraw their replaced tokens. There is no deadline on redemption. ### Example Token Vault holds $100,000 USDC and $200,000 of ETH (1:2 ratio). A user's total funds are $15,000 (a $10,000 lending position + $5,000 of deposits). After settlement, the user's claims are replaced with **$5,000 in USDC and $10,000 in ETH**, which they can withdraw at any time. ## Important properties * **Irreversible** — once triggered, markets never reopen; resuming operations would require new contract deployments. This one-way design lets users withdraw with certainty that the state won't change again. * **Proportional** — everyone receives the same collateral-token ratios; no queue-jumping. * **Loss scenarios** — if the vault itself lost funds (e.g. via the exploit that triggered settlement), redemptions are proportionally reduced. Settlement guarantees fair distribution of what remains, not immunity from the loss itself. ## Related * [Contracts & Security](/fixed-rate-lending/contracts-and-security) — audits and bug bounty * [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker) and [Base Price Adjustment](/fixed-rate-lending/advanced-topics/base-price-adjustment) — the everyday safety layers that make this one a last resort # Orderbook Deep Dive Why a full on-chain order book is hard — and the three techniques that make ours economical A full on-chain order book is widely considered impractical: every open order is state, and Solidity storage writes are expensive. Three operations in particular scale badly with data volume — creating open orders, executing market orders against many resting orders, and rolling every position at maturity. Naively implemented, these can approach the block gas limit. **Secured Finance runs a full on-chain order book anyway**, using three complementary techniques: | Technique | What it solves | | -------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | | [**Red-Black Tree**](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/red-black-tree) | O(log n) insertion, deletion, and best-price lookup for orders, with a custom *unlink* operation for bulk removal of matched orders | | [**Lazy Evaluation**](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/lazy-evaluation) | Defers state updates until a user actually acts — filled orders and matured positions are recomputed on read, not rewritten on every event | | [**Genesis Value & Compound Factor**](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/genesis-value-and-compound-factor) | Rolls *every* position at maturity by updating a single factor, instead of touching each position individually | Supporting structure: [**Orderbook Rotation**](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/orderbook-rotation) caps each currency at 9 order books (8 active + 1 pre-open), recycling matured markets so the data subject to lazy evaluation stays bounded. {% hint style="info" %} **Why bother?** Liquidity pools are simpler, but pool rates lack the transparency, composability, and term structure of an order book. Fixed income needs real price discovery at each maturity — that's what this architecture buys. {% endhint %} # Red-Black Tree O(log n) order management with bulk unlinking Each order book stores its resting orders in **Red-Black Trees** — self-balancing binary search trees where insertion, deletion, and search are all **O(log n)**. Every node is a **price level**; orders at the same price hang off the node in a **linked list**, preserving first-come-first-served priority within the level. Each order book maintains **two trees**: one for lend orders, one for borrow orders. ## Why it saves gas * Inserting or removing an order touches only the O(log n) path to its node — never the whole book. * Finding the best price is a walk to the tree's edge, also O(log n). * Updates affect the target node and its neighbors only; total data volume doesn't multiply the cost. For a book with 100 price levels, operations touch \~7 nodes instead of scanning 100 — an order-of-magnitude gas reduction versus array-based structures. ## The unlink extension Secured Finance extends the standard structure with an **unlink** operation: when orders are matched, the affected nodes (or entire subtrees) are *marked detached* in O(1) rather than physically deleted and rebalanced. Traversals skip unlinked entries; physical cleanup happens later, batched into transactions that already pay for storage writes (see [Lazy Evaluation](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/lazy-evaluation)). This matters most when many orders match at once — a large market order sweeping several levels, or an [Itayose](/fixed-rate-lending/advanced-topics/itayose) auction filling an entire overlap range — where per-order deletion would multiply gas costs. ## Life of an order in the tree 1. Alice places a limit lend order at price 95.24 → if a node for 95.24 exists, her order appends to its list; otherwise a new node is inserted (O(log n)) and the tree rebalances if needed. 2. Bob's market order matches Alice's → her order is **unlinked** (O(1)); the tree structure is untouched. 3. A later user action triggers cleanup → empty nodes are physically removed in a batch. ## Related * [Lazy Evaluation](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/lazy-evaluation) — the deferred-cleanup principle * [Order Book & Order Types](/fixed-rate-lending/core-concepts/order-book) — the user-facing view # Lazy Evaluation Compute on read, not on write — the protocol's core gas strategy **Lazy evaluation** defers computation and storage updates until they're actually needed. Instead of rewriting state every time an order fills or a market matures, the protocol records the minimal facts and reconstructs current values **on read**. Storage writes are the most expensive operation on the EVM; reads and computation are cheap — lazy evaluation trades the former for the latter. ## The three states of user funds | State | Representation | Lazy behavior | | ------------------------ | ---------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | **Open order** | Entry in the order book tree | Fill status checked via [unlink markers](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/red-black-tree) on read — no storage update when matched | | **Active position** | Future Value (FV) | Valued on read; when its market matures, it's *treated as* rolled without any write | | **Auto-rolled position** | Genesis Value (GV) | Value derived from the global [Compound Factor](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/genesis-value-and-compound-factor) — one update rolls everyone | When you query your balance, the contract computes the true current amount in real time from these representations — always up to date, never stale, no batch jobs. ## CleanUp: when writes actually happen Deferred state is settled by an implicit **CleanUp** during operations that already pay for storage — placing an order, withdrawing collateral, minting/burning ZC tokens. At that point matched orders are physically removed and matured positions are formally converted to GV. Users never trigger cleanup explicitly. ## Why it's essential, not optional * **Auto-Roll** without lazy evaluation would mean updating *every position in a market* at maturity — thousands of writes in one block, breaching gas limits. With GV accounting it's a single factor update. * **Market orders** sweeping many resting orders would pay per-order deletion costs; unlinking makes matching O(1) per matched order. * [**Orderbook Rotation**](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/orderbook-rotation) caps the books per currency at 9, keeping the data subject to lazy evaluation bounded forever. ## Does deferral risk inconsistency? No. The derivations are deterministic: given the same on-chain facts, a read always produces the same value, whether cleanup has run or not. Deferral changes *when* storage is written, never *what* the position is worth. ## Related * [Genesis Value & Compound Factor](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/genesis-value-and-compound-factor) — the accounting that makes rolls O(1) * [Red-Black Tree](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/red-black-tree) — unlinking in the order book # Genesis Value & Compound Factor How every position rolls at maturity with a single storage update These two constructs let the protocol roll *all* positions at maturity by updating **one number per market**, instead of touching every position — the accounting core of [Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) and [Lazy Evaluation](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/lazy-evaluation). ## Compound Factor At each quarterly roll, the protocol records the roll's effective discount rate as a multiplier and chains it onto a running product — the **Compound Factor**. Two are maintained per currency, differing by the roll fee: **Lending Compound Factor (LCF):** $$ LCF\_{n+1} = LCF\_{n} \times \left(\frac{1}{\text{AutoRollPrice}\_{n}} - \text{AutoRollFeeRate}\right) $$ **Borrowing Compound Factor (BCF):** $$ BCF\_{n+1} = BCF\_{n} \times \left(\frac{1}{\text{AutoRollPrice}\_{n}} + \text{AutoRollFeeRate}\right) $$ The asymmetry (− fee for lenders, + fee for borrowers) is how the [auto-roll fee](/fixed-rate-lending/core-concepts/fees) is charged without a separate transaction. ## Genesis Value A position's **Genesis Value (GV)** expresses it in terms of the market's **Genesis Date** (the protocol's reference start date). When a position is created or rolls past maturity: $$ GV = \frac{FV}{LCF\_{\text{current}}} $$ and at any later time its Future Value is recovered by: $$ FV\_{n} = GV \times LCF\_{n} $$ A lender's GV is positive and **never changes** — their FV grows purely through the LCF. A borrower's GV is negative and grows in magnitude with each roll, reflecting the fee spread between BCF and LCF: $$ GV\_{n+a} = GV\_{n} + GV\_{n}\left(\frac{BCF\_{n+a}}{BCF\_{n}} \cdot \frac{LCF\_{n}}{LCF\_{n+a}} - 1\right) \quad (GV\_n < 0) $$ ## Worked example 1. Roll occurs at AutoRollPrice 0.98 (a unit price of 98.00) with fee rate 0.001. A lender's LCF goes from 1.20 → 1.20 × (1/0.98 − 0.001) ≈ **1.2233**. 2. A lender with GV = 500: FV moves from 600 → 500 × 1.2233 ≈ **611.6** — the position grew through the roll with *zero* per-position computation. 3. For 1,000 positions, a naive roll would cost \~20M gas (20k × 1,000 writes). Updating the Compound Factor once costs \~50k gas — a **99.7% reduction** — and individual FVs are derived on read. ## Design notes * **One Genesis Date for everyone** standardizes the reference point; individual entry dates are captured by the LCF value at entry, not by per-user anchors. * GV is protocol-computed, immutable per position, and fully auditable on-chain. * ZC **perpetual tokens** ([Tokenization](/fixed-rate-lending/core-concepts/tokenization)) are GV made transferable: an ERC-20 denominated in Genesis Value terms. ## Related * [Auto-Roll Price Discovery](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll/auto-roll-price-discovery) — where AutoRollPrice comes from * [Lazy Evaluation](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/lazy-evaluation) — the read-time derivation this enables # Orderbook Rotation The quarterly recycling cycle that keeps gas costs bounded At the full standard configuration, each currency runs **9 order books (8 active + 1 inactive) inside a single lending market contract**; a market with less liquidity may keep fewer maturities open. Rather than creating new order books each quarter, matured ones are **recycled** — a design that both avoids deployment costs and caps the data volume that [lazy evaluation](/fixed-rate-lending/advanced-topics/orderbook-deep-dive/lazy-evaluation) must handle. ## The cycle 1. The **inactive** order book opens a **7-day pre-order period** for the next new maturity (2 years out), ending 1 hour before the nearest active book matures. 2. At maturity: the [Itayose](/fixed-rate-lending/advanced-topics/itayose) auction runs and the new book **activates**; the matured book's positions [auto-roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll); the matured book itself moves to the end of the queue and becomes the new **inactive** book. 3. The cycle repeats every quarter. **Example (ETH):** active books MAR2026…DEC2027, inactive book preparing MAR2028. When MAR2026 matures, MAR2028 opens via Itayose, MAR2026's positions roll into JUN2026 (nearest 3-month), and the MAR2026 order book is recycled to prepare JUN2028.

Market Life Cycle

## Why exactly 9? * **Gas bound** — order placement and matching never consider more than 8 active books' data; lazy evaluation has a fixed-size working set. * **Liquidity concentration** — 8 quarterly points cover 2 years without fragmenting volume across dozens of dates. * **No deployment churn** — recycling reuses order books within the same contract, so the protocol's address surface stays stable. ## Related * [Fixed Maturity & Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) — the user-facing view of the same cycle * [Itayose](/fixed-rate-lending/advanced-topics/itayose) — how the new book's opening price is set # APR vs APY Why the protocol quotes APR, and how to compare rates across venues **APR** (Annual Percentage Rate) is simple interest — the periodic rate scaled to a year, ignoring compounding. **APY** (Annual Percentage Yield) is the effective annual return *including* compounding: $$ APY = \left(1 + \frac{APR}{n}\right)^{n} - 1 \qquad (n = \text{compounding periods per year}) $$ ## Why Secured Finance quotes APR * **Fixed-income convention** — bond markets quote simple rates; participants from traditional finance expect APR. * **Nothing to compound** — a Zero-Coupon bond has exactly two cash flows. There are no interim payments to reinvest, so a compounding assumption would be fiction. * **Exact by construction** — buy at 98.04, redeem at 100: your return *is* the discount. The APR label just annualizes it (see [Zero-Coupon Bonds](/fixed-rate-lending/core-concepts/zero-coupon-bonds) for the formulas). Most variable-rate DeFi protocols quote APY because their rates float and compound continuously — the APY figure assumes today's rate holds for 365 days, which it never does. When comparing rates across venues, convert to a common basis first. ## The difference in numbers Bob invests 100 USD at "10%" for 6 months: * **10% APR** → 100 × (1 + 0.10 × 0.5) = **105.00** * **10% APY** (compounded semi-annually) → equivalent APR is lower: 100 × (1.10)^0.5 ≈ **104.88** The same nominal "10%" differs by how compounding is counted. At 12% nominal for one year: | Compounding | Effective APY | | ----------- | ------------- | | Annual | 12.00% | | Quarterly | 12.55% | | Monthly | 12.68% | | Daily | 12.75% | ## Converting for comparison * APR → APY: `APY = (1 + APR/n)^n − 1` * APY → APR: `APR = n × ((1 + APY)^(1/n) − 1)` When comparing a Secured Finance fixed APR with a variable APY elsewhere, remember the fixed rate is **guaranteed to maturity**, while the APY is an extrapolation of a moment's rate. ## Related * [Zero-Coupon Bonds](/fixed-rate-lending/core-concepts/zero-coupon-bonds) — price → APR math used by the app * [Fixed Maturity & Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll) — quarterly reinvestment via Auto-Roll # Contracts & Security Deployed addresses, audit reports, and security resources ## Contract addresses The latest version of [`@secured-finance/contracts`](https://github.com/Secured-Finance/contracts) is deployed at the following addresses on **Ethereum Mainnet, Arbitrum One, and Filecoin** (all addresses on this page are taken from the [`deployments/`](https://github.com/Secured-Finance/contracts/tree/develop/deployments) records in the contracts repository): | Contract | Address | | ----------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | | [BeaconProxyController](https://github.com/Secured-Finance/contracts/blob/develop/contracts/protocol/BeaconProxyController.sol) | `0x581e463841bD2B30285929448e1A93D74708719F` | | [CurrencyController](https://github.com/Secured-Finance/contracts/blob/develop/contracts/protocol/CurrencyController.sol) | `0x7dca6b6BF30cd28ADe83e86e21e82e3F852bF2DC` | | [GenesisValueVault](https://github.com/Secured-Finance/contracts/blob/develop/contracts/protocol/GenesisValueVault.sol) | `0xa2700D5feDB13b86Bba3228008C7a0d464a07f2b` | | [LendingMarketController](https://github.com/Secured-Finance/contracts/blob/develop/contracts/protocol/LendingMarketController.sol) | `0x35e9D8e0223A75E51a67aa731127C91Ea0779Fe2` | | [ReserveFund](https://github.com/Secured-Finance/contracts/blob/develop/contracts/protocol/ReserveFund.sol) | `0xD2683E22331B9a6e9F38350d829dBEB64ad2778e` | | [TokenVault](https://github.com/Secured-Finance/contracts/blob/develop/contracts/protocol/TokenVault.sol) | `0xB74749b2213916b1dA3b869E41c7c57f1db69393` | {% hint style="info" %} [`ProxyController`](https://github.com/Secured-Finance/contracts/blob/develop/contracts/protocol/ProxyController.sol) is deployed at a **different address on each network**: {% endhint %} | Network | ProxyController | | ---------------- | -------------------------------------------- | | Ethereum Mainnet | `0x5615074Bcd7eA63f10f961064F9EBb8Af61Fa960` | | Arbitrum One | `0x8A5a80bca08dD11d5623862B8B0f6286f539dFAb` | | Filecoin | `0x1634D2104B48299DA7D927C4582EA7Ba67020EBB` |
Testnet addresses (Sepolia, Arbitrum Sepolia) Testnet deployments use different addresses from production: | Contract | Sepolia | Arbitrum Sepolia | | ----------------------- | -------------------------------------------- | -------------------------------------------- | | BeaconProxyController | `0xaa38CeF2FBa6F54Ce1cCe9De7035abCEfE4657a0` | `0x7c221f83b09cA6cA6f89405F4010B307c0B55595` | | CurrencyController | `0x5b82FA84e455F7Ba27Def020F18Dc379AB701f97` | `0xe36a7122940d0f530c8857dF37dBaAb2d7D17fC3` | | GenesisValueVault | `0x89fF7044d93bA01b6cEE2eBA09D0f793A8533704` | `0x087b6E8728C39D298F39d22E1Ceb95E8d0e72B3F` | | LendingMarketController | `0x66aCc8c1314797fDba0b63676C8Aa367D3821C8C` | `0xc81ec45EDb30b755f66D050AdEB77cC85522e794` | | ProxyController | `0xE453FfcA365a46eaf5b3D5752b5Dc87Fc6986cd8` | `0xE9bDa3831905ABB5f2Ba50D6A23Bf22e5f539E00` | | ReserveFund | `0x4f856edE4846f1dC6A2cD4a452b3E704C61f1134` | `0x20b24b5A5e45bB27e36B95E1578b13975db19b52` | | TokenVault | `0x4E01afFD15C58221faC3F77649a483531fF13646` | `0xB61ec7d5bE3bEdc038bd5f4E32e870B83F725F37` |
Deprecated networks (Avalanche, Polygon zkEVM) Avalanche support is deprecated. Polygon zkEVM has been sunset and is no longer operational. The legacy deployment addresses below are retained for historical reference only. Avalanche legacy addresses: | Contract | Address | | ----------------------- | -------------------------------------------- | | BeaconProxyController | `0x581e463841bD2B30285929448e1A93D74708719F` | | CurrencyController | `0x7dca6b6BF30cd28ADe83e86e21e82e3F852bF2DC` | | GenesisValueVault | `0xa2700D5feDB13b86Bba3228008C7a0d464a07f2b` | | LendingMarketController | `0x35e9D8e0223A75E51a67aa731127C91Ea0779Fe2` | | ProxyController | `0x0fC649b763A685E2f22fA248CEbf6b2b70f53F1F` | | ReserveFund | `0xD2683E22331B9a6e9F38350d829dBEB64ad2778e` | | TokenVault | `0xB74749b2213916b1dA3b869E41c7c57f1db69393` | Polygon zkEVM legacy addresses: | Contract | Address | | ----------------------- | -------------------------------------------- | | BeaconProxyController | `0xd5043054819F001B40F13dDCB3EA5aCa9bc18947` | | CurrencyController | `0x9E1254292195F241FA2DF1aA51af23796627A74B` | | GenesisValueVault | `0x5926A0F0D204444bEDfa16F3Ae51C26848245402` | | LendingMarketController | `0x9a2B4b3AC4AE0D8aFE670DacB639e71C81f7Ba36` | | ProxyController | `0x54A3F4ef9854c43926563348508d1E9C0f1D7926` | | ReserveFund | `0xff56c7d0129a75594D02ee02F73E5538E3171445` | | TokenVault | `0x0896AC8B9e2DC3545392ff65061E5a8a3eD68824` |
## Audit reports | Auditor | Scope | Period | Report | | ---------- | ---------------------------- | ---------- | ----------------------------------------------------------------------------------------------------------------- | | Quantstamp | Fixed-Rate Lending contracts | 2023/10–11 | [2023-11-Quantstamp.pdf](https://github.com/Secured-Finance/contracts/blob/develop/audits/2023-11-Quantstamp.pdf) | | Quantstamp | Fixed-Rate Lending contracts | 2024/3 | [2024-03-Quantstamp.pdf](https://github.com/Secured-Finance/contracts/blob/develop/audits/2024-03-Quantstamp.pdf) | USDFC Stablecoin audits (Hexens 2025/1, Decurity 2025/3) are listed in the [USDFC documentation](/usdfc-stablecoin/deployed-contracts). ## Security resources * **Bug Bounty** — vulnerabilities are rewarded through our [Bug Bounty program](/developer-portal/bug-bounty) * **Runtime protections** — [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker), [Base Price Adjustment](/fixed-rate-lending/advanced-topics/base-price-adjustment), and [minimum-volume Mark Pricing](/fixed-rate-lending/core-concepts/liquidation/mark-to-market) * **Last resort** — [Emergency Global Settlement](/fixed-rate-lending/advanced-topics/emergency-global-settlement) * **Verify parameters yourself** — on-chain getters listed in [Protocol Parameters](/fixed-rate-lending/protocol-parameters) # FAQs Frequently asked questions about the Fixed-Rate Lending Protocol ## Platform basics
What is Secured Finance? A DeFi platform for **fixed-rate, fixed-term lending and borrowing**, built on a fully on-chain order book and Zero-Coupon bonds, live on Ethereum, Arbitrum, and Filecoin. Secured Finance also operates the [USDFC stablecoin](/usdfc-stablecoin/overview) on Filecoin.
What is a Zero-Coupon (ZC) bond? A debt instrument sold at a discount and worth its full face value (100) at maturity. Buy at 95, hold to maturity, receive 100 — the 5-point discount is your fixed interest. Details: [Zero-Coupon Bonds](/fixed-rate-lending/core-concepts/zero-coupon-bonds).
What asset underlies each ZC bond? The specific currency of that market: lending ETH in the DEC2026 market gives you a claim denominated in ETH (*ZC ETH DEC2026*). Each bond is asset-specific, maturity-specific, and can be [tokenized as an ERC-20](/fixed-rate-lending/core-concepts/tokenization) for use across DeFi.
## Trading
Is my money locked until maturity? No — there is no lock-up. Positions can be **unwound** (closed at the current market price) 24/7, subject to order-book liquidity. Lending positions can also be tokenized and transferred. Note the flip side: **exiting requires an action** — the protocol never auto-settles at maturity. See [Managing Your Positions](/fixed-rate-lending/getting-started/managing-positions).
What happens to my position at maturity? It **auto-rolls** into the nearest 3-month market at a fair roll price. Auto-Roll is protocol-wide — there are no settings to enable or disable. To receive your funds instead, unwind manually before or after maturity. See [Fixed Maturity & Auto-Roll](/fixed-rate-lending/core-concepts/fixed-maturity-and-auto-roll).
What happens to my open orders at maturity? Unfilled orders **expire** automatically and the allocated funds return to your deposit balance, ready to withdraw or reuse. Filled portions become positions and follow the Auto-Roll rules above.
Why is my unwind order "Blocked" or "Partially Blocked"? Either the order book lacks matching liquidity, or execution would fall outside the [Circuit Breaker](/fixed-rate-lending/advanced-topics/circuit-breaker)'s allowed price range for this block. Wait for liquidity and retry, or place an opposite **limit order** at your acceptable price — filled amounts net against your position. See [Order Life Cycle](/fixed-rate-lending/core-concepts/order-book/order-life-cycle).
What fees do I pay? The **taker side** of a fill pays the trading fee (1% p.a. prorated — 0.25% for 3 months): market orders, and the portion of a limit order that crosses the book and fills immediately. **Volume resting on the book pays nothing.** Auto-Rolls charge the same rate as the taker fee each quarter. Liquidated borrowers pay a 7% liquidation fee. Full details: [Fees](/fixed-rate-lending/core-concepts/fees) and [Protocol Parameters](/fixed-rate-lending/protocol-parameters).
## Collateral & risk
Why do borrowers need collateral? Collateral replaces credit checks: it protects lenders from default because under-collateralized positions are liquidated before losses reach lenders. See [Collateral](/fixed-rate-lending/core-concepts/collateral).
Which assets can be collateral? It varies by network — WBTC, ETH, USDC, and uMINT (RWA) on Ethereum; WBTC, ETH, and USDC on Arbitrum; FIL, iFIL, wpFIL, and USDFC on Filecoin. The authoritative list, with haircuts: [Protocol Parameters](/fixed-rate-lending/protocol-parameters).
What happens if my collateral value falls? Your LTV rises. At the liquidation threshold (80%), up to 50% of your debt can be liquidated with a 7% fee taken from collateral. Watch the risk indicator in [Portfolio](/fixed-rate-lending/getting-started/platform-guide/portfolio) and add collateral or reduce debt early. See [Liquidation](/fixed-rate-lending/core-concepts/liquidation).
## Advanced
What is Itayose? The opening auction that sets a fair price whenever a new quarterly market launches: pre-open orders are collected for 7 days and matched simultaneously at the volume-maximizing price — with zero fees for filled pre-orders. See [Itayose](/fixed-rate-lending/advanced-topics/itayose).
How can the order book be fully on-chain? Isn't that too expensive? It's economical thanks to three techniques: Red-Black Trees for O(log n) order management, lazy evaluation to defer storage writes, and Genesis Value accounting to roll all positions with one update. See the [Orderbook Deep Dive](/fixed-rate-lending/advanced-topics/orderbook-deep-dive).
Can I run a liquidation bot? Yes — liquidation is permissionless and pays a 5% fee to the liquidator. Start with the [Liquidator's Guide](/fixed-rate-lending/core-concepts/liquidation/liquidators-guide).
## Still stuck? * Guides: [Getting Started](/fixed-rate-lending/getting-started) * Developers: [Developer Portal](/developer-portal/introduction) * Community support: [Support & Contacts](/community/support-and-contacts) # Overview The [**SF Yield Vault**](https://vaults.secured.finance/) is an automated yield management module within the **Secured Finance** ecosystem. Vaults are designed to provide users with a simple way to earn yield by depositing assets into a Vault, without the need to actively manage positions, strategies, or market timing. In return for a deposit, users receive Vault shares that represent their proportional ownership of the Vault. The value of these shares changes over time based on the performance of the underlying strategies. The SF Yield Vault architecture is built by forking **Yearn V3** and follows the ERC-4626 standard. This modular design separates asset custody and accounting (Vaults) from yield generation (Strategies), allowing strategies to be updated or expanded while maintaining a consistent user interface. From a user perspective, interaction with Vaults is intentionally minimal. Users can deposit assets, monitor the value of their position, and withdraw assets at any time by redeeming Vault shares. All strategy selection and allocation decisions are handled at the Vault level. Secured Finance currently supports multiple asset-specific Vaults, including [**JPYC Vault**](https://vaults.secured.finance/1/0x7a6E3635694952dC00F6bA4d4AD1a7B892028789) and[ **USDFC Vault**](https://vaults.secured.finance/314/0x9f59bB0A1dbfad10443Fba08D41c75b0664Bf41B). Each Vault accepts deposits in its underlying asset and allocates them to lending strategies to generate variable yield. Over time, additional Vaults and strategies may be introduced to support different assets and yield sources. For a practical walkthrough of how to use Vaults, please refer to the **Getting Started** section. # Getting Started SF Yield Vault Basic #### What is SF Yield Vault? SF Yield Vault is an automated yield management product that allows users to deposit assets into asset-specific Vaults and earn variable yield through underlying strategies. At the technical level, a Vault is an asset-specific ERC-4626–compliant smart contract that: * Accepts deposits of a specific asset * Issues Vault shares representing proportional ownership * Allocates deposited assets to one or more yield strategies Users do not interact with strategies directly. Instead, they hold Vault shares, whose value increases as yield is generated. *** #### Supported Assets Each Vault supports a single base asset. * JPYC Vault: JPYC * USDFC Vault: USDFC Additional Vaults with different base assets may be introduced in the future. *** #### Depositing into a Vault When a user deposits assets into a Vault: 1. The Vault receives the asset 2. Vault shares are minted to the user 3. Assets are allocated to one or more strategies according to the Vault configuration Deposits are permissionless unless explicitly restricted. *** #### Withdrawing from a Vault Users can withdraw by redeeming their Vault shares. * Withdrawals return the underlying asset * The amount received depends on the current share price * Withdrawals may be subject to limits or delays, depending on strategy liquidity # Deposit Assets #### Overview This page explains how to **deposit supported assets into a Vault**. By depositing assets into a Vault, users can participate in automated yield strategies without actively managing positions. In return for a deposit, users receive **Vault Shares**, which represent their proportional ownership of the Vault. Deposits are currently supported for **JPYC Vault** and **USDFC Vault**. *** ### Before You Deposit Before depositing assets into a Vault, please ensure the following: * You have a supported wallet (e.g. MetaMask) * Your wallet is connected to the correct network * You hold the required asset for the Vault you want to use * You understand that Vault returns are **variable** and **not guaranteed** Depositing into a Vault is not the same as depositing into a bank account.\ The value of your position may increase or decrease over time depending on strategy performance. *** ### What Happens When You Deposit When you deposit assets into a Vault: 1. Your assets are transferred to the Vault contract 2. The Vault mints **Vault Shares** to your wallet 3. The deposited assets are allocated to one or more strategies 4. Yield generated by the strategies increases the value of Vault Shares over time The number of Vault Shares you hold does not change unless you deposit or withdraw.\ Instead, the **value per share** changes as yield accrues. *** ### Step-by-Step: Depositing Assets #### Step 1: Connect Your Wallet * Open the Secured Finance application * Click **Connect Wallet** * Select your wallet provider and approve the connection Once connected, your wallet address and balances will be displayed. *** #### Step 2: Select a Vault * Navigate to the **Vaults** section * Choose the Vault you want to deposit into * For example: **JPYC Vault** Each Vault supports a single base asset.
*** #### Step 3: Enter Deposit Amount * Enter the amount of assets you wish to deposit * Review the estimated number of Vault Shares you will receive * Check any minimum or maximum deposit limits (if applicable)
*** #### Step 4: Approve Asset Usage Before your first deposit, you must approve the Vault to use your assets. * Click **Approve** * Confirm the transaction in your wallet * Wait for the approval transaction to be confirmed This step is required only once per asset per Vault. *** #### Step 5: Confirm Deposit * Click **Deposit** * Confirm the transaction in your wallet * Wait for the transaction to be finalized on-chain After confirmation, your Vault Shares will be credited to your wallet.
*** ### After Depositing Once your deposit is complete: * Your Vault Share balance will be updated * Your position will appear in your portfolio * Yield will begin accruing automatically No further action is required to earn yield.
*** ### Important Notes * Deposits are subject to blockchain transaction fees * Depositing does not lock your assets for a fixed period * Vault Shares can be redeemed later to withdraw assets * The value of your position may fluctuate over time *** ### Next Steps After depositing assets, you may want to: * Monitor your Vault position * Learn how withdrawals work * Understand how yield is generated These topics are covered in the following sections. # Withdrawing Assets #### Overview This page explains how to **withdraw assets from a Vault**. Withdrawing assets involves redeeming your **Vault Shares** in exchange for the underlying asset. The amount you receive depends on the current **value per share** at the time of withdrawal. *** ### Before You Withdraw Before withdrawing from a Vault, please note the following: * You must have an active Vault position * Your wallet must be connected to the correct network * The amount you receive may differ from your original deposit * Vault withdrawals are **not fixed-rate** and **not guaranteed** Withdrawals are processed on-chain and are subject to network conditions and strategy liquidity. *** ### What Happens When You Withdraw When you withdraw assets from a Vault: 1. Your Vault Shares are redeemed 2. The Vault retrieves assets from the underlying strategy 3. The corresponding amount of the base asset is transferred to your wallet If yield has been generated, you may receive **more** than your initial deposit.\ If losses occurred, you may receive **less**. *** ### Step-by-Step: Withdrawing Assets #### Step 1: Connect Your Wallet * Open the Secured Finance application * Click **Connect Wallet** * Confirm the connection in your wallet Your active Vault positions will be displayed once connected. *** #### Step 2: Locate Your Vault Position * Navigate to **Vaults** or **Portfolio** * Select the Vault you wish to withdraw from * For example: **JPYC Vault** * Review your current: * Vault Share balance * Estimated asset value
*** #### Step 3: Choose Withdrawal Amount * Enter the amount you wish to withdraw * Some interfaces allow withdrawing by **asset amount** * Others allow withdrawing by **share amount** * Review the estimated amount you will receive The estimate is based on the current Vault share price.
*** #### Step 4: Confirm Withdrawal * Click **Withdraw** * Confirm the transaction in your wallet * Wait for the transaction to be confirmed on-chain Once confirmed, the redeemed assets will be sent to your wallet. *** ### Partial vs Full Withdrawals * **Partial withdrawal** * Redeems a portion of your Vault Shares * Remaining shares continue to earn yield * **Full withdrawal** * Redeems all Vault Shares * Closes your Vault position Both options follow the same withdrawal process. *** ### Liquidity Considerations Withdrawals depend on the liquidity available within the strategy. In certain market conditions: * Withdrawals may take longer to process * The amount received may be affected by liquidity constraints These behaviors are strategy-dependent and are covered in more detail in the **Core Mechanics** section. *** ### After Withdrawing After a successful withdrawal: * Your Vault Share balance will be updated * Your wallet will receive the withdrawn assets * Any remaining shares will continue to accrue yield All transactions can be reviewed on-chain using a block explorer.
*** ### Important Notes * Withdrawals incur blockchain transaction fees * Vaults do not enforce fixed lock-up periods by default * Share value may fluctuate between deposit and withdrawal * Withdrawing does not retroactively lock in past yields *** ### Next Steps After withdrawing assets, you may want to: * Monitor remaining Vault positions * Re-deposit assets * Learn how to manage and track your Vault performance These topics are covered in the following sections. # Managing Position #### Overview This page explains how to **monitor and manage your Vault position** after depositing assets. Once assets are deposited into a Vault, users do not need to actively manage strategies. However, understanding how to track performance and position status is important for a smooth experience. *** ### What It Means to “Manage” a Vault Position Managing a Vault position does **not** involve: * Selecting strategies * Rebalancing assets * Adjusting maturities or rates Instead, it means: * Monitoring the value of your position * Understanding how yield is reflected * Deciding when to deposit more or withdraw *** ### Key Metrics to Monitor When viewing your Vault position, you will typically see the following metrics. #### Vault Share Balance * The number of Vault Shares you own * This number remains constant unless you deposit or withdraw * Shares represent your proportional ownership of the Vault *** #### Estimated Asset Value * The current value of your Vault position in the base asset * Calculated using the current value per share * This value may fluctuate over time *** #### Share Price (Value per Share) * Indicates how much of the base asset each Vault Share represents * Increases as yield is generated * Decreases if losses occur within the strategy Users should focus on **value per share**, not just share quantity. *** ### Understanding Yield Accrual Yield in a Vault is accrued automatically. * Yield is reflected through changes in share price * No additional tokens are distributed * No action is required from users This model allows yield to compound naturally over time. *** ### Adding More Assets If you wish to increase your position: * You can deposit additional assets into the same Vault * New Vault Shares will be minted based on the current share price * Existing shares are unaffected Deposits and withdrawals are independent actions. *** ### Partial Withdrawals Users are not required to fully exit a Vault. * You may withdraw a portion of your Vault Shares * Remaining shares continue to accrue yield * Partial withdrawals allow flexible position sizing *** ### Tracking Performance Over Time Performance can be tracked by: * Comparing your initial deposit to current estimated value * Monitoring changes in value per share * Reviewing transaction history on-chain Vaults are designed for medium- to long-term participation rather than frequent trading. *** ### Common User Questions #### Why does my share balance stay the same? Because yield is reflected in **share value**, not share quantity. *** #### Why does my estimated value change even if I take no action? Because strategy performance and market conditions change over time. *** #### Can the value go down? Yes. Vault positions are subject to market and strategy risk.\ Value may decrease under adverse conditions. *** ### When to Consider Withdrawing You may consider withdrawing if: * You want to reduce exposure * You want to reallocate capital * Market conditions no longer fit your risk preference Withdrawals are executed by redeeming Vault Shares, as explained in the previous section. *** ### Next Steps After learning how to manage your Vault position, you may want to: * Explore the **Platform Guide** to understand the UI in detail * Learn more about how Vaults work internally * Review strategy-specific documentation These topics are covered in the following sections. # Platform Guide #### Overview This page explains the **Vault interface**. At this stage, the Vault interface allows users to perform **two actions only**: * Deposit assets into a Vault * Withdraw assets from a Vault All information shown on the screen relates directly to these actions or to the current Vault status. *** ### Vault Header At the top of the Vault page, you will see the Vault header. This section displays: * **Vault name**\ Example: `JPYC` * **Vault contract address**\ Example: `0x7a6E3635694952dC00F6bA4d4AD1a7B892028789` * **Network and asset information**\ Example: JPYC on Ethereum * **Summary metrics** * **Total deposited**\ The total amount of assets currently deposited into the Vault * **Historical APY**\ The annualized yield based on past performance * **Value in asset**\ The current estimated value of your position in the base asset These values update automatically based on on-chain data.
*** ### Deposit and Withdraw Tabs Below the header, there are two tabs: * **Deposit** * **Withdraw** These tabs define the actions you can take in the Vault.
*** ### Deposit Tab The **Deposit** tab is used to deposit assets from your wallet into the Vault. #### Fields Explained * **From wallet**\ The asset that will be sent from your wallet\ Example: `JPYC` * **Amount**\ The amount of the asset you want to deposit\ You can click **Max** to use your full wallet balance * **To vault**\ The Vault share token you will receive\ Example: `yvJPYC` * **You will receive**\ An estimate of how many Vault Shares you will receive\ This value depends on the current share price #### How Deposits Work 1. Enter the deposit amount 2. Approve the asset (if required) 3. Confirm the deposit transaction Once completed, Vault Shares are credited to your wallet. *** ### Withdraw Tab The **Withdraw** tab is used to redeem Vault Shares and receive assets back to your wallet. #### Fields Explained * **From vault**\ The Vault share token you are redeeming\ Example: `yvJPYC` * **Amount**\ The number of Vault Shares you want to redeem\ You can click **Max** to withdraw all shares * **To wallet**\ The asset that will be returned to your wallet\ Example: `JPYC` * **You will receive**\ An estimate of the asset amount you will receive\ This value depends on the current share price #### How Withdrawals Work 1. Enter the withdrawal amount 2. Confirm the transaction in your wallet After confirmation, the asset is sent to your wallet. *** ### About Tab The **About** tab provides general information about the Vault. This section includes: * A short Vault description * Historical APY data * Fee information, such as: * Management fee * Performance fee All values shown reflect the current configuration of the Vault.
*** ### Strategies Tab The **Strategies** tab shows how assets deposited in the Vault are allocated. In this section, you may see: * The name of the strategy currently used by the Vault\ Example: `Secured Finance JPYC Lender` * **Allocation percentage**\ The portion of Vault assets allocated to each strategy * **Unallocated balance**\ Assets that are not currently allocated to a strategy This tab is **informational only**.\ Users cannot change strategy allocation.
*** ### Info Tab The **Info** tab displays additional Vault-related information, such as: * Vault metadata * On-chain references * Supporting technical details This tab is intended for users who want more context about the Vault.
*** ### Risk Tab The **Risk** tab outlines risks associated with depositing into the Vault. This section typically includes: * Smart contract risk * Strategy-related risk * Liquidity risk Users are encouraged to review this information before depositing assets.
*** ### Transaction Confirmation All actions in the Vault require confirmation through your wallet. * Deposits * Withdrawals * Approvals Transactions are completed once confirmed on-chain. *** ### Summary Using the current Vault interface, users can: * Deposit assets from their wallet into a Vault * Withdraw assets by redeeming Vault Shares * View Vault status, allocation, and basic performance metrics For details on how Vaults and strategies work internally, refer to the **Core Mechanics** section. # Core Mechanics #### Overview This section explains the **core mechanics behind the SF Yield Vault framework**. While the [Getting Started](/sf-yield-vault/getting-started) section focuses on how to use Vaults,this section describes **how Vaults and strategies work internally**,including how assets are managed, allocated, and how yield is generated. The pages in this section are intended for users who want a deeper understanding of the system,\ as well as developers and advanced users. *** ### What You Will Learn In this section, you will learn: * How Vaults are structured and how they manage user assets * How strategies are integrated into Vaults and how allocation works * How different Vaults and strategies are organized within the system Each page builds on the previous one, starting from general concepts and moving toward strategy-specific details. *** ### Section Structure #### Vault System Overview This page introduces the **high-level architecture** of Vaults. It explains: * The role of Vaults as asset managers and accounting layers * The separation between Vaults and strategies * How deposits, shares, and withdrawals are handled This page applies to **all Vaults**, regardless of the underlying strategy. *** #### Strategy Framework and Allocation Model This page explains **how strategies are designed and connected to Vaults**. It covers: * What a strategy is in the context of Vaults * How Vaults allocate assets to strategies * How strategies are added, managed, and updated The concepts in this page are shared across all current and future strategies. *** #### Available Vaults and Strategies This page provides an overview of **Vaults and strategies that are currently available**. It serves as a navigation hub and links to detailed documentation for each strategy, allowing users to explore strategy-specific behavior and characteristics. # Vault System Overview #### Purpose of This Page This page explains the **core system model** shared by all Vaults. It describes how user funds flow through the system, independent of any specific strategy. *** #### Vault as the Core Capital Container At the center of the system is the **Vault**. A Vault is a smart contract that: * Accepts user deposits of a single asset * Issues Vault Shares to represent ownership * Keeps track of total assets and liabilities * Delegates capital deployment to strategies The Vault itself does **not** generate yield.\ Instead, it acts as a **capital coordinator and accounting layer**. This design is inherited from Yearn V3 and allows the Vault interface to remain stable even as strategies evolve. *** #### Separation of Responsibilities The Vault system is intentionally modular. Each component has a clearly defined role: * **Vault** * Manages deposits and withdrawals * Issues and redeems shares * Tracks total assets * **Strategy** * Deploys assets to generate yield * Interacts with external protocols or markets * **Periphery Modules** * Enforce limits, fees, and configuration * Provide auxiliary logic without modifying core contracts This separation allows strategies to be added, removed, or replaced without disrupting users. *** #### Vault Shares and Ownership When a user deposits assets into a Vault, they receive **Vault Shares**. Vault Shares represent: * A proportional claim on the Vault’s total assets * Ownership that changes in value, not in quantity As yield is generated by strategies: * The number of shares held by a user remains the same * The value of each share increases This share-based model avoids rebasing and provides a consistent user experience across strategies. *** #### Capital Flow (High-Level) The typical flow of funds is: 1. User deposits assets into the Vault 2. Vault mints shares to the user 3. Vault allocates assets to one or more strategies 4. Strategies generate yield over time 5. Yield increases the Vault’s total assets 6. Users redeem shares to withdraw assets All Vaults follow this same flow, regardless of the strategy used. *** #### Strategy-Agnostic Design A key design principle is that **Vaults are strategy-agnostic**. The Vault does not assume: * How yield is generated * What external protocol is used * Whether returns are stable or volatile All strategy-specific logic is intentionally isolated outside the Vault. This makes the system extensible and future-proof. # Strategy Framework and Allocation Model #### Purpose of This Page This page explains how strategies integrate with Vaults and how capital is allocated, managed, and withdrawn. *** #### What Is a Strategy? A **Strategy** is a contract responsible for generating yield using Vault assets. Each strategy: * Accepts assets from the Vault * Deploys them according to its own logic * Reports balances and performance back to the Vault Strategies are designed to be **independent and reusable**. A single strategy may be connected to multiple Vaults, depending on configuration. *** #### Strategy Responsibilities From the Vault’s perspective, a strategy must be able to: * Receive assets * Return assets on request (subject to liquidity constraints) * Accurately report its current balance * Reflect gains or losses over time How the strategy achieves this is intentionally left abstract at the Vault level. *** #### Allocation Model Vaults allocate capital to strategies based on configuration parameters. These may include: * Maximum allocation limits * Strategy capacity * Liquidity characteristics * Risk considerations A Vault may: * Use a single strategy * Distribute capital across multiple strategies * Adjust allocations over time The allocation logic can evolve without changing the Vault interface. *** #### Strategy Lifecycle Strategies typically follow a defined lifecycle: 1. Deployment 2. Registration with the system 3. Activation for allocation 4. Ongoing operation and reporting 5. Allocation reduction or pause 6. Removal, if necessary This lifecycle allows strategies to be managed safely without forcing users to exit the Vault. *** #### Handling Yield and Losses Strategies may generate: * Positive yield * No yield * Temporary or permanent losses All outcomes are reflected at the Vault level through changes in total assets. Vault Shares automatically adjust in value to reflect strategy performance, without requiring user action. *** #### Risk Boundaries It is important to clearly define what the Vault does and does not guarantee. * Vaults do not guarantee principal * Vaults do not guarantee yield * Strategy risk is borne collectively by Vault participants The modular design allows risk to be managed, but not eliminated. *** #### Why This Framework Matters This strategy framework enables: * Incremental addition of new strategies * Experimentation without disrupting users * Clear separation between infrastructure and execution * Long-term scalability of the Vault system # Available Vault and Strategies Available Strategies #### Overview This section introduces the **strategies currently available within Vaults**. A strategy defines how assets deposited into a Vault are deployed to generate yield. Vaults may support one or multiple strategies, and strategies may evolve over time as the protocol expands. This page serves as a **navigation hub** for strategy-specific documentation. *** #### How to Read This Section For each strategy, you will find a dedicated page that explains: * The purpose of the strategy * How yield is generated (at a high level) * Key characteristics and constraints * Risk considerations relevant to users Strategy pages are written to complement the **Core Mechanics** section and focus on strategy-specific behavior, rather than Vault infrastructure. *** #### Currently Available Strategies * [**JPYC Lending Strategy**](/sf-yield-vault/core-mechanics/available-vault-and-strategies/jpyc-fixed-income-strategy)\ A lending-based strategy that deploys JPYC to generate variable yield. * [**USDFC Lending Strategy**](/sf-yield-vault/core-mechanics/available-vault-and-strategies/usdfc-lending-strategy)\ A lending-based strategy that deploys USDFC to generate variable yield. Additional strategies may be introduced in the future and will be listed here as they become available. *** #### Strategy Availability and Changes Strategies are not static. Over time, strategies may be: * Added * Updated * Paused * Deprecated Such changes are handled through governance or operational processes. Vaults are designed so that strategy changes do not require users to change how they interact with the Vault. # JPYC Lending Strategy #### Overview The **JPYC Lending Strategy** is the first strategy deployed within the [**JPYC Vault**](https://vaults.secured.finance/1/0x7a6E3635694952dC00F6bA4d4AD1a7B892028789) under the Secured Finance framework. This strategy is designed to generate yield by deploying **JPYC** into the Secured Finance fixed-rate lending markets, allowing Vault participants to earn variable returns without actively managing positions. The strategy is **fully rule-based**: every rule described on this page is encoded in the deployed strategy contract, which can be inspected on-chain directly from the Vault page. *** #### Purpose of the Strategy The primary objectives of the JPYC Lending Strategy are: * To provide a simple, automated way to earn yield on JPYC * To abstract away lending market operations from users * To integrate JPYC into the broader Secured Finance fixed-income ecosystem Users interact with the Vault, not the strategy directly. *** #### How Yield Is Generated The strategy places limit lend orders in the JPYC fixed-rate markets according to fixed rules: * **Allocation:** deposits are split across the **two nearest eligible maturities** at a fixed **40% / 60%** ratio (nearest / next), set immutably at deployment. * **Eligibility:** a maturity is excluded automatically when it is within the **maturity exclusion period (default: 7 days)** of expiry, or its order book is in Itayose / pre-order state, or the market is closed. When the nearest maturity enters the exclusion window, allocation shifts to the next eligible pair automatically. * **Order placement:** one limit lend order per eligible maturity, priced just below the current best lend price (or at the market mid where more favorable), subject to a **minimum APR floor of 1%**. * **Rebalancing:** orders are re-placed only when recalculated target rates deviate from resting orders by more than **25 bps**, or when idle funds exceed **100,000 JPYC**. These conditions are publicly computable on-chain. * **Capacity:** the vault has a deposit limit (currently **50,000,000 JPYC**). Interest earned on filled positions increases the Vault's total assets, which increases the value of Vault shares. Returns are **variable** and depend on market conditions. *** #### User Experience From the user's perspective: * JPYC is deposited into the Vault * Vault shares are received * Yield accrues automatically over time * Withdrawals are performed by redeeming shares Users do not need to select lending terms, manage maturities, or rebalance positions. *** #### Relationship to Fixed-Rate Lending The JPYC Lending Strategy differs from Secured Finance's Fixed-Rate Lending product in several key ways: * **JPYC Lending Strategy** * Variable yield * No fixed maturity * Fully automated allocation * **Fixed-Rate Lending** * Fixed interest rate * Defined maturity * Direct position management Both products coexist within the ecosystem and serve different user preferences. *** #### Liquidity and Withdrawals — please read Withdrawals are served in a fixed order: 1. **Idle funds** held by the vault and strategy; 2. **Cancellation of the strategy's own resting orders**, starting from the farthest maturity (preserving near-term positions); 3. **Unwinding of positions**, starting from the nearest maturity, executed against the live order book. **Material limitation:** step 3 depends on order-book liquidity. If the book cannot absorb the unwind, **the withdrawal transaction reverts** ("Not enough funds freed") rather than executing at a distorted price or realizing an artificial loss. Funds remain in the vault; the withdrawal can be retried later or in smaller size. Withdrawal availability is therefore **not guaranteed at all times** and depends on market liquidity at the moment of withdrawal. Positions held to maturity are auto-rolled into the next maturity by the protocol's rotation mechanism; roll pricing is determined by the next maturity's order book at rotation time, with no strategy discretion. *** #### Fees * **Performance fee: 5% (500 bps) of realized profits**, accrued at report time to the on-chain designated fee recipient. * The strategy charges **no fees on deposits or withdrawals**. * Order execution in the underlying fixed-rate market incurs the protocol's standard order fee, as for any market participant; this cost is reflected in strategy returns. Current fee parameters are readable directly from the strategy contract. *** #### Automated Execution and Governance * Execution involves **no per-trade discretionary decisions**: no person selects individual trades, counterparties, timing, or prices. * Strategy parameters are either **fixed at deployment** (maturity split, order count, minimum APR, maintenance threshold) or adjustable **only** through disclosed governance functions restricted to the management role (**deposit limit; maturity exclusion period**). Every parameter change is an on-chain transaction, publicly visible and permanently auditable. * The **management** role governs the adjustable parameters above; a separate **keeper** role may call the maintenance functions (`tend` / `report`) only. The current management, keeper, and fee-recipient addresses are readable directly from the strategy contract, which is the authoritative source. * The strategy contract's logic is **not upgradeable**. Share accounting is delegated to Yearn v3's audited `TokenizedStrategy` implementation. The strategy cannot lend outside the Secured Finance JPYC markets defined above, and cannot access depositor funds for any purpose other than the lending flows described here. *** #### Risk Considerations The JPYC Lending Strategy involves several types of risk, including but not limited to: * **Liquidity / withdrawal risk** — withdrawals may fail temporarily when order-book liquidity is insufficient (see above) * **Rate risk** — fixed-rate position values fluctuate with market rates until maturity; early unwinds execute at prevailing market prices * **Roll risk** — auto-roll pricing depends on next-maturity order-book conditions at rotation * **Smart contract risk** — vault, strategy, and protocol contracts may contain defects notwithstanding audits * **Stablecoin risk** — JPYC issuer and peg risk Users should understand that principal is not guaranteed, returns may fluctuate, and losses are possible under adverse conditions. *** #### Future Evolution The strategy may be complemented or replaced by additional strategies over time. Any strategy deployment or parameter change is an on-chain transaction and will be reflected in updated documentation. # USDFC Lending Strategy #### Overview The **USDFC Lending Strategy** is a strategy deployed within the [**USDFC Vault**](https://vaults.secured.finance/314/0x9f59bB0A1dbfad10443Fba08D41c75b0664Bf41B) under the Secured Finance framework. This strategy is designed to generate yield by deploying **USDFC** into lending activities, allowing Vault participants to earn variable returns without actively managing positions. The USDFC Lending Strategy operates within the shared Vault infrastructure described in previous sections. *** #### Purpose of the Strategy The primary objectives of the USDFC Lending Strategy are: * To provide a simple, automated way to earn yield on USDFC * To abstract away lending market operations from users * To integrate USDFC into the broader Secured Finance fixed-income ecosystem Users interact with the Vault, not the strategy directly. *** #### How Yield Is Generated At a high level, the strategy generates yield by: * Allocating USDFC supplied by the Vault to lending mechanisms * Earning interest from borrowers over time * Returning accrued interest to the Vault The resulting yield is reflected as an increase in the Vault's total assets, which in turn increases the value of Vault shares. Returns are **variable** and depend on market conditions. *** #### User Experience From the user's perspective: * USDFC is deposited into the Vault * Vault shares are received * Yield accrues automatically over time * Withdrawals are performed by redeeming shares Users do not need to select lending terms, manage maturities, or rebalance positions. *** #### Relationship to Fixed-Rate Lending The USDFC Lending Strategy differs from Secured Finance's Fixed-Rate Lending product in several key ways: * **USDFC Lending Strategy** * Variable yield * No fixed maturity * Fully automated allocation * **Fixed-Rate Lending** * Fixed interest rate * Defined maturity * Direct position management Both products coexist within the ecosystem and serve different user preferences. *** #### Liquidity and Withdrawals Withdrawals from the Vault depend on the liquidity available within the strategy. While the strategy is designed to support regular withdrawals, certain market conditions may affect withdrawal timing or amounts. Details regarding liquidity behavior are covered in the **Risk Considerations** section. *** #### Risk Considerations The USDFC Lending Strategy involves several types of risk, including but not limited to: * Smart contract risk * Lending market risk * Liquidity risk * Counterparty or protocol dependency risk Users should understand that: * Principal is not guaranteed * Returns may fluctuate * Losses are possible under adverse conditions *** #### Strategy Scope and Limitations This strategy focuses specifically on: * USDFC as the base asset * Lending-based yield generation It does not: * Guarantee a minimum return * Provide fixed-rate outcomes * Eliminate all forms of risk *** #### Future Evolution The USDFC Lending Strategy supports USDFC-based yield generation within the Vault framework. Over time, the strategy may: * Be adjusted or optimized * Be complemented by additional USDFC strategies * Serve as a reference model for future lending strategies Any material changes will be reflected in updated documentation. # Contracts and Security The official deployed smart contract addresses ### 📌 Contract Addresses
ContractNetworkAddress
JPYC VaultEthereum Mainnet0x7a6E3635694952dC00F6bA4d4AD1a7B892028789
Secured Finance JPYC LenderEthereum Mainnet0x6F6046e59501E484152d46045bA5eECf1Cab8935
USDFC VaultFilecoin0x9f59bB0A1dbfad10443Fba08D41c75b0664Bf41B
Secured Finance USDFC LenderFilecoin0xE77d238A707762073836351c6E83245C0aE4339d
# FAQs This page answers common questions about **SF Yield Vault**. If you are new to Vaults, we recommend starting with the [**Getting Started**](/sf-yield-vault/getting-started) section before reading this page. *** ## General #### What is SF Yield Vault? SF Yield Vault is an automated yield management product built around asset-specific Vault smart contracts. It allows users to deposit assets into Vaults and earn variable yield through underlying strategies. When you deposit assets into a Vault, you receive **Vault shares** that represent your proportional ownership of the Vault. The value of these shares changes over time based on the performance of the underlying strategy. *** #### How is SF Yield Vault different from Fixed-Rate Lending? SF Yield Vault and Fixed-Rate Lending serve different purposes. * **SF Yield Vault** * Variable yield * No fixed maturity * Automated strategy allocation * **Fixed-Rate Lending** * Fixed interest rate * Defined maturity * Manual position management Users can choose between the two depending on their risk and return preferences. *** #### What assets can I deposit into a Vault? Each Vault supports a single base asset. Currently available: * **JPYC Vault** — accepts JPYC deposits only * **USDFC Vault** — accepts USDFC deposits only *** ## Deposits #### What happens when I deposit into a Vault? When you deposit into a Vault: 1. Your assets are transferred to the Vault contract 2. Vault shares are minted to your wallet 3. Deposited assets are allocated to the Vault’s strategy You do not interact with the strategy directly. *** #### What do I receive after depositing? You receive **Vault shares**. Vault shares represent your ownership of the Vault and can be redeemed for the underlying asset at any time. *** #### Do I need to approve tokens before depositing? Yes. Before your first deposit, you must approve the Vault to use your assets.\ This is a standard requirement for ERC-20 tokens. *** ## Withdrawals #### Can I withdraw my assets at any time? Yes. You can withdraw at any time by redeeming your Vault shares through the **Withdraw** tab. *** #### Why is the amount I receive different from what I deposited? Vaults generate **variable returns**. * If the strategy performs well, you may receive more than your initial deposit * If losses occur, you may receive less Vaults do not guarantee principal or returns. *** #### Can I partially withdraw my position? Yes. You can withdraw part of your Vault shares.\ The remaining shares will continue to accrue yield. *** ## Vault Shares and Yield #### Why does my Vault share balance not change? Yield is reflected in the **value of each share**, not in the number of shares. Your share balance changes only when you deposit or withdraw. *** #### How is yield distributed? Yield is not paid out separately. Instead, yield increases the total assets held by the Vault, which increases the value of Vault shares. *** #### How is the Price Per Share (PPS) calculated? The PPS represents the net asset value of a single Vault share and increases as the Vault generates yield: $$ PPS = \frac{\text{Total Assets Held by the Vault}}{\text{Total Supply of Vault Shares}} $$ *** #### How many shares will I receive upon deposit? The number of shares minted to your wallet is determined by the PPS at the time of your deposit: $$ \text{Shares Minted} = \frac{\text{Amount Deposited}}{PPS} $$ *** #### How much will I receive upon withdrawal? When you redeem your shares, the amount of the underlying asset you receive is calculated based on the latest PPS: $$ \text{Amount Received} = \text{Shares Redeemed} \times PPS $$ *** #### Does yield compound automatically? Yes. Because yield is reflected in share value, it compounds automatically without any user action. *** ## Strategy and Allocation #### Can I choose or change the strategy? No. Strategy selection and allocation are managed by the Vault configuration.\ Users interact only with the Vault. *** #### Why does the UI show “Unallocated” assets? “Unallocated” assets are assets temporarily not deployed into a strategy. This can occur during allocation updates or liquidity management and does not require user action. *** ## Risks #### Is my deposit guaranteed? No. Vaults involve risks, including: * Smart contract risk * Strategy risk * Liquidity risk * Market risk Users should understand these risks before depositing. *** #### Can the value of my position decrease? Yes. If the underlying strategy incurs losses or market conditions change, the value of Vault shares may decrease. *** ## Fees #### Are there any fees? Fee information, if applicable, is displayed in the Vault interface under the **About** tab. Fees are reflected in Vault performance and do not require separate user action. *** ## Technical #### Do Vaults custody my assets? Vaults are non-custodial smart contracts. You always interact with Vaults directly through your wallet, and all transactions require your approval. # Overview The Role of USDFC Stablecoin
## Why **Secured Finance launch Stablecoin protocol?** Secured Finance is a decentralized financial platform that aims to provide institutional-grade capabilities and greater financial flexibility for everyone, offering more liquidity and new ways to grow your digital assets. We have two core protocols: [**Fixed Income Lending**](https://app.secured.finance/) and the [**USDFC** **Stablecoin**](https://usdfc.secured.finance/). Each protocol addresses the distinct needs of DeFi users by delivering both fixed-income investment opportunities and flexible borrowing solutions for digital assets. Through **Fixed Income Lending**, users can borrow and lend at fixed rates, structured as zero-coupon bonds and tokenized debt. This setup ensures predictable and stable returns for specific time periods, appealing to those seeking secure, fixed-rate yields. We introduce the **USDFC Stablecoin** to provide immediate access to a USD-pegged stablecoin without requiring a traditional counterparty or relying on external liquidity for exchange. The system enables you to open a **Trove** where you can manage your collateral and debt, offering a decentralized and efficient way to mint, borrow, and repay **USDFC**. By integrating a stablecoin into the Secured Finance ecosystem, USDFC can seamlessly connect with Fixed Income Lending market, serving as a ready source of order book liquidity. In turn, this gives USDFC added utility, allowing it to earn stable returns within the protocol. ## **The Role of USDFC in the Filecoin Ecosystem** USDFC is exclusively backed by **Filecoin**, with all operations occurring on the **Filecoin Virtual Machine** (FVM). By choosing Filecoin as collateral, we leverage its robust ecosystem, which is poised for growth amid rising data storage needs in the AI-driven era. Through direct integration of **USDFC** stablecoin on the FVM, Secured Finance aims to boost Filecoin’s DeFi landscape as MakerDAO's DAI did for Ethereum DeFi ecosystem. As the first decentralized stablecoin fully collateralized by Filecoin, USDFC provides liquidity for Filecoin stakeholders, miners, and DeFi users alike. This, in turn, strengthens liquidity across the Filecoin network and establishes a solid basis for expanded DeFi development. Secured Finance envisions delivering financial flexibility to everyone and spurring DeFi sector growth via stablecoin and fixed-income markets—supported by Filecoin and the wider blockchain community. By leveraging the FVM, our protocol promotes stability and composability for Filecoin assets, adding another layer of utility to the network and advancing the sustainable, long-term development of the Filecoin economy. # Getting Started (UI v2) Your guide to using the USDFC stablecoin protocol via the UI v2 Welcome to the USDFC stablecoin protocol! This section provides step-by-step guides to help you start using USDFC, a dollar-pegged stablecoin backed by Filecoin (FIL) collateral. Whether you're new to DeFi or an experienced user, these guides will walk you through the essential operations of the USDFC protocol. USDFC allows you to unlock the value of your FIL holdings while maintaining exposure to FIL's potential price appreciation. By depositing FIL as collateral in a Trove, you can mint USDFC stablecoins and use them across the DeFi ecosystem. ## What You'll Learn * How to create a Trove and deposit FIL collateral * How to mint USDFC stablecoins against your collateral * How to manage your collateral ratio to avoid liquidation * How to monitor your position's health * How to participate in the Stability Pool to earn rewards * How to redeem USDFC for FIL under low liquidity conditions ## Key Components ### Core Operations | Operation | Description | Guide | | -------------------- | ---------------------------------------------- | ---------------------------------------------------------------------------------------------------- | | Creating a Trove | Set up your collateralized debt position | [Creating Your First Trove](/usdfc-stablecoin/getting-started/creating-your-first-trove) | | Minting USDFC | Generate stablecoins against your collateral | [Minting USDFC Step-by-Step](/usdfc-stablecoin/getting-started/minting-usdfc-step-by-step) | | Managing Collateral | Add or withdraw collateral to adjust risk | [Managing Collateral Effectively](/usdfc-stablecoin/getting-started/managing-collateral-effectively) | | Monitoring Position | Track your Trove's health and liquidation risk | [Monitoring Your Position](/usdfc-stablecoin/getting-started/monitoring-your-position) | | Using Stability Pool | Earn rewards by helping secure the protocol | [Using the Stability Pool](/usdfc-stablecoin/getting-started/using-the-stability-pool) | | Redeeming USDFC | Exchange USDFC for FIL at face value | [Redeeming USDFC](/usdfc-stablecoin/getting-started/redeeming-usdfc) | ### What You Can Do With USDFC After minting USDFC, you have several options to put your stablecoins to work: 1. **Deposit into the Stability Pool** - Earn liquidated FIL at a discount while helping secure the protocol 2. **Provide Liquidity on DEXs** - Pair USDFC with FIL on SushiSwap to earn trading fees 3. **Lend in Fixed-Income Markets** - Earn interest by lending USDFC in Secured Finance's [Fixed Income Market](https://app.secured.finance/) 4. **Bridge to Other Chains** - Use the [bridge and swap](https://usdfc.secured.finance/#/bridge) functionality to move USDFC to other blockchains ## Testnet Resources If you want to try USDFC on testnet first: * Access the [Getting Test USDFC on Testnet](/usdfc-stablecoin/getting-started/getting-test-usdfc-on-testnet) * Get testnet tFIL from the [Calibration Faucet](https://faucet.calibnet.chainsafe-fil.io/) * Watch the [Demo from FIL Dev Summit 2024](https://www.youtube.com/watch?v=LOnCu4HZnXg\&list=PL_0VrY55uV1__uv3uOvZ3L6exG9y10lSy\&index=13) ## Related Resources * [USDFC Overview](/usdfc-stablecoin/overview) * [Core Mechanics](/usdfc-stablecoin/core-mechanics) * [Advanced Topics](/usdfc-stablecoin/advanced-topics) * [FAQs](/usdfc-stablecoin/faqs) * [Fixed-Rate Lending](/fixed-rate-lending/overview) # Getting Test USDFC on Testnet Learn how to get and use test USDFC on the Filecoin Calibration testnet ## Overview This tutorial guides you through the process of obtaining and using test USDFC on the Filecoin Calibration testnet. Testing on the testnet allows you to experiment with USDFC's features without using real assets. You'll learn how to: * Obtain test Filecoin (tFIL) from a faucet * Access the USDFC testnet application * Mint test USDFC using tFIL as collateral * Add test USDFC to your wallet ## Prerequisites * A web3 wallet (like MetaMask) installed and have your wallet address * Basic understanding of blockchain transactions ## Step 1: Get Test Filecoin (tFIL) from the Faucet Before minting test USDFC, you'll need test Filecoin (tFIL) to use as collateral. 1. Visit the Filecoin Calibration testnet faucet at 2. Enter your wallet address 3. Complete any verification steps required by the faucet 4. Request tFIL (you will receive 100 tFIL twice a day) 5. Wait for the transaction to complete (this usually takes a few minutes)

Filecoin Calibration testnet faucet interface

## Step 2: Access the USDFC Testnet Application The USDFC testnet application is separate from the mainnet application. 1. Go to the USDFC testnet application at 2. Connect your wallet by clicking the "Connect Wallet" button in the top right corner 3. Ensure your wallet is set to the Filecoin Calibration testnet network

USDFC testnet application page with adding Calibration network

> **Note:** The testnet application () is different from the mainnet application (). Make sure you're using the correct URL for testing. ## Step 3: Mint Test USDFC Using tFIL Now that you have tFIL and are connected to the testnet application, you can mint test USDFC. 1. On the USDFC testnet application, navigate to the "Trove" page 2. Enter the amount of tFIL you want to use as collateral 3. The application will calculate the amount of USDFC you can mint based on your collateral 4. Adjust the collateral ratio as needed (higher ratios provide more protection against liquidation) 5. Confirm the transaction in your wallet 6. Wait for the transaction to be confirmed on the blockchain

Minting USDFC

## Step 4: Add Test USDFC to Your Wallet After minting, you'll want to see your test USDFC in your wallet. 1. On the Dashboard page, find "Add USDFC to Wallet, Click here" 2. Click "Click here" 3. The token symbol (USDFC) and decimals should be added 4. Click "Add" or "Import" to add test USDFC to your wallet

Adding USDFC to Wallet

## Step 5: Closing Your Trove Most cases, 'Update Trove' should allow withdrawing collateralized FIL, but if you no longer need to use USDFC system, you can close your trove and you can reopen a trove again. {% hint style="warning" %} Don't forget to repay the borrowing fees. If you wish to close the trove with the USDFC amount you just borrowed, it doesn't work. You should repay borrowing fees. Please get additional USDFC from another account or via swap. {% endhint %} 1. On the USDFC testnet application, navigate to the "Trove" page 2. Click the "Close Trove" tab 3. If you see error message that you need more USDFC to pay borrowing fees, please get it 4. Click "Repay & Close Trove" to send the transaction with your wallet

Closing Your Trove requires repayment of the borrowed amount and fees in USDFC

## Using Test USDFC on Testnet Now that you have test USDFC, you can explore various features of the USDFC ecosystem on testnet: ### Stability Pool You can deposit your test USDFC into the Stability Pool to help secure the protocol and potentially earn rewards from liquidations. Learn more with [Using the Stability Pool](/usdfc-stablecoin/getting-started/using-the-stability-pool)

Stability Pool

### Fixed Rate Lending Market While Bridge and SushiSwap features are not available on testnet, you can use the USDFC fixed rate lending market. 1. Visit 2. Connect your wallet 3. Navigate to the lending markets 4. Explore lending or borrowing with your test USDFC. Learn more with [Quick Start: Lend](/fixed-rate-lending/getting-started/quick-start-lend) and [Quick Start: Borrow](/fixed-rate-lending/getting-started/quick-start-borrow) ## Testnet Limitations It's important to understand the differences between testnet and mainnet: * **Bridge functionality** is not available on testnet * **SushiSwap integration** is not available on testnet * Test tokens have no real-world value * Transaction times and network behavior may differ from mainnet * The USDFC fixed rate lending market is available at [https://stg.secured.finance](http://stg.secured.finance/?chain_id=314159) ## Common Questions **Q: How often can I request test FIL from the faucet?**\ A: Faucet limitations vary, but typically you can request once every 24 hours. **Q: Are there any fees for transactions on testnet?**\ A: Yes, you'll need to pay gas fees in tFIL, but since tFIL has no real value, these fees are effectively free. **Q: Can I transfer my test USDFC to mainnet?**\ A: No, testnet tokens cannot be transferred to mainnet as they exist on separate networks. **Q: What should I do if my transaction fails?**\ A: Check that you have enough tFIL for gas fees, ensure your wallet is connected to the Filecoin Calibration testnet, and try again with a higher gas limit if necessary. ## Related Resources * [USDFC Overview](/usdfc-stablecoin/overview) * [Creating Your First Trove](/usdfc-stablecoin/getting-started/creating-your-first-trove) * [Minting USDFC Step-by-Step](/usdfc-stablecoin/getting-started/minting-usdfc-step-by-step) * [Using the Stability Pool](/usdfc-stablecoin/getting-started/using-the-stability-pool) # Creating Your First Trove Learn how to create your first Trove to start using USDFC

Watch a quick walkthrough of this step

## Prerequisites * A wallet with FIL tokens (Filecoin's native cryptocurrency) * Basic understanding of blockchain transactions * Access to the [USDFC application](https://app.usdfc.net) ## Overview A Trove is your personal collateralized debt position in the USDFC protocol. By creating a Trove, you can deposit FIL as collateral and mint USDFC stablecoins against it. This guide will walk you through the process of creating your first Trove. ## Step 1: Connect Your Wallet Before you can create a Trove, you need to connect your wallet to the USDFC application. 1. Navigate to the [USDFC application](https://app.usdfc.net) 2. Click on the "Connect Wallet" button in the top right corner 3. Select your wallet provider (MetaMask, WalletConnect, etc.) 4. Confirm the connection

The wallet connection interface after the "Connect Wallet" button

## Step 2: Navigate to the Trove Management Section Once your wallet is connected, you need to navigate to the Trove management section. 1. On the USDFC application, navigate to the "Trove" page 2. You'll see the Trove creation section

The USDFC dashboard with the Trove/Mint USDFC section

## Step 3: Set Your Collateral and Debt Amounts Now you need to decide how much FIL to deposit and how much USDFC to mint. 1. Enter the amount of FIL you want to deposit as collateral 2. Enter the amount of USDFC you want to mint & borrow 3. The system will automatically calculate your collateral ratio 4. Ensure your collateral ratio is above the minimum required (typically 110%)

The collateral and debt input fields with the collateral ratio calculation

## Step 4: Review Transaction Details Before confirming, review all transaction details carefully. 1. Check the collateral amount (FIL) 2. Verify the debt amount (USDFC) 3. Review the collateral ratio 4. Note any fees that will be applied (including the Liquidation Reserve of 20 USDFC) ## Step 5: Confirm and Create Your Trove Once you're satisfied with the details, you can create your Trove. 1. Click the "Create Trove and Borrow USDFC" button 2. Confirm the transaction in your wallet 3. Wait for the transaction to be processed on the blockchain

The confirmation screen with the "Confirm" button highlighted

## Step 6: Verify Your Trove Creation After the transaction is confirmed, verify that your Trove was created successfully. 1. Check that your Trove appears in the dashboard 2. Verify that the USDFC has been added to your wallet balance

Screenshot showing a successfully created Trove in the dashboard

## Next Steps Now that you've created your first Trove, you can: * [Mint additional USDFC](/usdfc-stablecoin/getting-started/minting-usdfc-step-by-step) * [Manage your collateral](/usdfc-stablecoin/getting-started/managing-collateral-effectively) * [Monitor your position](/usdfc-stablecoin/getting-started/monitoring-your-position) * [Deposit USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/using-the-stability-pool) ## Troubleshooting * **Transaction Failed**: Ensure you have enough FIL for gas fees and that your collateral ratio meets the minimum requirement * **USDFC Not Showing in Wallet**: Add USDFC as a custom token in your wallet using the contract address found in the [deployed contracts](/usdfc-stablecoin/deployed-contracts) page, or click the wallet icon near the USDFC contract info on the USDFC app * **High Gas Fees**: Try again when network congestion is lower or adjust your gas settings ## Common Questions **Q: What is the minimum amount of FIL I can deposit?**\ A: You need to deposit enough FIL to borrow at least 200 USDFC (the minimum borrowing amount) while maintaining at least a 110% collateral ratio. The exact FIL amount will depend on the current FIL price. **Q: What is the Liquidation Reserve?**\ A: The Liquidation Reserve is a small amount of USDFC (20 USDFC) that is set aside to cover potential gas costs in case your Trove needs to be liquidated. **Q: Can I create multiple Troves?**\ A: No, each wallet address can only have one Trove at a time. **Q: What happens if my collateral ratio falls below the minimum?**\ A: Your Trove may be liquidated. Learn more in the [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) section. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Mint & Borrow](/usdfc-stablecoin/core-mechanics/mint-and-borrow) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Minting USDFC Step-by-Step A comprehensive guide to minting USDFC stablecoins

Watch a quick walkthrough of this step

## Prerequisites * An active Trove with FIL collateral * Access to the [USDFC application](https://app.usdfc.net) * Connected wallet with enough FIL for gas fees ## Overview Minting USDFC allows you to generate dollar-pegged stablecoins against your FIL collateral. This guide walks you through the process of minting USDFC from an existing Trove. ## Step 1: Access Your Trove First, you need to access your existing Trove in the USDFC application. 1. Navigate to the [USDFC application](https://app.usdfc.net) 2. Connect your wallet if not already connected 3. Go to the "Trove" page on the USDFC application 4. You should see your current Trove details including collateral amount, debt, and collateral ratio {% hint style="warning" %} "Debt" is the Total debt = Borrowed amount + Borrowing Fees (cumulative) {% endhint %}

The Trove dashboard showing current position details

## Step 2: Select "Update Trove" To mint additional USDFC, you need to adjust your Trove. 1. Click the "Update Trove" tab 2. This will open the Trove adjustment interface

Screenshot after clicking the "Adjust Trove" button

## Step 3: Specify Minting Amount Now you need to specify how much additional USDFC you want to mint. 1. In the adjustment interface, locate the "Collateral" and "Borrowed Amount" input fields 2. Enter the amount of Collateral and USDFC debt you want to adjust 3. The system will automatically calculate your new collateral ratio 4. Ensure your new collateral ratio remains above the minimum required (recommended 150%) {% hint style="info" %} "Total debt" is Borrowed Amount + Liquidation Reserve + Borrowing Fee (this mint fee). {% endhint %}

The minting interface with the adjusted amount and collateral ratio calculation

## Step 4: Review Transaction Details Before confirming, review all transaction details carefully. 1. Check the additional USDFC amount you're minting 2. Verify your new collateral ratio 3. Review any fees that will be applied 4. Ensure you understand how this affects your liquidation risk ## Step 5: Confirm and Mint USDFC Once you're satisfied with the details, you can proceed with minting. 1. Click the "Update Trove" button 2. Confirm the transaction in your wallet 3. Wait for the transaction to be processed on the blockchain

The confirmation screen with the "Adjust Trove" method

## Step 6: Verify Minted USDFC After the transaction is confirmed, verify that your USDFC was minted successfully. 1. Check that your Trove details have been updated with the new debt amount 2. Verify that the additional USDFC has been added to your wallet balance 3. If you don't see the additional USDFC in your wallet, you may need to refresh or check your transaction history on your wallet or [a blockchain explorer](https://filfox.info/en) 4. Check that your wallet balance reflects Borrowing Fee subtracted {% hint style="info" %} Wallet balance = Total debt - Liquidation Reserve - Borrowing Fees (cumulative). {% endhint %}

Screenshot showing updated Trove details and wallet balance

## Next Steps Now that you've minted USDFC, you can: * [Manage your collateral](/usdfc-stablecoin/getting-started/managing-collateral-effectively) to adjust your risk level * [Monitor your position](/usdfc-stablecoin/getting-started/monitoring-your-position) to stay informed about your Trove's health * [Deposit USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/using-the-stability-pool) to earn rewards * [Redeem USDFC](/usdfc-stablecoin/getting-started/redeeming-usdfc) for FIL when you're ready ## Troubleshooting * **Transaction Failed**: Ensure you have enough FIL for gas fees and that your collateral ratio meets the minimum requirement * **Cannot Mint More USDFC**: You may have reached the maximum debt for your current collateral amount * **High Gas Fees**: Try again when network congestion is lower or adjust your gas settings ## Common Questions **Q: Is there a limit to how much USDFC I can mint?**\ A: The amount of USDFC you can mint is limited by your collateral amount and the minimum collateral ratio requirement. **Q: Are there any fees for minting USDFC?**\ A: Yes, there is a small minting fee that varies based on the current base rate. This fee helps maintain the stability of the protocol. **Q: How does minting more USDFC affect my liquidation risk?**\ A: Minting more USDFC without adding collateral increases your debt, which lowers your collateral ratio and increases your liquidation risk. **Q: Can I mint USDFC in small increments?**\ A: Yes, you can mint USDFC in any amount as long as your collateral ratio remains above the minimum requirement. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Mint & Borrow](/usdfc-stablecoin/core-mechanics/mint-and-borrow) * [Protocol Fees](/usdfc-stablecoin/core-mechanics/protocol-fees) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) # Managing Collateral Effectively Learn how to manage your collateral to maintain a healthy Trove

Watch a quick walkthrough of this step

## Prerequisites * An active Trove with FIL collateral * Access to the [USDFC application](https://app.usdfc.net) * Connected wallet with FIL for additional collateral (if adding) ## Overview Managing your collateral effectively is crucial for maintaining a healthy Trove and avoiding liquidation. This guide will show you how to add or withdraw collateral, and how to determine the optimal collateral ratio for your risk tolerance. ## Step 1: Access Your Trove First, you need to access your existing Trove in the USDFC application. 1. Navigate to the [USDFC application](https://app.usdfc.net) 2. Connect your wallet if not already connected 3. Go to the "Trove" page on the USDFC application 4. Review your current collateral amount, debt, and collateral ratio

Trove dashboard showing current position details

## Step 2: Select "Update Trove" To manage your collateral, you need to adjust your Trove. 1. Click on the "Update Trove" tab 2. This will open the Trove adjustment interface

"Adjust Trove" interface

## Step 3: Add or Withdraw Collateral Now you can add more collateral or withdraw some of your existing collateral. ### To Add Collateral: 1. In the adjustment interface, locate the "Collateral" input field 2. Increase the amount of FIL from your current value 3. The system will automatically calculate your new collateral ratio 4. Adding collateral increases your collateral ratio and reduces liquidation risk

Screenshot of the interface for adding collateral

### To Withdraw Collateral: 1. In the adjustment interface, locate the "Collateral" input field 2. Decrease the amount of FIL from your current value 3. The system will automatically calculate your new collateral ratio 4. Ensure your new collateral ratio remains above the minimum required (110%)

Screenshot of the interface for withdrawing collateral

## Step 4: Review Transaction Details Before confirming, review all transaction details carefully. 1. Check the collateral adjustment amount 2. Verify your new collateral ratio 3. Understand how this affects your liquidation risk 4. Review any fees that will be applied ## Step 5: Confirm and Execute Once you're satisfied with the details, you can proceed with the adjustment. 1. Click the "Update Trove" button 2. Confirm the transaction in your wallet 3. Wait for the transaction to be processed on the blockchain

Screenshot of the wallet confirmation screen

## Step 6: Verify the Adjustment After the transaction is confirmed, verify that your collateral was adjusted successfully. 1. Check that your Trove details have been updated with the new collateral amount 2. Verify your new collateral ratio 3. If withdrawing collateral, confirm that the FIL has been added to your wallet balance

Screenshot showing updated Trove details

## Understanding Collateral Ratios ### Key Collateral Ratio Thresholds | Threshold | Value | Description | | ------------------------------ | ----- | ----------------------------------------------------------------------------------- | | Minimum Collateral Ratio (MCR) | 110% | The absolute minimum ratio required to avoid liquidation | | Recovery Mode Threshold | 150% | When the system enters Recovery Mode if the Total Collateral Ratio falls below this | | Recommended Safe Ratio | 200%+ | A conservative ratio that provides a good buffer against price fluctuations | ### Calculating Your Liquidation Price To calculate the FIL price at which your Trove would reach the minimum collateral ratio (110%): $$ \text{Liquidation Price} = \frac{\text{Debt in USDFC} \times 1.1}{\text{Collateral in FIL}} $$ \[Image: Visual representation of the liquidation price calculation] ## Strategies for Collateral Management ### Conservative Strategy (Low Risk) * Maintain a collateral ratio of 200% or higher * Add collateral proactively when FIL price starts to decline * Smaller USDFC minting relative to collateral value ### Balanced Strategy (Medium Risk) * Maintain a collateral ratio between 150% and 200% * Monitor FIL price regularly and adjust as needed * Balance between capital efficiency and safety ### Aggressive Strategy (High Risk) * Maintain a collateral ratio between 110% and 150% * Requires very active monitoring and quick reactions to price changes * Maximizes capital efficiency but has higher liquidation risk \[Image: Visual comparison of different collateral management strategies] ## Next Steps * [Monitor your position](/usdfc-stablecoin/getting-started/monitoring-your-position) regularly to stay informed about your Trove's health * Consider [depositing USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/using-the-stability-pool) to earn rewards * Learn about [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) and how it affects your Trove ## Troubleshooting * **Cannot Withdraw Collateral**: Your withdrawal might push your collateral ratio below the minimum requirement * **Transaction Failed**: Ensure you have enough FIL for gas fees * **Collateral Not Showing**: Refresh the page or check your transaction history ## Common Questions **Q: How often should I adjust my collateral?**\ A: This depends on your risk tolerance and FIL price volatility. More volatile markets require more frequent adjustments. **Q: What happens if FIL price drops suddenly?**\ A: If the price drop causes your collateral ratio to fall below the minimum requirement (110%), your Trove may be liquidated. **Q: Can I add collateral without minting more USDFC?**\ A: Yes, you can add collateral without changing your debt amount to increase your collateral ratio. **Q: Is there a fee for adjusting my collateral?**\ A: Adding collateral only incurs gas fees. Withdrawing collateral may incur both gas fees and a small protocol fee. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Collateral Ratio](https://github.com/Secured-Finance/secured-finance-docs/tree/main/usdfc-stablecoin/getting-started/broken-reference/README.md) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Monitoring Your Position Learn how to track and manage your Trove's health
## Prerequisites * An active Trove with FIL collateral * Access to the [USDFC application](https://app.usdfc.net) * Basic understanding of collateral ratios and liquidation risk ## Overview Monitoring your position is essential for maintaining a healthy Trove and avoiding liquidation. This guide will show you how to track your Trove's health, understand key metrics, and set up alerts to stay informed about changes that could affect your position. ## Step 1: Access Your Trove Dashboard The Trove dashboard is your primary tool for monitoring your position. 1. Navigate to the [USDFC application](https://app.usdfc.net) 2. Connect your wallet if not already connected 3. Go to the "Dashboard" page on the USDFC application 4. Review your current Trove or Stability Pool details

Screenshot of the Trove dashboard showing key metrics

## Step 2: Understand Key Metrics To effectively monitor your position, you need to understand the key metrics displayed on your dashboard.
### Collateral Ratio The collateral ratio is the most important metric to monitor. It represents the value of your collateral relative to your debt. $$ \text{Collateral Ratio} = \frac{\text{Collateral Value in USD}}{\text{Debt in USDFC}} \times 100% $$ * **Safe Zone**: Above 200% (Conservative) * **Caution Zone**: 150% to 200% (Moderate risk) * **Danger Zone**: 110% to 150% (High risk) * **Liquidation Zone**: Below 110% (Immediate risk) \[Image: Visual representation of collateral ratio zones] ### Liquidation Price The liquidation price is the FIL price at which your Trove would reach the minimum collateral ratio (110%) and become eligible for liquidation. $$ \text{Liquidation Price} = \frac{\text{Debt in USDFC} \times 1.1}{\text{Collateral in FIL}} $$ \[Image: Visualization of liquidation price calculation] ### Current FIL Price The current price of FIL relative to USD is displayed to help you understand how close you are to your liquidation price. ### Available Actions Based on your current metrics, the dashboard may suggest available actions to improve your position's health. ## Step 3: Set Up External Alerts While the USDFC application doesn't currently offer built-in alerts, you can set up external alerts to monitor your position. ### Price Alerts Set up price alerts for FIL using cryptocurrency tracking apps or exchanges. 1. Calculate your liquidation price 2. Set an alert for when FIL price approaches this threshold (e.g., 20% above liquidation price) 3. Popular platforms for price alerts include [CoinGecko](https://www.coingecko.com/learn/how-to-set-up-the-price-alert-function-on-coingecko), CoinMarketCap, or exchange apps ### Blockchain Monitoring Tools Use blockchain monitoring tools to track your Trove's health. 1. Find your Trove's address or ID 2. Set up monitoring using tools like [Filfox](https://filfox.info/en), Tenderly, or DeFi-specific monitoring platforms 3. Configure alerts for significant changes to your Trove ## Step 4: Regular Check-ins Establish a routine for checking your Trove's health. ### Daily Checks (High-Risk Positions) If your collateral ratio is close to the minimum (110%-150%): * Check your position at least once daily * Monitor FIL price movements throughout the day * Be prepared to add collateral quickly if needed ### Weekly Checks (Moderate-Risk Positions) If your collateral ratio is in a safer range (150%-200%): * Check your position at least once weekly * Review FIL price trends for the week * Adjust collateral as needed based on market outlook ### Monthly Checks (Low-Risk Positions) If your collateral ratio is very high (>200%): * Check your position at least once monthly * Evaluate if you're being too conservative with your capital * Consider strategies to optimize your position ## Step 5: Respond to Market Changes Develop a plan for responding to different market scenarios. ### During FIL Price Decreases 1. Calculate how much the price can drop before reaching your comfort threshold 2. Prepare additional FIL for collateral if needed 3. Consider reducing your debt by repaying some USDFC ### During FIL Price Increases 1. Evaluate if you want to withdraw some collateral 2. Consider minting additional USDFC 3. Rebalance your position to maintain your target collateral ratio \[Image: Flowchart showing decision paths for different market scenarios] ## Next Steps * Learn how to [manage your collateral effectively](/usdfc-stablecoin/getting-started/managing-collateral-effectively) * Consider [depositing USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/using-the-stability-pool) to earn rewards * Understand [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) and how it affects your Trove ## Troubleshooting * **Dashboard Not Loading**: Try refreshing the page or reconnecting your wallet * **Metrics Not Updating**: Check if there are pending transactions or network congestion * **Unexpected Collateral Ratio**: Verify the current FIL price from multiple sources ## Common Questions **Q: How often does the dashboard update?**\ A: The dashboard updates in real-time based on blockchain data and current price feeds. **Q: Will I receive notifications if my Trove is at risk?**\ A: The USDFC application doesn't currently send automatic notifications. You should set up external alerts as described above. **Q: What should I do if I can't access the application but know my position is at risk?**\ A: You can interact with the USDFC protocol directly through the smart contracts if necessary. Keep emergency funds ready to add collateral when needed. **Q: How can I tell if the system is in Recovery Mode?**\ A: The dashboard will display a prominent notification when the system enters Recovery Mode. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Collateral Ratio](https://github.com/Secured-Finance/secured-finance-docs/tree/main/usdfc-stablecoin/getting-started/broken-reference/README.md) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Using the Stability Pool Learn how to deposit USDFC into the Stability Pool and earn rewards

Watch a quick walkthrough of this step

## Prerequisites * USDFC tokens in your wallet * Access to the [USDFC application](https://app.usdfc.net) * Connected wallet with enough FIL for gas fees ## Overview The Stability Pool is a key component of the USDFC protocol that helps maintain system stability. By depositing your USDFC into the Stability Pool, you contribute to the liquidation mechanism and earn rewards in the form of liquidated FIL collateral. This guide will walk you through the process of depositing USDFC into the Stability Pool and understanding how rewards work. ## Step 1: Access the Stability Pool First, you need to navigate to the Stability Pool page in the USDFC application. 1. Navigate to the [USDFC application](https://app.usdfc.net) 2. Connect your wallet if not already connected 3. Go to the "Stability Pool" page on the USDFC application 4. See the "Protocol Overview" section on the Dashboard page to check the Stability Pool information

Stability Pool section and Protocol Statistics section

## Step 2: Review Stability Pool Information Before depositing, review the current Stability Pool information. 1. Check the total USDFC deposited in the Stability Pool 2. Review the current rewards (if displayed) 3. Note that liquidation rewards are automatically calculated and distributed on a pro rata basis based on your Stability Pool contribution 4. Be aware that liquidation history is not displayed in the app but may be available through external on-chain analytics tools ## Step 3: Deposit USDFC Now you can deposit your USDFC into the Stability Pool. 1. Enter the amount of USDFC you want to deposit 2. Review any fees or conditions associated with the deposit 3. Click the "Deposit USDFC" button 4. Confirm the transaction in your wallet 5. Wait for the transaction to be processed on the blockchain

The Stability Pool deposit interface with the amount input field

## Step 4: Monitor Your Deposit and Rewards After depositing, you can monitor your position and earned rewards. 1. Your deposit amount will be displayed in the Stability Pool dashboard 2. Any earned FIL rewards will accumulate over time 3. The dashboard will show your share of the Stability Pool and Liquidation gain as rewards

Screenshot showing deposit and rewards information

## Step 5: Claim Rewards (When Available) When you've earned rewards, you can claim them. 1. Locate the "Claim Gains" or similar button in the Stability Pool dashboard 2. Click the button to claim your earned FIL rewards 3. Confirm the transaction in your wallet 4. Wait for the transaction to be processed 5. Verify that the FIL rewards have been added to your ## Step 6: Withdraw USDFC (When Desired) You can generally withdraw your USDFC from the Stability Pool at any time. 1. Enter the amount of USDFC you want to keep in the Stability Pool by subtracting the amount of USDFC you want to withdraw 2. Click the "Withdraw USDFC" button 3. Confirm the transaction in your wallet 4. Wait for the transaction to be processed 5. Verify that the USDFC has been returned to your Liquidation Gains {% hint style="warning" %} As a general rule, deposits in the Stability Pool can be withdrawn at any time, and there is no minimum lockup period. However, withdrawals are temporarily suspended while there are Troves below the minimum collateral ratio of 110% that have not yet been liquidated. {% endhint %}

The withdrawal by deposit amount adjustment

## How Stability Pool Rewards Work ### Liquidation Process When a Trove is liquidated, the following happens: 1. The system identifies Troves with collateral ratios below the minimum requirement 2. USDFC from the Stability Pool is used to repay the debt of the liquidated Trove 3. The liquidated Trove's collateral is distributed to Stability Pool depositors proportionally ### Reward Distribution Rewards are distributed based on your share of the Stability Pool: $$ \text{Your Reward} = \text{Liquidated Collateral} \times \frac{\text{Your Deposit}}{\text{Total Stability Pool}} $$ \[Image: Visual representation of the reward distribution mechanism] ### Deposit Dilution It's important to understand that your deposit may be "diluted" over time: 1. When liquidations occur, some of your deposited USDFC is used to repay debt 2. Your deposit amount decreases, but you receive FIL collateral in return 3. This is not a loss but a conversion from USDFC to FIL at a potentially favorable rate \[Image: Diagram explaining deposit dilution during liquidations] ## Strategies for Stability Pool Participation ### Conservative Strategy * Deposit a small portion of your USDFC (10-20%) * Lower risk and lower potential rewards * Good for those who want to maintain liquidity ### Balanced Strategy * Deposit a moderate portion of your USDFC (30-60%) * Balance between liquidity and potential rewards * Monitor the system health regularly ### Aggressive Strategy * Deposit a large portion of your USDFC (70-100%) * Higher potential rewards during periods of liquidations * Less liquidity for other opportunities \[Image: Comparison chart of different Stability Pool strategies] ## Next Steps * Learn about [redeeming USDFC](/usdfc-stablecoin/getting-started/redeeming-usdfc) when you're ready to exit * Understand [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) and how it affects the Stability Pool * Explore other ways to use your USDFC in the ecosystem ## Troubleshooting * **Transaction Failed**: Ensure you have enough FIL for gas fees * **Cannot Deposit**: Verify that you have the USDFC amount you're trying to deposit * **Rewards Not Showing**: Rewards only accumulate when liquidations occur; there may not have been recent liquidations ## Common Questions **Q: Is there a minimum amount I need to deposit?**\ A: There is typically no minimum amount, but very small deposits may result in gas fees outweighing potential rewards. **Q: How often are rewards distributed?**\ A: Rewards are distributed automatically during liquidation events. The frequency depends on market conditions and system health. **Q: Can I lose my deposited USDFC?**\ A: Your deposit is used to repay liquidated debt, but you receive FIL collateral in return, often at a discount to market value. **Q: How do I know if the Stability Pool is profitable?**\ A: Monitor the liquidation history and current system health. More liquidations generally mean more rewards for depositors. ## Related Topics * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) * [Protocol Fees](/usdfc-stablecoin/core-mechanics/protocol-fees) * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) # Redeeming USDFC Learn how to redeem your USDFC for FIL collateral under certain conditions
## Prerequisites * USDFC tokens in your wallet * Access to the [USDFC application](https://app.usdfc.net) * Connected wallet with enough FIL for gas fees * Understanding of repayment with trove adjustments * Understanding of redemption mechanics and fees ## Overview Redemption is a process that allows you to exchange your USDFC for FIL collateral at face value (1 USDFC = $1 worth of FIL). This mechanism helps maintain the USDFC peg to the US dollar. This guide will walk you through the redemption process and help you understand when redemption is beneficial. {% hint style="warning" %} Repayment is adjusting your trove. However, the redemption is adjusting 3rd party's lowest collateral trove.\ To avoid getting redemption, please watch 'Debt in front' amount and increase the collateral ratio. {% endhint %} ## Step 1: Access the Redemption Feature First, you need to navigate to the redemption section in the USDFC application. 1. Navigate to the [USDFC application](https://app.usdfc.net) 2. Connect your wallet if not already connected 3. Locate the "Redeem USDFC" page in the "More" tab in the USDFC application

The Redemption page location in the "More" tab

## Step 2: Review Redemption Information Before proceeding, review the current redemption information. 1. Check the current redemption fee (variable based on the base rate) 2. Understand which Troves will be affected by your redemption 3. Review the current FIL price and calculate how much FIL you'll receive

Screenshot of the redemption information page

## Step 3: Enter Redemption Amount Now you can specify how much USDFC you want to redeem. 1. Enter the amount of USDFC you want to redeem 2. The system will calculate the amount of FIL you will receive based on the current FIL price 3. Review the redemption fee that will be applied 4. Understand which Troves will be affected (redemptions start from the lowest collateral ratio Troves)

The lowest Collateral Ratio Troves get redeemed

## Step 4: Review Transaction Details Before confirming, review all transaction details carefully. 1. Check the USDFC amount you're redeeming 2. Verify the FIL amount you'll receive 3. Review the redemption fee 4. Understand the gas costs for the transaction

The Redemption section shows all relevant details

## Step 5: Confirm and Execute Redemption Once you're satisfied with the details, you can proceed with the redemption. 1. Click the "Redeem USDFC" button 2. Confirm the transaction in your wallet 3. Wait for the transaction to be processed on the blockchain

Screenshot showing updated wallet balances after redemption

\[Image: Screenshot of the confirmation screen with the "Redeem" button highlighted] ## Step 6: Verify Redemption After the transaction is confirmed, verify that your redemption was successful. 1. Check that your USDFC balance has decreased by the redeemed amount 2. Verify that the FIL has been added to your wallet balance 3. Review the transaction details in your wallet history or on a blockchain explorer

Lowest Collateral Ratio Trove's FIL Collateral and USDFC Debt was reduced

## Understanding Redemption Mechanics ### How Redemption Works 1. When you redeem USDFC, the system identifies Troves starting from the lowest collateral ratio 2. Your USDFC is used to repay the debt of these Troves 3. In return, you receive an equivalent value of FIL collateral (minus the redemption fee) 4. This process continues until your redemption amount is fulfilled or no more Troves can be redeemed from ### Redemption Fee The redemption fee is variable and depends on the current base rate: $$ \text{Redemption Fee} = \text{Base Rate} + \text{Redemption Fee Multiplier} $$ The base rate increases with each redemption and decays over time, which helps prevent large-scale redemptions that could destabilize the system. \[Image: Graph showing how the base rate changes with redemptions] ### When to Redeem Redemption is most beneficial in the following scenarios: 1. When USDFC is trading below its $1 peg (arbitrage opportunity) 2. When you want to exit the USDFC system entirely 3. When you believe FIL price will increase and want to acquire it at the current price \[Image: Decision flowchart for when to consider redemption] ## Next Steps * Consider [depositing USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/using-the-stability-pool) as an alternative to redemption * Learn about [managing collateral effectively](/usdfc-stablecoin/getting-started/managing-collateral-effectively) if you have your own Trove * Explore other ways to use your USDFC in the ecosystem ## Troubleshooting * **Transaction Failed**: Ensure you have enough FIL for gas fees * **Cannot Redeem**: There may not be enough Troves available for redemption, or the system might be in Recovery Mode * **High Redemption Fee**: The base rate might be elevated due to recent redemptions; consider waiting for it to decay ## Common Questions **Q: Can I redeem any amount of USDFC?**\ A: Yes, but smaller amounts may not be cost-effective due to gas fees and the redemption fee. **Q: Which Troves are affected by my redemption?**\ A: Redemptions start from the Troves with the lowest collateral ratios and move upward. **Q: Is there a waiting period for redemption?**\ A: No, redemptions can be processed immediately, but the redemption fee increases with each redemption to prevent large-scale redemptions in a short period. **Q: Can redemptions be blocked?**\ A: Yes, redemptions are disabled during Recovery Mode to protect the system's stability. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Redemption](/usdfc-stablecoin/core-mechanics/redemption) * [Protocol Fees](/usdfc-stablecoin/core-mechanics/protocol-fees) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Getting Started (UI v1) Your guide to using the USDFC stablecoin protocol via UI v1 Welcome to the USDFC stablecoin protocol! This section provides step-by-step guides to help you start using USDFC, a dollar-pegged stablecoin backed by Filecoin (FIL) collateral. Whether you're new to DeFi or an experienced user, these guides will walk you through the essential operations of the USDFC protocol. USDFC allows you to unlock the value of your FIL holdings while maintaining exposure to FIL's potential price appreciation. By depositing FIL as collateral in a Trove, you can mint USDFC stablecoins and use them across the DeFi ecosystem. ## What You'll Learn * How to create a Trove and deposit FIL collateral * How to mint USDFC stablecoins against your collateral * How to manage your collateral ratio to avoid liquidation * How to monitor your position's health * How to participate in the Stability Pool to earn rewards * How to redeem USDFC for FIL under low liquidity conditions ## Key Components ### Core Operations | Operation | Description | Guide | | -------------------- | ---------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | | Creating a Trove | Set up your collateralized debt position | [Creating Your First Trove](/usdfc-stablecoin/getting-started/getting-started/creating-your-first-trove) | | Minting USDFC | Generate stablecoins against your collateral | [Minting USDFC Step-by-Step](/usdfc-stablecoin/getting-started/getting-started/minting-usdfc-step-by-step) | | Managing Collateral | Add or withdraw collateral to adjust risk | [Managing Collateral Effectively](/usdfc-stablecoin/getting-started/getting-started/managing-collateral-effectively) | | Monitoring Position | Track your Trove's health and liquidation risk | [Monitoring Your Position](/usdfc-stablecoin/getting-started/getting-started/monitoring-your-position) | | Using Stability Pool | Earn rewards by helping secure the protocol | [Using the Stability Pool](/usdfc-stablecoin/getting-started/getting-started/using-the-stability-pool) | | Redeeming USDFC | Exchange USDFC for FIL at face value | [Redeeming USDFC](/usdfc-stablecoin/getting-started/getting-started/redeeming-usdfc) | ### What You Can Do With USDFC After minting USDFC, you have several options to put your stablecoins to work: 1. **Deposit into the Stability Pool** - Earn liquidated FIL at a discount while helping secure the protocol 2. **Provide Liquidity on DEXs** - Pair USDFC with FIL on SushiSwap to earn trading fees 3. **Lend in Fixed-Income Markets** - Earn interest by lending USDFC in Secured Finance's [Fixed Income Market](https://app.secured.finance/) 4. **Bridge to Other Chains** - Use the [bridge and swap](https://legacy.usdfc.net/#/bridge) functionality to move USDFC to other blockchains ## Testnet Resources If you want to try USDFC on testnet first: * Access the [Getting Test USDFC on Testnet](/usdfc-stablecoin/getting-started/getting-started/getting-test-usdfc-on-testnet) * Get testnet tFIL from the [Calibration Faucet](https://faucet.calibnet.chainsafe-fil.io/) * Watch the [Demo from FIL Dev Summit 2024](https://www.youtube.com/watch?v=LOnCu4HZnXg\&list=PL_0VrY55uV1__uv3uOvZ3L6exG9y10lSy\&index=13) ## Related Resources * [USDFC Overview](/usdfc-stablecoin/overview) * [Core Mechanics](/usdfc-stablecoin/core-mechanics) * [Advanced Topics](/usdfc-stablecoin/advanced-topics) * [FAQs](/usdfc-stablecoin/faqs) * [Fixed-Rate Lending](/fixed-rate-lending/overview) # Getting Test USDFC on Testnet Learn how to get and use test USDFC on the Filecoin Calibration testnet ## Overview This tutorial guides you through the process of obtaining and using test USDFC on the Filecoin Calibration testnet. Testing on the testnet allows you to experiment with USDFC's features without using real assets. You'll learn how to: * Obtain test Filecoin (tFIL) from a faucet * Access the USDFC testnet application * Mint test USDFC using tFIL as collateral * Add test USDFC to your wallet ## Prerequisites * A web3 wallet (like MetaMask) installed and have your wallet address * Basic understanding of blockchain transactions ## Step 1: Get Test Filecoin (tFIL) from the Faucet Before minting test USDFC, you'll need test Filecoin (tFIL) to use as collateral. 1. Visit the Filecoin Calibration testnet faucet at 2. Enter your wallet address 3. Complete any verification steps required by the faucet 4. Request tFIL (you will receive 100 tFIL twice a day) 5. Wait for the transaction to complete (this usually takes a few minutes)

Filecoin Calibration testnet faucet interface

## Step 2: Access the USDFC Testnet Application The USDFC testnet application is separate from the mainnet application. 1. Go to the USDFC testnet application at 2. Connect your wallet by clicking the "Connect Wallet" button in the top right corner 3. Ensure your wallet is set to the Filecoin Calibration testnet network

USDFC testnet application page with adding Calibration network

> **Note:** The testnet application () is different from the mainnet application (). Make sure you're using the correct URL for testing. ## Step 3: Mint Test USDFC Using tFIL Now that you have tFIL and are connected to the testnet application, you can mint test USDFC. 1. On the USDFC testnet application, navigate to the "Trove" section and click "Open Trove" 2. Enter the amount of tFIL you want to use as collateral 3. The application will calculate the amount of USDFC you can mint based on your collateral 4. Adjust the collateral ratio as needed (higher ratios provide more protection against liquidation) 5. Confirm the transaction in your wallet 6. Wait for the transaction to be confirmed on the blockchain

Minting USDFC

## Step 4: Add Test USDFC to Your Wallet After minting, you'll want to see your test USDFC in your wallet. 1. On the Dashboard page, navigate to the "Protocol Statistics" section and find "USDFC contract. 2. Click "Add to Wallet" icon. 3. The token symbol (USDFC) and decimals should be added 4. Click "Add" or "Import" to add test USDFC to your wallet ([video](https://gyazo.com/4102e760883c7c413ee1161a851d5712))

Adding USDFC to Wallet

## Step 5: Closing Your Trove Most cases, 'Adjust' should allow withdrawing collateralized FIL, but if you no longer need to use USDFC system, you can close your trove and you can reopen a trove again. {% hint style="warning" %} Don't forget to repay the borrowing fees. If you wish to close the trove with the USDFC amount you just borrowed, it doesn't work. You should repay borrowing fees. Please get additional USDFC from another account or via swap. {% endhint %} 1. On the Dashboard page, navigate to the "Trove" section 2. Click "Close Trove" button 3. If you see error message that you need more USDFC to pay borrowing fees, please get it. 4. If you just wish to withdraw FIL as much as possible, you can cancel closing and click "Adjust" 5. Click "Confirm" to send the transaction with your wallet

Closing Your Trove requires repayment of the borrowed amount and fees in USDFC

## Using Test USDFC on Testnet Now that you have test USDFC, you can explore various features of the USDFC ecosystem on testnet: ### Stability Pool You can deposit your test USDFC into the Stability Pool to help secure the protocol and potentially earn rewards from liquidations. Learn more with [Using the Stability Pool](/usdfc-stablecoin/getting-started/getting-started/using-the-stability-pool)

Stability Pool

### Fixed Rate Lending Market While Bridge and SushiSwap features are not available on testnet, you can use the USDFC fixed rate lending market. 1. Visit 2. Connect your wallet 3. Navigate to the lending markets 4. Explore lending or borrowing with your test USDFC. Learn more with [Quick Start: Lend](/fixed-rate-lending/getting-started/quick-start-lend) and [Quick Start: Borrow](/fixed-rate-lending/getting-started/quick-start-borrow) ## Testnet Limitations It's important to understand the differences between testnet and mainnet: * **Bridge functionality** is not available on testnet * **SushiSwap integration** is not available on testnet * Test tokens have no real-world value * Transaction times and network behavior may differ from mainnet * The USDFC fixed rate lending market is available at [https://stg.secured.finance](http://stg.secured.finance/?chain_id=314159) ## Common Questions **Q: How often can I request test FIL from the faucet?**\ A: Faucet limitations vary, but typically you can request once every 24 hours. **Q: Are there any fees for transactions on testnet?**\ A: Yes, you'll need to pay gas fees in tFIL, but since tFIL has no real value, these fees are effectively free. **Q: Can I transfer my test USDFC to mainnet?**\ A: No, testnet tokens cannot be transferred to mainnet as they exist on separate networks. **Q: What should I do if my transaction fails?**\ A: Check that you have enough tFIL for gas fees, ensure your wallet is connected to the Filecoin Calibration testnet, and try again with a higher gas limit if necessary. ## Related Resources * [USDFC Overview](/usdfc-stablecoin/overview) * [Creating Your First Trove](/usdfc-stablecoin/getting-started/getting-started/creating-your-first-trove) * [Minting USDFC Step-by-Step](/usdfc-stablecoin/getting-started/getting-started/minting-usdfc-step-by-step) * [Using the Stability Pool](/usdfc-stablecoin/getting-started/getting-started/using-the-stability-pool) # Creating Your First Trove Learn how to create your first Trove to start using USDFC ## Prerequisites * A wallet with FIL tokens (Filecoin's native cryptocurrency) * Basic understanding of blockchain transactions * Access to the [USDFC application](https://legacy.usdfc.net/) ## Overview A Trove is your personal collateralized debt position in the USDFC protocol. By creating a Trove, you can deposit FIL as collateral and mint USDFC stablecoins against it. This guide will walk you through the process of creating your first Trove. ## Step 1: Connect Your Wallet Before you can create a Trove, you need to connect your wallet to the USDFC application. 1. Navigate to the [USDFC application](https://legacy.usdfc.net/) 2. Click on the "Connect Wallet" button in the top right corner 3. Select your wallet provider (MetaMask, WalletConnect, etc.) 4. Confirm the connection

The wallet connection interface after the "Connect Wallet" button

## Step 2: Navigate to the Trove Management Section Once your wallet is connected, you need to navigate to the Trove management section. 1. On the USDFC dashboard, locate and click on the "Open Trove" button 2. You'll see the Trove creation section on the same page

The USDFC dashboard with the Trove/Mint USDFC section

## Step 3: Set Your Collateral and Debt Amounts Now you need to decide how much FIL to deposit and how much USDFC to mint. 1. Enter the amount of FIL you want to deposit as collateral 2. Enter the amount of USDFC you want to mint & borrow 3. The system will automatically calculate your collateral ratio 4. Ensure your collateral ratio is above the minimum required (typically 110%)

The collateral and debt input fields with the collateral ratio calculation

## Step 4: Review Transaction Details Before confirming, review all transaction details carefully. 1. Check the collateral amount (FIL) 2. Verify the debt amount (USDFC) 3. Review the collateral ratio 4. Note any fees that will be applied (including the Liquidation Reserve of 20 USDFC) ## Step 5: Confirm and Create Your Trove Once you're satisfied with the details, you can create your Trove. 1. Click the "Confirm" button 2. Confirm the transaction in your wallet 3. Wait for the transaction to be processed on the blockchain

The confirmation screen with the "Confirm" button highlighted

## Step 6: Verify Your Trove Creation After the transaction is confirmed, verify that your Trove was created successfully. 1. Check that your Trove appears in the dashboard 2. Verify that the USDFC has been added to your wallet balance 3. If you don't see USDFC in your wallet, you may need to add it as a custom token (see a [wallet icon](https://gyazo.com/4102e760883c7c413ee1161a851d5712) in the Protocol Statistics section)

Screenshot showing a successfully created Trove in the dashboard

## Next Steps Now that you've created your first Trove, you can: * [Mint additional USDFC](/usdfc-stablecoin/getting-started/getting-started/minting-usdfc-step-by-step) * [Manage your collateral](/usdfc-stablecoin/getting-started/getting-started/managing-collateral-effectively) * [Monitor your position](/usdfc-stablecoin/getting-started/getting-started/monitoring-your-position) * [Deposit USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/getting-started/using-the-stability-pool) ## Troubleshooting * **Transaction Failed**: Ensure you have enough FIL for gas fees and that your collateral ratio meets the minimum requirement * **USDFC Not Showing in Wallet**: Add USDFC as a custom token in your wallet using the contract address found in the [deployed contracts](/usdfc-stablecoin/deployed-contracts) page, or click the wallet icon near the USDFC contract info on the USDFC app * **High Gas Fees**: Try again when network congestion is lower or adjust your gas settings ## Common Questions **Q: What is the minimum amount of FIL I can deposit?**\ A: You need to deposit enough FIL to borrow at least 200 USDFC (the minimum borrowing amount) while maintaining at least a 110% collateral ratio. The exact FIL amount will depend on the current FIL price. **Q: What is the Liquidation Reserve?**\ A: The Liquidation Reserve is a small amount of USDFC (20 USDFC) that is set aside to cover potential gas costs in case your Trove needs to be liquidated. **Q: Can I create multiple Troves?**\ A: No, each wallet address can only have one Trove at a time. **Q: What happens if my collateral ratio falls below the minimum?**\ A: Your Trove may be liquidated. Learn more in the [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) section. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Mint & Borrow](/usdfc-stablecoin/core-mechanics/mint-and-borrow) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Minting USDFC Step-by-Step A comprehensive guide to minting USDFC stablecoins ## Prerequisites * An active Trove with FIL collateral * Access to the [USDFC application](https://legacy.usdfc.net/) * Connected wallet with enough FIL for gas fees ## Overview Minting USDFC allows you to generate dollar-pegged stablecoins against your FIL collateral. This guide walks you through the process of minting USDFC from an existing Trove. ## Step 1: Access Your Trove First, you need to access your existing Trove in the USDFC application. 1. Navigate to the [USDFC application](https://legacy.usdfc.net/) 2. Connect your wallet if not already connected 3. Go to the "Trove" section on the USDFC Dashboard page 4. You should see your current Trove details including collateral amount, debt, and collateral ratio {% hint style="warning" %} "Debt" is the Total debt = Borrowed amount + Borrowing Fees (cumulative) {% endhint %}

The Trove dashboard showing current position details

## Step 2: Select "Adjust Trove" To mint additional USDFC, you need to adjust your Trove. 1. Click on the "Adjust" button 2. This will open the Trove adjustment interface {% hint style="info" %} "Net debt" is Total Debt - Liquidation Reserve. In this example, 221.02 - 20 = 201.02 USDFC. {% endhint %}

Screenshot after clicking the "Adjust Trove" button

## Step 3: Specify Minting Amount Now you need to specify how much additional USDFC you want to mint. 1. In the adjustment interface, locate the "Collateral" and "Net debt" input fields 2. Enter the amount of Collateral and USDFC debt you want to adjust 3. The system will automatically calculate your new collateral ratio 4. Ensure your new collateral ratio remains above the minimum required (recommended 150%) {% hint style="info" %} "Total debt" is Net debt + Liquidation Reserve + Borrowing Fee (this mint fee). In this example, 220.00 + 20 + 0.10 = 240.10 USDFC. {% endhint %}

The minting interface with the adjusted amount and collateral ratio calculation

## Step 4: Review Transaction Details Before confirming, review all transaction details carefully. 1. Check the additional USDFC amount you're minting 2. Verify your new collateral ratio 3. Review any fees that will be applied 4. Ensure you understand how this affects your liquidation risk ## Step 5: Confirm and Mint USDFC Once you're satisfied with the details, you can proceed with minting. 1. Click the "Confirm" button 2. Confirm the transaction in your wallet 3. Wait for the transaction to be processed on the blockchain

The confirmation screen with the "Adjust Trove" method

## Step 6: Verify Minted USDFC After the transaction is confirmed, verify that your USDFC was minted successfully. 1. Check that your Trove details have been updated with the new debt amount 2. Verify that the additional USDFC has been added to your wallet balance 3. If you don't see the additional USDFC in your wallet, you may need to refresh or check your transaction history on your wallet or [a blockchain explorer](https://filfox.info/en) 4. Check that your wallet balance reflects Borrowing Fee subtracted {% hint style="info" %} Wallet balance = Total debt - Liquidation Reserve - Borrowing Fees (cumulative). In this example, 240.10 - 20 - 0.10 (this mint fee) - 1.02 (prev mint fee) = 218.98 USDFC. {% endhint %}

Screenshot showing updated Trove details and wallet balance

## Next Steps Now that you've minted USDFC, you can: * [Manage your collateral](/usdfc-stablecoin/getting-started/getting-started/managing-collateral-effectively) to adjust your risk level * [Monitor your position](/usdfc-stablecoin/getting-started/getting-started/monitoring-your-position) to stay informed about your Trove's health * [Deposit USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/getting-started/using-the-stability-pool) to earn rewards * [Redeem USDFC](/usdfc-stablecoin/getting-started/getting-started/redeeming-usdfc) for FIL when you're ready ## Troubleshooting * **Transaction Failed**: Ensure you have enough FIL for gas fees and that your collateral ratio meets the minimum requirement * **Cannot Mint More USDFC**: You may have reached the maximum debt for your current collateral amount * **High Gas Fees**: Try again when network congestion is lower or adjust your gas settings ## Common Questions **Q: Is there a limit to how much USDFC I can mint?**\ A: The amount of USDFC you can mint is limited by your collateral amount and the minimum collateral ratio requirement. **Q: Are there any fees for minting USDFC?**\ A: Yes, there is a small minting fee that varies based on the current base rate. This fee helps maintain the stability of the protocol. **Q: How does minting more USDFC affect my liquidation risk?**\ A: Minting more USDFC without adding collateral increases your debt, which lowers your collateral ratio and increases your liquidation risk. **Q: Can I mint USDFC in small increments?**\ A: Yes, you can mint USDFC in any amount as long as your collateral ratio remains above the minimum requirement. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Mint & Borrow](/usdfc-stablecoin/core-mechanics/mint-and-borrow) * [Protocol Fees](/usdfc-stablecoin/core-mechanics/protocol-fees) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) # Managing Collateral Effectively Learn how to manage your collateral to maintain a healthy Trove ## Prerequisites * An active Trove with FIL collateral * Access to the [USDFC application](https://legacy.usdfc.net/) * Connected wallet with FIL for additional collateral (if adding) ## Overview Managing your collateral effectively is crucial for maintaining a healthy Trove and avoiding liquidation. This guide will show you how to add or withdraw collateral, and how to determine the optimal collateral ratio for your risk tolerance. ## Step 1: Access Your Trove First, you need to access your existing Trove in the USDFC application. 1. Navigate to the [USDFC application](https://legacy.usdfc.net/) 2. Connect your wallet if not already connected 3. Go to the "Trove" section on the USDFC Dashboard page 4. Review your current collateral amount, debt, and collateral ratio

Trove dashboard showing current position details

## Step 2: Select "Adjust Trove" To manage your collateral, you need to adjust your Trove. 1. Click on the "Adjust" button 2. This will open the Trove adjustment interface

"Adjust Trove" interface

## Step 3: Add or Withdraw Collateral Now you can add more collateral or withdraw some of your existing collateral. ### To Add Collateral: 1. In the adjustment interface, locate the "Collateral" input field 2. Increase the amount of FIL from your current value 3. The system will automatically calculate your new collateral ratio 4. Adding collateral increases your collateral ratio and reduces liquidation risk

Screenshot of the interface for adding collateral

### To Withdraw Collateral: 1. In the adjustment interface, locate the "Collateral" input field 2. Decrease the amount of FIL from your current value 3. The system will automatically calculate your new collateral ratio 4. Ensure your new collateral ratio remains above the minimum required (110%)

Screenshot of the interface for withdrawing collateral

## Step 4: Review Transaction Details Before confirming, review all transaction details carefully. 1. Check the collateral adjustment amount 2. Verify your new collateral ratio 3. Understand how this affects your liquidation risk 4. Review any fees that will be applied ## Step 5: Confirm and Execute Once you're satisfied with the details, you can proceed with the adjustment. 1. Click the "Confirm" button 2. Confirm the transaction in your wallet 3. Wait for the transaction to be processed on the blockchain

Screenshot of the wallet confirmation screen

## Step 6: Verify the Adjustment After the transaction is confirmed, verify that your collateral was adjusted successfully. 1. Check that your Trove details have been updated with the new collateral amount 2. Verify your new collateral ratio 3. If withdrawing collateral, confirm that the FIL has been added to your wallet balance

Screenshot showing updated Trove details

## Understanding Collateral Ratios ### Key Collateral Ratio Thresholds | Threshold | Value | Description | | ------------------------------ | ----- | ----------------------------------------------------------------------------------- | | Minimum Collateral Ratio (MCR) | 110% | The absolute minimum ratio required to avoid liquidation | | Recovery Mode Threshold | 150% | When the system enters Recovery Mode if the Total Collateral Ratio falls below this | | Recommended Safe Ratio | 200%+ | A conservative ratio that provides a good buffer against price fluctuations | ### Calculating Your Liquidation Price To calculate the FIL price at which your Trove would reach the minimum collateral ratio (110%): $$ \text{Liquidation Price} = \frac{\text{Debt in USDFC} \times 1.1}{\text{Collateral in FIL}} $$ \[Image: Visual representation of the liquidation price calculation] ## Strategies for Collateral Management ### Conservative Strategy (Low Risk) * Maintain a collateral ratio of 200% or higher * Add collateral proactively when FIL price starts to decline * Smaller USDFC minting relative to collateral value ### Balanced Strategy (Medium Risk) * Maintain a collateral ratio between 150% and 200% * Monitor FIL price regularly and adjust as needed * Balance between capital efficiency and safety ### Aggressive Strategy (High Risk) * Maintain a collateral ratio between 110% and 150% * Requires very active monitoring and quick reactions to price changes * Maximizes capital efficiency but has higher liquidation risk \[Image: Visual comparison of different collateral management strategies] ## Next Steps * [Monitor your position](/usdfc-stablecoin/getting-started/getting-started/monitoring-your-position) regularly to stay informed about your Trove's health * Consider [depositing USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/getting-started/using-the-stability-pool) to earn rewards * Learn about [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) and how it affects your Trove ## Troubleshooting * **Cannot Withdraw Collateral**: Your withdrawal might push your collateral ratio below the minimum requirement * **Transaction Failed**: Ensure you have enough FIL for gas fees * **Collateral Not Showing**: Refresh the page or check your transaction history ## Common Questions **Q: How often should I adjust my collateral?**\ A: This depends on your risk tolerance and FIL price volatility. More volatile markets require more frequent adjustments. **Q: What happens if FIL price drops suddenly?**\ A: If the price drop causes your collateral ratio to fall below the minimum requirement (110%), your Trove may be liquidated. **Q: Can I add collateral without minting more USDFC?**\ A: Yes, you can add collateral without changing your debt amount to increase your collateral ratio. **Q: Is there a fee for adjusting my collateral?**\ A: Adding collateral only incurs gas fees. Withdrawing collateral may incur both gas fees and a small protocol fee. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Collateral Ratio](https://github.com/Secured-Finance/secured-finance-docs/tree/main/usdfc-stablecoin/getting-started/broken-reference/README.md) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Monitoring Your Position Learn how to track and manage your Trove's health ## Prerequisites * An active Trove with FIL collateral * Access to the [USDFC application](https://legacy.usdfc.net/) * Basic understanding of collateral ratios and liquidation risk ## Overview Monitoring your position is essential for maintaining a healthy Trove and avoiding liquidation. This guide will show you how to track your Trove's health, understand key metrics, and set up alerts to stay informed about changes that could affect your position. ## Step 1: Access Your Trove Dashboard The Trove dashboard is your primary tool for monitoring your position. 1. Navigate to the [USDFC application](https://legacy.usdfc.net/) 2. Connect your wallet if not already connected 3. Go to the "Trove" section on the USDFC Dashboard page 4. Review your current Trove details

Screenshot of the Trove dashboard showing key metrics

## Step 2: Understand Key Metrics To effectively monitor your position, you need to understand the key metrics displayed on your dashboard. ### Collateral Ratio The collateral ratio is the most important metric to monitor. It represents the value of your collateral relative to your debt. $$ \text{Collateral Ratio} = \frac{\text{Collateral Value in USD}}{\text{Debt in USDFC}} \times 100% $$ * **Safe Zone**: Above 200% (Conservative) * **Caution Zone**: 150% to 200% (Moderate risk) * **Danger Zone**: 110% to 150% (High risk) * **Liquidation Zone**: Below 110% (Immediate risk) \[Image: Visual representation of collateral ratio zones] ### Liquidation Price The liquidation price is the FIL price at which your Trove would reach the minimum collateral ratio (110%) and become eligible for liquidation. $$ \text{Liquidation Price} = \frac{\text{Debt in USDFC} \times 1.1}{\text{Collateral in FIL}} $$ \[Image: Visualization of liquidation price calculation] ### Current FIL Price The current price of FIL relative to USD is displayed to help you understand how close you are to your liquidation price. ### Available Actions Based on your current metrics, the dashboard may suggest available actions to improve your position's health. ## Step 3: Set Up External Alerts While the USDFC application doesn't currently offer built-in alerts, you can set up external alerts to monitor your position. ### Price Alerts Set up price alerts for FIL using cryptocurrency tracking apps or exchanges. 1. Calculate your liquidation price 2. Set an alert for when FIL price approaches this threshold (e.g., 20% above liquidation price) 3. Popular platforms for price alerts include [CoinGecko](https://www.coingecko.com/learn/how-to-set-up-the-price-alert-function-on-coingecko), CoinMarketCap, or exchange apps ### Blockchain Monitoring Tools Use blockchain monitoring tools to track your Trove's health. 1. Find your Trove's address or ID 2. Set up monitoring using tools like [Filfox](https://filfox.info/en), Tenderly, or DeFi-specific monitoring platforms 3. Configure alerts for significant changes to your Trove ## Step 4: Regular Check-ins Establish a routine for checking your Trove's health. ### Daily Checks (High-Risk Positions) If your collateral ratio is close to the minimum (110%-150%): * Check your position at least once daily * Monitor FIL price movements throughout the day * Be prepared to add collateral quickly if needed ### Weekly Checks (Moderate-Risk Positions) If your collateral ratio is in a safer range (150%-200%): * Check your position at least once weekly * Review FIL price trends for the week * Adjust collateral as needed based on market outlook ### Monthly Checks (Low-Risk Positions) If your collateral ratio is very high (>200%): * Check your position at least once monthly * Evaluate if you're being too conservative with your capital * Consider strategies to optimize your position ## Step 5: Respond to Market Changes Develop a plan for responding to different market scenarios. ### During FIL Price Decreases 1. Calculate how much the price can drop before reaching your comfort threshold 2. Prepare additional FIL for collateral if needed 3. Consider reducing your debt by repaying some USDFC ### During FIL Price Increases 1. Evaluate if you want to withdraw some collateral 2. Consider minting additional USDFC 3. Rebalance your position to maintain your target collateral ratio \[Image: Flowchart showing decision paths for different market scenarios] ## Next Steps * Learn how to [manage your collateral effectively](/usdfc-stablecoin/getting-started/getting-started/managing-collateral-effectively) * Consider [depositing USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/getting-started/using-the-stability-pool) to earn rewards * Understand [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) and how it affects your Trove ## Troubleshooting * **Dashboard Not Loading**: Try refreshing the page or reconnecting your wallet * **Metrics Not Updating**: Check if there are pending transactions or network congestion * **Unexpected Collateral Ratio**: Verify the current FIL price from multiple sources ## Common Questions **Q: How often does the dashboard update?**\ A: The dashboard updates in real-time based on blockchain data and current price feeds. **Q: Will I receive notifications if my Trove is at risk?**\ A: The USDFC application doesn't currently send automatic notifications. You should set up external alerts as described above. **Q: What should I do if I can't access the application but know my position is at risk?**\ A: You can interact with the USDFC protocol directly through the smart contracts if necessary. Keep emergency funds ready to add collateral when needed. **Q: How can I tell if the system is in Recovery Mode?**\ A: The dashboard will display a prominent notification when the system enters Recovery Mode. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Collateral Ratio](https://github.com/Secured-Finance/secured-finance-docs/tree/main/usdfc-stablecoin/getting-started/broken-reference/README.md) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Using the Stability Pool Learn how to deposit USDFC into the Stability Pool and earn rewards ## Prerequisites * USDFC tokens in your wallet * Access to the [USDFC application](https://legacy.usdfc.net/) * Connected wallet with enough FIL for gas fees ## Overview The Stability Pool is a key component of the USDFC protocol that helps maintain system stability. By depositing your USDFC into the Stability Pool, you contribute to the liquidation mechanism and earn rewards in the form of liquidated FIL collateral. This guide will walk you through the process of depositing USDFC into the Stability Pool and understanding how rewards work. ## Step 1: Access the Stability Pool First, you need to navigate to the Stability Pool section in the USDFC application. 1. Navigate to the [USDFC application](https://legacy.usdfc.net/) 2. Connect your wallet if not already connected 3. Locate the "Stability Pool" section on the Dashboard page 4. See the "Protocol Statistics" section to check the Stability Pool information

Stability Pool section and Protocol Statistics section

## Step 2: Review Stability Pool Information Before depositing, review the current Stability Pool information. 1. Check the total USDFC deposited in the Stability Pool 2. Review the current rewards (if displayed) 3. Note that liquidation rewards are automatically calculated and distributed on a pro rata basis based on your Stability Pool contribution 4. Be aware that liquidation history is not displayed in the app but may be available through external on-chain analytics tools ## Step 3: Deposit USDFC Now you can deposit your USDFC into the Stability Pool. 1. Enter the amount of USDFC you want to deposit 2. Review any fees or conditions associated with the deposit 3. Click the "Confirm" button 4. Confirm the transaction in your wallet 5. Wait for the transaction to be processed on the blockchain

The Stability Pool deposit interface with the amount input field

## Step 4: Monitor Your Deposit and Rewards After depositing, you can monitor your position and earned rewards. 1. Your deposit amount will be displayed in the Stability Pool dashboard 2. Any earned FIL rewards will accumulate over time 3. The dashboard will show your share of the Stability Pool and Liquidation gain as rewards

Screenshot showing deposit and rewards information

## Step 5: Claim Rewards (When Available) When you've earned rewards, you can claim them. 1. Locate the "Claim FIL" or similar button in the Stability Pool dashboard 2. Click the button to claim your earned FIL rewards 3. Confirm the transaction in your wallet 4. Wait for the transaction to be processed 5. Verify that the FIL rewards have been added to your trove ## Step 6: Withdraw USDFC (When Desired) You can generally withdraw your USDFC from the Stability Pool at any time. 1. Enter the amount of USDFC you want to keep in the Stability Pool by subtracting the amount of USDFC you want to withdraw 2. Click the "Confirm" button 3. Confirm the transaction in your wallet 4. Wait for the transaction to be processed 5. Verify that the USDFC has been returned to your wallet {% hint style="warning" %} As a general rule, deposits in the Stability Pool can be withdrawn at any time, and there is no minimum lockup period. However, withdrawals are temporarily suspended while there are Troves below the minimum collateral ratio of 110% that have not yet been liquidated. {% endhint %}

The withdrawal by deposit amount adjustment

## How Stability Pool Rewards Work ### Liquidation Process When a Trove is liquidated, the following happens: 1. The system identifies Troves with collateral ratios below the minimum requirement 2. USDFC from the Stability Pool is used to repay the debt of the liquidated Trove 3. The liquidated Trove's collateral is distributed to Stability Pool depositors proportionally ### Reward Distribution Rewards are distributed based on your share of the Stability Pool: $$ \text{Your Reward} = \text{Liquidated Collateral} \times \frac{\text{Your Deposit}}{\text{Total Stability Pool}} $$ \[Image: Visual representation of the reward distribution mechanism] ### Deposit Dilution It's important to understand that your deposit may be "diluted" over time: 1. When liquidations occur, some of your deposited USDFC is used to repay debt 2. Your deposit amount decreases, but you receive FIL collateral in return 3. This is not a loss but a conversion from USDFC to FIL at a potentially favorable rate \[Image: Diagram explaining deposit dilution during liquidations] ## Strategies for Stability Pool Participation ### Conservative Strategy * Deposit a small portion of your USDFC (10-20%) * Lower risk and lower potential rewards * Good for those who want to maintain liquidity ### Balanced Strategy * Deposit a moderate portion of your USDFC (30-60%) * Balance between liquidity and potential rewards * Monitor the system health regularly ### Aggressive Strategy * Deposit a large portion of your USDFC (70-100%) * Higher potential rewards during periods of liquidations * Less liquidity for other opportunities \[Image: Comparison chart of different Stability Pool strategies] ## Next Steps * Learn about [redeeming USDFC](/usdfc-stablecoin/getting-started/getting-started/redeeming-usdfc) when you're ready to exit * Understand [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) and how it affects the Stability Pool * Explore other ways to use your USDFC in the ecosystem ## Troubleshooting * **Transaction Failed**: Ensure you have enough FIL for gas fees * **Cannot Deposit**: Verify that you have the USDFC amount you're trying to deposit * **Rewards Not Showing**: Rewards only accumulate when liquidations occur; there may not have been recent liquidations ## Common Questions **Q: Is there a minimum amount I need to deposit?**\ A: There is typically no minimum amount, but very small deposits may result in gas fees outweighing potential rewards. **Q: How often are rewards distributed?**\ A: Rewards are distributed automatically during liquidation events. The frequency depends on market conditions and system health. **Q: Can I lose my deposited USDFC?**\ A: Your deposit is used to repay liquidated debt, but you receive FIL collateral in return, often at a discount to market value. **Q: How do I know if the Stability Pool is profitable?**\ A: Monitor the liquidation history and current system health. More liquidations generally mean more rewards for depositors. ## Related Topics * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) * [Protocol Fees](/usdfc-stablecoin/core-mechanics/protocol-fees) * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) # Redeeming USDFC Learn how to redeem your USDFC for FIL collateral under certain conditions ## Prerequisites * USDFC tokens in your wallet * Access to the [USDFC application](https://legacy.usdfc.net/) * Connected wallet with enough FIL for gas fees * Understanding of repayment with trove adjustments * Understanding of redemption mechanics and fees ## Overview Redemption is a process that allows you to exchange your USDFC for FIL collateral at face value (1 USDFC = $1 worth of FIL). This mechanism helps maintain the USDFC peg to the US dollar. This guide will walk you through the redemption process and help you understand when redemption is beneficial. {% hint style="warning" %} Repayment is adjusting your trove. However, the redemption is adjusting 3rd party's lowest collateral trove.\ To avoid getting redemption, please watch 'Debt in front' amount and increase the collateral ratio. {% endhint %} ## Step 1: Access the Redemption Feature First, you need to navigate to the redemption section in the USDFC application. 1. Navigate to the [USDFC application](https://legacy.usdfc.net/) 2. Connect your wallet if not already connected 3. Locate the "Redemption" page in the "More" tab in the USDFC application

The Redemption page location in the "More" tab

## Step 2: Review Redemption Information Before proceeding, review the current redemption information. 1. Check the current redemption fee (variable based on the base rate) 2. Understand which Troves will be affected by your redemption 3. Review the current FIL price and calculate how much FIL you'll receive

Screenshot of the redemption information page

## Step 3: Enter Redemption Amount Now you can specify how much USDFC you want to redeem. 1. Enter the amount of USDFC you want to redeem 2. The system will calculate the amount of FIL you will receive based on the current FIL price 3. Review the redemption fee that will be applied 4. Understand which Troves will be affected (redemptions start from the lowest collateral ratio Troves)

The lowest Collateral Ratio Troves get redeemed

## Step 4: Review Transaction Details Before confirming, review all transaction details carefully. 1. Check the USDFC amount you're redeeming 2. Verify the FIL amount you'll receive 3. Review the redemption fee 4. Understand the gas costs for the transaction

The Redemption section shows all relevant details

## Step 5: Confirm and Execute Redemption Once you're satisfied with the details, you can proceed with the redemption. 1. Click the "Confirm" button 2. Confirm the transaction in your wallet 3. Wait for the transaction to be processed on the blockchain

Screenshot showing updated wallet balances after redemption

\[Image: Screenshot of the confirmation screen with the "Redeem" button highlighted] ## Step 6: Verify Redemption After the transaction is confirmed, verify that your redemption was successful. 1. Check that your USDFC balance has decreased by the redeemed amount 2. Verify that the FIL has been added to your wallet balance 3. Review the transaction details in your wallet history or on a blockchain explorer

Lowest Collateral Ratio Trove's FIL Collateral and USDFC Debt was reduced

## Understanding Redemption Mechanics ### How Redemption Works 1. When you redeem USDFC, the system identifies Troves starting from the lowest collateral ratio 2. Your USDFC is used to repay the debt of these Troves 3. In return, you receive an equivalent value of FIL collateral (minus the redemption fee) 4. This process continues until your redemption amount is fulfilled or no more Troves can be redeemed from ### Redemption Fee The redemption fee is variable and depends on the current base rate: $$ \text{Redemption Fee} = \text{Base Rate} + \text{Redemption Fee Multiplier} $$ The base rate increases with each redemption and decays over time, which helps prevent large-scale redemptions that could destabilize the system. \[Image: Graph showing how the base rate changes with redemptions] ### When to Redeem Redemption is most beneficial in the following scenarios: 1. When USDFC is trading below its $1 peg (arbitrage opportunity) 2. When you want to exit the USDFC system entirely 3. When you believe FIL price will increase and want to acquire it at the current price \[Image: Decision flowchart for when to consider redemption] ## Next Steps * Consider [depositing USDFC into the Stability Pool](/usdfc-stablecoin/getting-started/getting-started/using-the-stability-pool) as an alternative to redemption * Learn about [managing collateral effectively](/usdfc-stablecoin/getting-started/getting-started/managing-collateral-effectively) if you have your own Trove * Explore other ways to use your USDFC in the ecosystem ## Troubleshooting * **Transaction Failed**: Ensure you have enough FIL for gas fees * **Cannot Redeem**: There may not be enough Troves available for redemption, or the system might be in Recovery Mode * **High Redemption Fee**: The base rate might be elevated due to recent redemptions; consider waiting for it to decay ## Common Questions **Q: Can I redeem any amount of USDFC?**\ A: Yes, but smaller amounts may not be cost-effective due to gas fees and the redemption fee. **Q: Which Troves are affected by my redemption?**\ A: Redemptions start from the Troves with the lowest collateral ratios and move upward. **Q: Is there a waiting period for redemption?**\ A: No, redemptions can be processed immediately, but the redemption fee increases with each redemption to prevent large-scale redemptions in a short period. **Q: Can redemptions be blocked?**\ A: Yes, redemptions are disabled during Recovery Mode to protect the system's stability. ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Redemption](/usdfc-stablecoin/core-mechanics/redemption) * [Protocol Fees](/usdfc-stablecoin/core-mechanics/protocol-fees) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Core Mechanics Explore the fundamental mechanisms of the USDFC Stablecoin Protocol ## Overview The USDFC Stablecoin Protocol introduces a variety of innovative features that enable users to efficiently mint, manage, and utilize **USDFC**, our decentralized, Filecoin-backed stablecoin. These core mechanics work together to ensure the stability, security, and usability of the protocol. ## What You'll Learn * How to mint USDFC using Filecoin (FIL) as collateral * How the Trove system manages individual collateralized debt positions * How liquidations protect the protocol from undercollateralization * How the redemption mechanism maintains USDFC's peg to the US Dollar * How protocol fees contribute to the system's sustainability ## Key Components * [**The Trove System**](/usdfc-stablecoin/core-mechanics/the-trove-system): Individual vaults where users deposit FIL collateral and mint USDFC * [**Mint & Borrow**](/usdfc-stablecoin/core-mechanics/mint-and-borrow): The process of creating new USDFC backed by FIL collateral * [**Liquidation**](/usdfc-stablecoin/core-mechanics/liquidation): The mechanism for handling undercollateralized positions * [**Redemption**](/usdfc-stablecoin/core-mechanics/redemption): The process allowing USDFC holders to exchange for FIL at face value * [**Protocol Fees**](/usdfc-stablecoin/core-mechanics/protocol-fees): The fee structure supporting the protocol's long-term sustainability ## Related Resources * [System Overview](/usdfc-stablecoin/core-mechanics/system-overview) * [Advanced Topics](/usdfc-stablecoin/advanced-topics) * [FAQs](/usdfc-stablecoin/faqs) # System Overview Understanding the USDFC Stablecoin Protocol Architecture ## Overview The USDFC Stablecoin Protocol is a decentralized system that enables users to mint a USD-pegged stablecoin (USDFC) by depositing Filecoin (FIL) as collateral. The protocol maintains stability through a series of interconnected mechanisms that ensure USDFC maintains its 1:1 peg to the US Dollar. ## How It Works The protocol operates through several key components that work together to maintain stability, manage collateral, and ensure the proper functioning of the system: 1. **Trove System**: Individual vaults where users deposit FIL collateral and mint USDFC 2. **Stability Pool**: A reserve of USDFC that absorbs liquidations of under-collateralized Troves 3. **Redemption Mechanism**: Allows USDFC holders to exchange their tokens for FIL at face value 4. **Recovery Mode**: A special state that activates when the system's overall collateral ratio falls below 150% 5. **Price Oracle**: Provides accurate FIL/USD price data to determine collateral values ## System Architecture ### Normal Mode
Normal Mode Architecture

USDFC Protocol Architecture in Normal Mode

### Recovery Mode
Recovery Mode Architecture

USDFC Protocol Architecture in Recovery Mode

## Key Parameters | Parameter | Description | Default Value | | ------------------------------ | -------------------------------------------------- | ------------- | | Minimum Collateral Ratio (MCR) | Minimum required ratio of collateral to debt | 110% | | Recovery Mode Threshold | TCR level that triggers Recovery Mode | 150% | | Liquidation Reserve | USDFC reserved for potential liquidation gas costs | 20 USDFC | | Minimum Borrow Amount | Minimum USDFC that can be borrowed | 180 USDFC | | Base Rate | Variable component of minting and redemption fees | 0% to 4.5% | ## Common Questions **What happens if the price of FIL drops significantly?**\ If FIL price drops, Troves with lower collateral ratios may become eligible for liquidation. The protocol prioritizes liquidating the riskiest Troves first to maintain system solvency. **How does the protocol maintain the USDFC peg?**\ The redemption mechanism allows USDFC holders to exchange their tokens for FIL at face value, creating arbitrage opportunities that help maintain the peg. **What is the difference between Normal Mode and Recovery Mode?**\ In Normal Mode, Troves require a minimum 110% collateral ratio. In Recovery Mode, stricter rules apply, including higher liquidation thresholds and restrictions on borrowing. [Learn more in the FAQs section](/usdfc-stablecoin/faqs) ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Mint & Borrow](/usdfc-stablecoin/core-mechanics/mint-and-borrow) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Redemption](/usdfc-stablecoin/core-mechanics/redemption) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # The Trove System Understanding the core vault system for managing collateral and debt ## Overview The Trove System is the foundation of the USDFC Stablecoin Protocol, providing users with personal vaults to deposit Filecoin (FIL) collateral and borrow USDFC. Each Trove tracks your collateral, debt, and maintains a collateralization ratio that must stay above the minimum threshold to avoid liquidation. ## How It Works A Trove is your personal vault within the protocol where you lock up Filecoin (FIL) as collateral in order to borrow USDFC. The system carefully tracks the relationship between your collateral value and debt to ensure the protocol remains solvent. ### Key Components 1. **Collateral**: The amount of FIL you deposit to secure your borrowed USDFC 2. **Total Debt**: The sum of your borrowed USDFC, liquidation reserve, and any applicable fees 3. **Collateral Ratio**: The ratio of your collateral value (in USD) to your total debt (in USDFC) ### Trove Lifecycle 1. **Opening a Trove**: Deposit FIL collateral and specify how much USDFC to borrow 2. **Managing a Trove**: Add collateral or repay debt to maintain a healthy collateral ratio 3. **Closing a Trove**: Repay all debt to reclaim your collateral 4. **Liquidation**: If your collateral ratio falls below the minimum threshold, your Trove may be liquidated ## Key Parameters | Parameter | Description | Default Value | | ------------------------ | -------------------------------------------------- | ------------- | | Minimum Collateral Ratio | Minimum required ratio in Normal Mode | 110% | | Recovery Mode Threshold | System-wide ratio that triggers Recovery Mode | 150% | | Minimum Borrow Amount | Minimum USDFC that can be borrowed | 180 USDFC | | Liquidation Reserve | USDFC reserved for potential liquidation gas costs | 20 USDFC | ## Debt Calculations ### Total Debt Formula $$ \text{Total Debt} = (\text{Borrowed Amount}) + (\text{Liquidation Reserve}) + (\text{Borrowing Fee}) $$ The Total Debt represents the full amount you owe to the protocol, including: * **Borrowed Amount**: The USDFC you receive (minimum 180 USDFC) * **Liquidation Reserve**: 20 USDFC set aside to cover potential liquidation costs (refunded when you close your Trove) * **Borrowing Fee**: One-time fee based on your borrowed amount (waived in Recovery Mode) ### Collateral Ratio Formula $$ \text{Collateral Ratio} = \frac{\text{Collateral Value (USD)}}{\text{Total Debt (USDFC)}} $$ * Must remain above 110% in Normal Mode * Recommended to maintain above 150% to avoid liquidation in Recovery Mode * Many users maintain 200-250% as an extra safety buffer ## Action-Specific Calculations ### Opening a Trove **Normal Mode**: $$ \text{Total Debt} = (\text{Borrowed Amount}) + (\text{Liquidation Reserve}) + (\text{Borrowing Fee}) $$ **Recovery Mode**: $$ \text{Total Debt} = (\text{Borrowed Amount}) + (\text{Liquidation Reserve}) $$ (Borrowing Fee is waived) **Example (Normal Mode)**: * Borrowed Amount: 180 USDFC * Liquidation Reserve: 20 USDFC * Borrowing Fee: 0.90 USDFC (0.5% of 180) * **Total Debt**: 200.90 USDFC ### Closing a Trove To close your Trove, you must repay your Total Debt. However, the protocol immediately refunds the Liquidation Reserve, so you only need to prepare the net amount. **Example**: * Total Debt: 200.90 USDFC * Liquidation Reserve: 20 USDFC * **Amount You Need to Prepare**: 180.90 USDFC ## Common Questions **Is there any ongoing interest on my borrowed USDFC?**\ No, the protocol only charges a one-time Borrowing Fee when you mint USDFC. There are no recurring interest charges. **What collateral ratio should I maintain to be safe?**\ While the minimum is 110%, it's recommended to maintain at least 150% to avoid liquidation during Recovery Mode. Many users maintain 200-250% as an extra safety buffer. **What happens to my Liquidation Reserve?**\ The 20 USDFC Liquidation Reserve is automatically refunded when you close your Trove. If your Trove is liquidated, this reserve is used to compensate the liquidator for gas costs. [Learn more in the FAQs section](/usdfc-stablecoin/faqs) ## Related Topics * [Mint & Borrow](/usdfc-stablecoin/core-mechanics/mint-and-borrow) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Redemption](/usdfc-stablecoin/core-mechanics/redemption) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Mint & Borrow The main feature to generate USDFC and borrow it into your connected wallet ## Overview Mint & Borrow is the core function of the USDFC Stablecoin Protocol that allows users to deposit Filecoin (FIL) as collateral and mint USDFC stablecoins. This mechanism provides liquidity without selling your FIL, maintaining exposure to potential FIL price appreciation while accessing dollar-denominated value. {% hint style="success" %} **Why Mint & Borrow USDFC?** * Get instant and ample $ liquidity without selling FIL * No need for counterparties or external exchanges * Keep FIL securely in a trove while enhancing capital efficiency {% endhint %} ## How It Works To use USDFC, you first open a trove to manage your FIL collateral and USDFC debt, maintaining a **minimum collateralization ratio (MCR) of 110%** to avoid [liquidation](/usdfc-stablecoin/core-mechanics/liquidation). This ensures the safety and stability of the system. The process involves the following steps: 1. **Deposit FIL as Collateral** * Prepare FIL in your wallet to cover the USDFC debt (borrowed amount + mint fees) * Open a trove and input a FIL amount to deposit as collateral * Input USDFC amount you want to borrow (after minted inside your trove) * You must maintain at least a 110% collateral ratio 2. **Mint USDFC** * Once the FIL amount and USDFC amount is set, check that the minting costs are added as total debt, then you can click confirm * Your connected wallet (ex. MetaMask) asks you to send a transaction * Once the USDFC amount is minted, you can see your borrowed amount in the app * Import the USDFC contract [address](/usdfc-stablecoin/deployed-contracts#contract-addresses) to your wallet so you can use it anywhere 3. **Maintain Collateral Ratio** * The minimum collateralization ratio (MCR) is set to 110% * For instance, if you deposit 1,000 USD worth of FIL, you can mint up to 909 USDFC, keeping a 110% collateral ratio * It's crucial to monitor your collateral ratio to avoid liquidation. If the collateral value drops, consider adding more FIL or repaying some USDFC to maintain a healthy buffer 4. **Adjust or Close** * You can make adjustments on your trove to manage FIL collateral and USDFC debt * Adjustment is used to add/reduce collateral, or borrow/repay USDFC * If you no longer need the trove, you can close it by repaying debts (borrowed + fees) in USDFC * You don't need to repay the liquidation reserve 5. **3rd Party Trove Adjustment (Liquidation & Redemption)** * You should be aware that your trove can be adjusted by special conditions below * To protect the system, anyone can liquidate your collateral using USDFC stability pool for the trove below 110% collateral ratio * To ensure 1:1 peg, anyone can bring USDFC and redeem FIL collateral for the trove with the lowest collateral ratio ## Key Parameters | Parameter | Description | Default Value | | ------------------------ | -------------------------------------------------- | -------------- | | Minimum Collateral Ratio | Minimum required ratio of collateral to debt | 110% | | Minimum Borrow Amount | Minimum USDFC that can be borrowed | 180 USDFC | | Liquidation Reserve | USDFC reserved for potential liquidation gas costs | 20 USDFC | | Minting Fee | One-time fee charged when minting USDFC | 0.5% to 5% | | Interest Rate | Ongoing interest charged on borrowed USDFC | 0% (currently) | {% hint style="warning" %} The system requires a minimum borrowed amount of 180 USDFC and reserves an additional 20 USDFC as long as trove exists. It creates limitations on all trove activities. {% endhint %} {% hint style="warning" %} When you want to close your trove completely, you should repay borrowed amount + minting fees in USDFC. {% endhint %} ## Minting Costs When you mint USDFC, the following costs apply: $$\text{Minting Fee} = \text{Liquidation Reserve} + \text{One-Time Minting Fee}$$ ### 1. Liquidation Reserve * A **20 USDFC reserve** is added to your debt when minting USDFC. This reserve is intended to cover gas fees in case of liquidation * If no liquidation occurs and you fully repay your debt, the **20 USDFC reserve** will be refunded when you close your position * When you close your trove completely, the reserve will be returned and burnt ### 2. One-Time Minting Fees $$\text{One-Time Minting Fee} = (\text{Base Rate} + 0.5%) \times \text{Minted USDFC}$$ * The **Minting (Borrowing) Fee** consists of two parts: * **Fixed Fee (0.5%)**: Fixed fee charged at the time of minting * **Base Rate (0% to 4.5%)**: The Base Rate varies depending on the system's conditions * Together, the Minting Fee ranges from **0.5% to 5%**, making it a one-time cost and added to your debt * During **Recovery Mode**, the Minting Fee is set to **0%**, encouraging users to add collateral and stabilize the system ### Total Debt Calculation Example $$\text{Total Debt = Borrowed amount + Liquidation Reserve + One-Time Minting Fees}$$ * If you mint **4,000 USDFC** with a **Base Rate** of **0.5%**: * **Liquidation Reserve**: 20 USDFC * **One-Time Minting Fee**: Fixed Fee + Base Rate = 40 USDFC * **Fixed Fee**: 0.5% of 4,000 USDFC = 20 USDFC * **Base Rate**: 0.5% of 4,000 USDFC = 20 USDFC (usually 0%) * **Total Debt**: 4,060 USDFC ## Base Rate Explanation The **Base Rate** is a dynamic component of the borrowing fee that adjusts according to market conditions and redemption activity: ### Dynamic Range * The Base Rate ranges from **0% to 4.5%**, adjusting based on the amount of USDFC redeemed relative to the total USDFC supply * The full Minting and Redemption Fee (fixed fee + base rate) therefore ranges between **0.5% and 5%** ### Calculation The Base Rate is initially set at **0%** and adjusts based on the redemption activity. The formula for updating the Base Rate is: $$ \text{Base Rate}*t = \text{Base Rate}*{t-1} + 0.5 \times \left( \frac{m}{n} \right) $$ Where:\ m = amount of USDFC redeemed\ n = current total supply of USDFC ### Decay The Base Rate decays over time when there is low redemption activity, following a **12-hour half-life**. This ensures that the Base Rate gradually returns to its baseline if no significant redemption activity occurs. The decay formula is: $$ \text{Base Rate}*t = \text{Base Rate}*{t-1} \times \delta^{\Delta t} $$ Where:\ δ = hourly decay factor (e.g., 0.944)\ Δt = time elapsed (in hours) since the last redemption or loan issuance {% hint style="info" %} The decay factor `δ` (0.944) is selected to ensure a 12-hour half-life for the base rate. {% endhint %} ### Purpose The Base Rate is designed to maintain stability in the USDFC supply by adapting to market conditions. It helps regulate borrowing behavior, balancing liquidity and redemption activity while keeping the system solvent. ## Interest Rate At the current stage, Secured Finance does not charge any ongoing **interest rate fees** on USDFC. This strategic decision allows for a more accessible and user-friendly experience: {% hint style="info" %} **Why no interest fees?** * Our primary goal is to foster the **widespread adoption of USDFC** within the Filecoin ecosystem and make it more attractive for DeFi users * By keeping the **interest rate at 0%**, we are encouraging users to mint and use USDFC without the added burden of accumulating interest over time We may introduce an **interest rate fee** on borrowed USDFC in the future to further support the long-term sustainability of the protocol {% endhint %} ## Common Questions **What is the minimum amount of USDFC I can borrow?**\ The minimum borrow amount is 180 USDFC, plus the 20 USDFC liquidation reserve. **Do I need to repay the liquidation reserve when closing my trove?**\ No, the liquidation reserve is automatically refunded when you close your trove. **What happens if the value of my FIL collateral drops?**\ If your collateral ratio falls below 110%, your trove becomes eligible for liquidation. It's recommended to maintain a higher ratio (150%+) as a safety buffer. [Learn more in the FAQs section](/usdfc-stablecoin/faqs) ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Redemption](/usdfc-stablecoin/core-mechanics/redemption) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Liquidation Understanding how under-collateralized positions are handled in the USDFC protocol ## Overview Liquidation is a critical mechanism in the USDFC Stablecoin Protocol that ensures the system remains solvent by handling under-collateralized positions. When a Trove's collateral ratio falls below 110%, it becomes eligible for liquidation, allowing the protocol to use the Stability Pool to cover the debt and distribute the collateral to depositors. ## How It Works Liquidations occur when a Trove's collateral ratio falls below the minimum threshold of 110%. The process involves using USDFC from the Stability Pool to repay the debt of the liquidated Trove, while distributing the Trove's collateral to Stability Pool depositors at a discount. ### Liquidation Process 1. **Triggering Liquidation**: When a Trove's collateral ratio falls below 110%, a Liquidator triggers the liquidation 2. **Debt Repayment**: The Stability Pool covers the Trove's debt by burning the corresponding amount of USDFC 3. **Collateral Distribution**: The collateral (FIL) from the liquidated Trove is distributed to the Stability Pool depositors based on their pool share, minus the Liquidator's compensation ### The Stability Pool The Stability Pool is a reserve of USDFC dedicated to absorbing liquidations when a borrower's collateral ratio falls below the required 110%. The pool serves several important functions: * **Purpose**: The Stability Pool repays the debt of liquidated borrowers using the deposited USDFC * **Depositor Rewards**: When USDFC from the pool is used, depositors receive Filecoin (FIL) from the liquidated collateral at a discount * **System Stability**: By providing a mechanism to handle under-collateralized positions, the Stability Pool helps maintain the overall stability of the protocol ## Key Parameters | Parameter | Description | Default Value | | --------------------- | ----------------------------------------------------------- | ------------- | | Liquidation Threshold | Collateral ratio below which a Trove can be liquidated | 110% | | Liquidator Reward | Percentage of liquidated collateral given to the liquidator | 0.5% | | Liquidation Reserve | USDFC reserved for potential liquidation gas costs | 20 USDFC | ## Stakeholders in the Liquidation Process ### 1. Stability Pool Depositors * Provide USDFC to the pool and receive FIL at a discount when liquidations occur * Effectively "buy FIL cheaper" than market price through the liquidation process * Earn passive rewards by helping maintain system stability ### 2. Liquidated Borrowers * Have their Trove liquidated when their collateral ratio falls below 110% * Lose collateral to repay their debt * Trove will be closed, but they keep their borrowed USDFC * Typically incur around a 10% loss in the process ### 3. Liquidators * Trigger the liquidation process by calling the liquidation function * Receive the Liquidation Reserve (20 USDFC) as gas compensation * Earn 0.5% of the liquidated collateral as an incentive ## Price Oracle Secured Finance uses Pyth as the primary oracle to determine the FIL price. Pyth provides accurate and reliable real-time price feeds essential for system operations. ### Fallback Mechanism In case of extreme conditions where the Pyth price feed is unavailable, the protocol switches to Tellor as a backup: * Pyth price not updated for over 4 hours * Pyth response reverts, returns invalid data, or shows an invalid timestamp * Price change between consecutive updates exceeds 50% This dual-oracle approach ensures that the protocol maintains accurate pricing and stability, even under extreme conditions. ## What Happens If the Stability Pool Is Empty? If the Stability Pool is empty during a liquidation, the protocol switches to a redistribution mechanism: 1. **Trove Liquidation**: A Trove is liquidated, but the Stability Pool has insufficient USDFC 2. **Debt and Collateral Redistribution**: The debt and collateral are proportionally distributed to other active Troves 3. **Impact on Troves**: Troves receiving the redistributed collateral and debt may see their collateral ratio lower, while the net USD value increases ## Common Questions **How can I avoid liquidation?**\ Maintain a collateral ratio well above 110%. A buffer of 150% or higher is recommended to account for FIL price volatility. **What happens to my borrowed USDFC if my Trove is liquidated?**\ You keep your borrowed USDFC, but lose your collateral. The liquidation effectively closes your Trove. **How can I benefit from liquidations?**\ You can deposit USDFC into the Stability Pool to receive discounted FIL when liquidations occur, or become a liquidator to earn rewards for triggering liquidations. [Learn more in the FAQs section](/usdfc-stablecoin/faqs) ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Collateral Ratio](https://github.com/Secured-Finance/secured-finance-docs/tree/main/usdfc-stablecoin/core-mechanics/liquidation/collateral-ratio.md) * [Liquidators](https://github.com/Secured-Finance/secured-finance-docs/tree/main/usdfc-stablecoin/core-mechanics/liquidation/liquidators.md) * [Liquidation Case Study](https://github.com/Secured-Finance/secured-finance-docs/tree/main/usdfc-stablecoin/core-mechanics/liquidation/case-study.md) * [Recovery Mode](/usdfc-stablecoin/advanced-topics/recovery-mode) # Redemption The mechanism that maintains USDFC's 1:1 peg to the US Dollar ## Overview The Redemption Mechanism is a critical component of the USDFC Stablecoin Protocol that allows USDFC holders to exchange their tokens for Filecoin (FIL) at face value. This direct conversion path creates arbitrage opportunities that help maintain USDFC's peg to the US Dollar, especially when the market price falls below $1. {% hint style="success" %} **Benefits of Redemption** * **Arbitrage Opportunity**: If USDFC dips below $1, buying and redeeming it for FIL can lock in potential gains and help restore the peg * **Direct FIL Access**: Redemption guarantees a way to swap USDFC for FIL, even when external exchange liquidity is low * **Reduced Market Impact**: Converting large FIL positions into USDFC through redemption avoids triggering selling pressure on open markets {% endhint %} ## How It Works The redemption process allows any USDFC holder to exchange their tokens for FIL at the current USD value, targeting Troves with the lowest collateral ratios first: 1. A user submits a redemption request to the protocol 2. The protocol uses the FIL collateral from the most under-collateralized Troves to fulfill the request 3. The user receives FIL, while the targeted Troves have their debt reduced but also lose collateral {% hint style="info" %} Redemptions target the Troves with the **lowest collateral ratios** among those with a collateral ratio of 110% or higher. Troves below 110% are subject to liquidation rather than redemption. Trove owners are advised to keep their collateral ratios well above the 110% minimum (ideally 150% or higher) to reduce the likelihood of being affected by redemptions or liquidation. Troves affected by redemptions undergo **a forced swap** of USDFC for their collateral at the current spot rate, impacting their collateral balance. {% endhint %} ### Important Distinction **Not Debt Repayment**: Redemption does not mean repaying borrowed USDFC. Instead, it allows the holder to exchange USDFC for FIL directly. Borrowers must repay their debt separately if they wish to close or manage their positions. {% hint style="warning" %} The system requires a minimum borrowed amount of 180 USDFC and reserves an additional 20 USDFC as long as trove exists. **You cannot redeem** to reduce a trove's borrowed amount below 180 USDFC; if it would, the redemption amount will be automatically adjusted. However, you may redeem enough to fully close a trove (reducing the borrowed amount to 0). Redemption can span multiple troves, but the same minimum-borrow rule applies to each. {% endhint %} ## Key Parameters | Parameter | Description | Default Value | | ------------------ | ---------------------------------------------------------- | ---------------- | | Redemption Fee | Fee charged on redemption transactions | Base Rate + 0.5% | | Minimum Fee | Minimum fee regardless of Base Rate | 0.5% | | Base Rate | Variable component that increases with redemption activity | 0% to 4.5% | | Minimum Trove Size | Minimum USDFC debt a Trove must maintain | 180 USDFC | ## Redemption Fee The **Redemption Fee** is calculated as [**Base Rate**](/usdfc-stablecoin/core-mechanics/mint-and-borrow#base-rate) + 0.5%, which ensures a minimum fee of **0.5%**. This fee dynamically adjusts depending on redemption activity: $$\text{Redemption Fee} = (\text{Base Rate} + 0.5%) \times \text{Redeemed USDFC}$$ * **Base Rate** increases with frequent redemptions and decays over time when redemptions are low * The more redemptions occur, the higher the **Base Rate** will rise, while a lack of redemptions leads the rate to decay back to the **0.5% minimum** {% hint style="info" %} Note that the redeemed amount is taken into account for calculating the base rate and might have an impact on the redemption fee, especially if the amount is large. {% endhint %} ## Peg Mechanism The redemption mechanism works alongside minting to maintain USDFC's stability around **1.0 USD**: ### Below Peg (USDFC < 1.0 USD) * When USDFC trades below 1.0 USD, users can redeem USDFC for FIL at a 1:1 rate, profiting from arbitrage * This reduces the circulating supply of USDFC, pushing its price back toward the peg * The redemption fee (Base Rate + 0.5%) still applies, meaning users should factor in the cost when calculating arbitrage opportunities ### Above Peg (USDFC > 1.0 USD) * In this scenario, minting USDFC by depositing FIL becomes attractive because users can borrow USDFC at the 1:1 rate and sell it at a premium * This increases the circulating supply and pushes the price back toward 1.0 USD * Minting requires over-collateralization (at least 110% FIL) and incurs a one-time minting fee (Base Rate + 0.5%) ## Example of a Redemption 1. **Market Situation**: USDFC trades at **0.98 USD** 2. **Redemption Initiation**: Buy 1,000 USDFC with **980 USD** and user redeems **1,000 USDFC** 3. **Redemption Fee**: Assume the **Base Rate** is **1.0%** * Redemption Fee = **(1.0% + 0.5%) of 1,000 USDFC** = **15 USDFC** 4. **Net Redemption**: The user receives FIL equivalent to **985 USD** after the fee is deducted. Net profit of **5 USD** ## Common Questions **Can I redeem USDFC to pay back my own debt?**\ No, redemption is not a debt repayment mechanism. It's a separate process that allows USDFC holders to exchange their tokens for FIL at face value. **How can I avoid having my Trove targeted by redemptions?**\ Maintain a higher collateral ratio than other eligible Troves in the system. Redemptions always target Troves with the lowest collateral ratios among Troves that are at or above 110%. Troves below 110% are subject to liquidation rather than redemption. **Is there a limit to how much USDFC can be redeemed at once?**\ There's no hard cap, but large redemptions may be limited by the available collateral in under-collateralized Troves and will incur higher fees as the Base Rate increases. [Learn more in the FAQs section](/usdfc-stablecoin/faqs) ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Mint & Borrow](/usdfc-stablecoin/core-mechanics/mint-and-borrow) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [Protocol Fees](/usdfc-stablecoin/core-mechanics/protocol-fees) # Protocol Fees Understanding the fee structure that supports the USDFC Stablecoin Protocol ## Overview The USDFC Stablecoin Protocol implements a fee structure that ensures its long-term sustainability while maintaining user-friendly economics. All fees collected are directed to the Fee Reserve, which will eventually be distributed to Secured Finance Token Stakers following the Token Generation Event (TGE). ## How It Works The Fee Reserve is a dedicated pool where protocol fees are collected and stored. These accumulated fees are crucial for the protocol's sustainability and will eventually be distributed to the Secured Finance Token Stakers following the Token Generation Event (TGE). The Fee Reserve is funded through various fees generated by user interactions with the protocol: 1. **Minting Fee**: Charged when users mint USDFC by depositing collateral 2. **Redemption Fee**: Applied when users redeem USDFC for Filecoin (FIL) at face value 3. **Interest Fee**: Currently set to 0%, but may be adjusted in the future ## Key Parameters | Fee Type | Calculation | Current Range | Destination | | -------------- | ----------------------------------- | ------------- | ----------- | | Minting Fee | (Base Rate + 0.5%) × Minted USDFC | 0.5% to 5% | Fee Reserve | | Redemption Fee | (Base Rate + 0.5%) × Redeemed USDFC | 0.5% to 5% | Fee Reserve | | Interest Fee | 0% | 0% | N/A | ## Fee Structure Details ### 1. Minting Fee * The **Minting Fee** is charged whenever users mint **USDFC** by depositing collateral * The fee is calculated as **(**[**Base Rate**](/usdfc-stablecoin/core-mechanics/mint-and-borrow) **+ 0.5%)** applied to the minted amount of USDFC * This fee is directed entirely to the Fee Reserve, ensuring that every minting transaction supports the protocol's sustainability * During Recovery Mode, the Minting Fee is set to 0% to encourage users to add collateral ### 2. Redemption Fee * The **Redemption Fee** is applied when users redeem USDFC for **Filecoin (FIL)** at face value * This fee incentivizes stability within the protocol and provides a mechanism to bring USDFC back to its 1:1 USD peg when necessary * The Redemption Fee is calculated as **(Base Rate + 0.5%)** of the redeemed USDFC amount * Like the Minting Fee, all proceeds from the Redemption Fee are added to the Fee Reserve ### 3. Interest Fee * **Interest Fee** is currently set to **0%** * This means that borrowers do not incur any recurring interest costs on their debt, encouraging wider adoption and utility of USDFC * The zero-interest model is strategic, aiming to boost the initial circulation of USDFC within the Filecoin ecosystem * This parameter may be reconsidered in the future based on market conditions ## Post-TGE Distribution After the **Token Generation Event (TGE)**, the Fee Reserve will be redistributed back to the Secured Finance Token Stakers as a reward. This model aligns incentives, rewarding early supporters and active participants while maintaining the protocol's stability. ## Common Questions **Why is there no ongoing interest fee?**\ The current 0% interest model is designed to encourage adoption and usage of USDFC in the early stages of the protocol. This may change in the future as the protocol matures. **How does the Base Rate affect fees?**\ The Base Rate is a dynamic component that increases with redemption activity and decays over time. It ensures that fees adjust based on market conditions and protocol usage. **When will the Fee Reserve be distributed?**\ The Fee Reserve will be distributed to Secured Finance Token Stakers after the Token Generation Event (TGE). The exact timing and distribution mechanism will be announced closer to the TGE. [Learn more in the FAQs section](/usdfc-stablecoin/faqs) ## Related Topics * [Mint & Borrow](/usdfc-stablecoin/core-mechanics/mint-and-borrow) * [Redemption](/usdfc-stablecoin/core-mechanics/redemption) * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) # Advanced Topics Explore deeper concepts and mechanisms of the USDFC Stablecoin Protocol ## Overview This section covers advanced concepts and mechanisms of the USDFC Stablecoin Protocol that build upon the core functionality. These topics provide deeper insights into how the protocol maintains stability, handles edge cases, and implements sophisticated economic mechanisms. ## What You'll Learn * How Recovery Mode protects the protocol during periods of systemic risk * Advanced liquidation scenarios and their impact on the system * Technical implementations of key protocol features * Economic principles underlying the protocol design ## Key Components * [**Recovery Mode**](/usdfc-stablecoin/advanced-topics/recovery-mode): The protocol's defensive mechanism that activates when system collateralization falls below critical thresholds * **Advanced Liquidation Scenarios**: Complex edge cases in the liquidation process * **Price Oracle Implementation**: Technical details of how the protocol obtains and validates price data * **Economic Mechanisms**: Detailed explanations of incentive structures and game theory considerations ## Related Resources * [Core Mechanics](/usdfc-stablecoin/core-mechanics/system-overview) * [FAQs](/usdfc-stablecoin/faqs) # Recovery Mode Understanding the protocol's defensive mechanism to maintain system solvency ## Overview Recovery Mode is a critical safety mechanism in the USDFC Stablecoin Protocol that activates when the Total Collateral Ratio (TCR) falls below 150%. It implements stricter rules for borrowing and liquidation to protect the protocol from systemic under-collateralization and restore stability to the system. {% hint style="warning" %} When Recovery Mode is active, Troves with collateral ratios below the current TCR become eligible for liquidation, even if they are above the normal 110% minimum threshold. This creates significant risk for borrowers with lower collateral ratios. {% endhint %} ## How It Works Recovery Mode is triggered automatically when the protocol's Total Collateral Ratio (TCR) falls below 150%. During this state, the protocol implements several changes to encourage deleveraging and recapitalization: ### Key Changes During Recovery Mode 1. **Elevated Liquidation Threshold** * Normal Mode: Troves below 110% collateral ratio are eligible for liquidation * Recovery Mode: Troves below the current TCR (which is < 150%) are eligible for liquidation * This means a Trove with 140% collateral ratio could be liquidated if the TCR is 145% 2. **Zero Minting Fee** * The borrowing fee is reduced to 0% to encourage users to add collateral * This makes it more economical to improve collateral ratios by minting additional USDFC 3. **Restricted Borrowing** * New borrowing is only allowed if it improves the TCR * Users can only mint USDFC if they create a new Trove with ≥150% collateral ratio * Existing Trove adjustments are only permitted if they increase the collateral ratio ## Key Parameters | Parameter | Normal Mode | Recovery Mode | | --------------------- | ---------------- | -------------------- | | Liquidation Threshold | 110% | Current TCR (< 150%) | | Minting Fee | Base Rate + 0.5% | 0% | | Minimum New Trove CR | 110% | 150% | | System Exit Threshold | N/A | TCR ≥ 150% | ## Liquidation Behavior in Recovery Mode Recovery Mode introduces a more complex liquidation process to maximize system stability:
ConditionLiquidation Behavior
ICR ≤ 100%Redistribute all debt and collateral (minus gas compensation) to active Troves.
100% < ICR < 110%
&
SP USDFC > Trove debt		USDFC in the Stability Pool equal to the Trove's debt is offset with the Trove's debt. The Trove's FIL collateral (minus gas compensation) is shared between depositors.
100% < ICR < 110%
&
SP USDFC < Trove debt		The total Stability Pool USDFC is offset with an equal amount of debt from the Trove. A fraction of the Trove's collateral (equal to the ratio of its offset debt to its entire debt) is shared between depositors. The remaining debt and collateral (minus gas compensation) is redistributed to active Troves.
110% ≤ ICR < TCR
&
SP USDFC >= Trove debt		The Stability Pool USDFC is offset with an equal amount of debt from the Trove. A fraction of FIL collateral with dollar value equal to 1.1 * debt is shared between depositors. Nothing is redistributed to other active Troves. Since its ICR was > 1.1, the Trove has a collateral remainder, which is sent to the CollSurplusPool and is claimable by the borrower. The Trove is closed.
110% ≤ ICR < TCR
&
SP USDFC < Trove debt		Do nothing.
ICR ≥ TCRDo nothing.
Where: * ICR = Individual Collateral Ratio * MCR = Minimum Collateral Ratio (110%) * TCR = Total Collateral Ratio * SP = Stability Pool ## Example Scenario 1. **Triggering Recovery Mode** * The TCR falls to 145%, automatically activating Recovery Mode * All Troves with collateral ratios below 145% become eligible for liquidation 2. **System Response** * Minting fees drop to 0% to encourage collateral additions * Borrowers rush to improve their collateral ratios to avoid liquidation * Liquidators target Troves with collateral ratios below 145% 3. **Exiting Recovery Mode** * As users add collateral and repay debt, the TCR gradually improves * Once the TCR exceeds 150%, the system returns to Normal Mode * Regular liquidation thresholds (110%) and minting fees are restored ## Risk Management for Borrowers During Recovery Mode, borrowers should take immediate action to protect their positions: 1. **Add Collateral**: The most direct way to increase your collateral ratio 2. **Repay Debt**: Reducing your debt also improves your collateral ratio 3. **Monitor TCR**: Keep track of the system's TCR to understand your liquidation risk 4. **Maintain Buffer**: Aim for a collateral ratio well above 150% to avoid liquidation risk {% hint style="success" %} **Best Practice**: Maintain a collateral ratio of at least 200% during normal operations to provide a substantial buffer against Recovery Mode liquidations. {% endhint %} ## Common Questions **How long does Recovery Mode typically last?**\ The duration varies based on market conditions and user behavior. It ends automatically when the TCR returns above 150%. **Will I be notified if Recovery Mode is activated?**\ The protocol doesn't send direct notifications. You should monitor the protocol's status page or use third-party monitoring tools. **Can I still close my Trove during Recovery Mode?**\ Yes, you can still close your Trove by repaying all debt, regardless of Recovery Mode status. [Learn more in the FAQs section](/usdfc-stablecoin/faqs) ## Related Topics * [The Trove System](/usdfc-stablecoin/core-mechanics/the-trove-system) * [Liquidation](/usdfc-stablecoin/core-mechanics/liquidation) * [System Overview](/usdfc-stablecoin/core-mechanics/system-overview) # Contracts and Security The official contract address, audit reports, and architecture diagram ## Contract Addresses The latest version of [`@secured-finance/stablecoin-contracts`](https://github.com/Secured-Finance/stablecoin-contracts) is deployed at the addresses listed below.
ContractFilecoin MainnetFilecoin Calibration Testnet
USDFC0x80B98d3aa09ffff255c3ba4A241111Ff1262F0450xb3042734b608a1B16e9e86B374A3f3e389B4cDf0
## Audit Reports | Auditor | Date | Report | | -------- | ---------------------- | ----------------------------------------------------------------------------------------------------------------------- | | Hexens | 2024/12/30 - 2025/1/20 | [2025-1-Hexens.pdf](https://github.com/Secured-Finance/stablecoin-contracts/blob/develop/audits/2025-01-Hexens.pdf) | | Decurity | 2025/2/19 - 2025/3/5 | [2025-3-Decurity.pdf](https://github.com/Secured-Finance/stablecoin-contracts/blob/develop/audits/2025-03-Decurity.pdf) | | Hexens | 2025/8/20 - 2025/8/28 | [2025-8-Hexens.pdf](https://github.com/Secured-Finance/stablecoin-contracts/blob/develop/audits/2025-08-Hexens.pdf) | ## Stress Test Report [Stress-Testing Simulation and Risk Assessment](https://medium.com/cryptoeconlab/stress-testing-usdfc-8b068d13a1cf) by CryptoEconLab Team {% file src="/files/hLNKkRx5HSezFDhnKADW" %} # FAQs Comprehensive answers to frequently asked questions about USDFC Stablecoin ## Overview This FAQ covers everything you need to know about USDFC, from basic concepts to advanced operations and troubleshooting. Whether you're new to stablecoins or looking for specific technical details, you'll find comprehensive answers here. ## What You'll Learn * How USDFC stablecoin works and its key features * Step-by-step processes for minting, managing, and redeeming USDFC * Risk management and liquidation mechanics * Advanced topics like Recovery Mode and edge cases * Stability Pool participation and rewards ## Quick Navigation * [Getting Started](#getting-started) * [Minting & Borrowing](#minting--borrowing) * [Risk Management](#risk-management) * [Advanced Topics](#advanced-topics) ## Getting Started
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](/)
What is USDFC? USDFC is a decentralized stablecoin pegged to the US Dollar and backed by Filecoin (FIL) collateral. It's designed to maintain its value at $1 USD through over-collateralization and various stability mechanisms. **Key features:** * **Decentralized**: No central authority controls USDFC * **Over-collateralized**: Backed by at least 110% FIL collateral * **Redeemable**: Exchange USDFC for underlying FIL anytime * **Yield-generating**: Earn rewards through Stability Pool participation **Related:** [USDFC Overview](https://github.com/Secured-Finance/secured-finance-docs/tree/main/overview.md)
How does USDFC maintain its peg to the US Dollar? USDFC maintains its $1 peg through multiple mechanisms: 1. **Over-collateralization**: Minimum 110% FIL collateral backing 2. **Redemption mechanism**: Direct exchange of USDFC for FIL at $1 rate 3. **Liquidation system**: Automatic closure of under-collateralized positions 4. **Stability Pool**: Buffer that absorbs liquidated debt 5. **Arbitrage opportunities**: Market forces help restore peg when deviations occur These mechanisms work together to create strong economic incentives for maintaining the peg. **Related:** [System Overview](https://github.com/Secured-Finance/secured-finance-docs/tree/main/core-mechanics/system-overview.md)
What are the benefits of using USDFC? USDFC offers several advantages: **For Users:** * **Stable value**: Maintains $1 peg for predictable purchasing power * **Decentralized**: No reliance on traditional banking systems * **Transparent**: All operations recorded on blockchain * **Yield opportunities**: Earn rewards through Stability Pool **For DeFi:** * **Composability**: Use in other DeFi protocols * **Liquidity**: Trade on decentralized exchanges * **Collateral**: Use as collateral for other loans **Related:** [USDFC Overview](https://github.com/Secured-Finance/secured-finance-docs/tree/main/overview.md)
How do I get started with USDFC? To get started with USDFC: 1. **Set up a wallet**: Use a Web3 wallet like MetaMask 2. **Acquire FIL**: Purchase Filecoin on exchanges 3. **Connect to platform**: Access the USDFC interface 4. **Create a Trove**: Deposit FIL as collateral 5. **Mint USDFC**: Borrow against your collateral 6. **Manage position**: Monitor and maintain healthy ratios **Related:** [Getting Started Guide](https://github.com/Secured-Finance/secured-finance-docs/tree/main/getting-started/README.md)
## Minting & Borrowing
How do I mint USDFC? To mint USDFC: 1. **Connect your wallet** to the USDFC platform 2. **Create a Trove** by depositing FIL as collateral 3. **Set collateral ratio** (minimum 110%, recommended 150%+) 4. **Mint USDFC** against your collateral 5. **Pay borrowing fee** (0.5% base fee) 6. **Confirm transaction** and receive USDFC **Example:** * Deposit 100 FIL worth $500 * Mint 400 USDFC (125% collateral ratio) * Pay 2 USDFC borrowing fee + 20 USDFC liquidation reserve * Receive 378 USDFC in your wallet **Related:** [Minting USDFC Step-by-Step](https://github.com/Secured-Finance/secured-finance-docs/tree/main/getting-started/minting-usdfc-step-by-step.md)
What is the minimum collateral ratio? The minimum collateral ratio for USDFC is **110%**. This means you need at least $110 worth of FIL to mint $100 USDFC. **Key points:** * Below 110% = liquidation risk * Recommended: 150%+ for safety * Increases to 150% during Recovery Mode **Related:** [Collateral Ratio Details](https://github.com/Secured-Finance/secured-finance-docs/tree/main/core-mechanics/liquidation/collateral-ratio.md)
What fees are involved in minting USDFC? When minting USDFC, you pay: **One-time fees:** * **Borrowing Fee**: 0.5% base fee (may vary with market conditions) * **Liquidation Reserve**: 20 USDFC (refunded when Trove is closed) * **Gas Fees**: Network transaction fees in FIL **No ongoing fees:** * No interest payments * No maintenance fees * No time-based charges **Example:** Minting 1,000 USDFC costs 5 USDFC borrowing fee plus 20 USDFC liquidation reserve plus gas. **Related:** [Protocol Fees Details](https://github.com/Secured-Finance/secured-finance-docs/tree/main/core-mechanics/protocol-fees.md)
Can I mint more USDFC from an existing Trove? Yes, you can mint additional USDFC from an existing Trove if: 1. **Collateral ratio remains above 110%** after minting 2. **You pay the borrowing fee** on additional USDFC 3. **Sufficient FIL collateral** supports the new total debt **Process:** 1. Access your existing Trove 2. Calculate new collateral ratio 3. Mint additional USDFC 4. Pay borrowing fee on new amount only **Related:** [Managing Collateral Effectively](https://github.com/Secured-Finance/secured-finance-docs/tree/main/getting-started/managing-collateral-effectively.md)
What happens if I want to close my Trove? To close your Trove: 1. **Repay all USDFC debt** including any fees 2. **Confirm closure transaction** 3. **Receive all FIL collateral** back to your wallet 4. **Pay gas fees** for the transaction **Requirements:** * Must repay 100% of USDFC debt * Cannot partially close a Trove * Trove is permanently removed after closure * 20 USDFC liquidation reserve is refunded upon closure **Related:** [Monitoring Your Position](https://github.com/Secured-Finance/secured-finance-docs/tree/main/getting-started/monitoring-your-position.md)
## Risk Management
What is the Stability Pool? The Stability Pool is a pool of USDFC tokens that acts as a buffer to absorb debt from liquidated Troves. It provides system stability and rewards for participants. **How it works:** 1. **Users deposit USDFC** into the pool 2. **Liquidated debt** is paid using pool funds 3. **Liquidated FIL collateral** is distributed to depositors 4. **Depositors typically profit** from liquidation premiums **Related:** [Using the Stability Pool](https://github.com/Secured-Finance/secured-finance-docs/tree/main/getting-started/using-the-stability-pool.md)
How do liquidations work? When a Trove's collateral ratio falls below 110%: 1. **Liquidation trigger**: Anyone can initiate liquidation 2. **Debt payment**: Stability Pool USDFC pays off the debt 3. **Collateral distribution**: FIL collateral goes to Stability Pool depositors 4. **Liquidator reward**: Liquidator receives gas compensation (20 USDFC) and 0.5% of collateral **Example:** * Trove has 100 FIL ($400) and 380 USDFC debt * Collateral ratio = 105% (below 110%) * Liquidation occurs, Stability Pool receives \~$400 FIL for $380 debt **Related:** [Liquidation Process](https://github.com/Secured-Finance/secured-finance-docs/tree/main/core-mechanics/liquidation.md)
What are the benefits of depositing in the Stability Pool? Stability Pool depositors receive: **Rewards:** * **FIL from liquidations**: Typically profitable due to 110%+ collateral * **Liquidation premiums**: Receive more value than USDFC deposited * **System rewards**: Potential additional token rewards **Example profit:** * Deposit 1,000 USDFC * Liquidation occurs, receive 1,100 USDFC worth of FIL * Net profit: 100 USDFC equivalent **Related:** [Using the Stability Pool](https://github.com/Secured-Finance/secured-finance-docs/tree/main/getting-started/using-the-stability-pool.md)
What are the risks of the Stability Pool? Risks include: 1. **USDFC reduction**: Your deposit decreases during liquidations 2. **FIL price volatility**: Received FIL may fluctuate in value 3. **Opportunity cost**: Might miss FIL price appreciation 4. **Smart contract risk**: Protocol vulnerabilities (though audited) **Mitigation strategies:** * **Diversify exposure**: Don't deposit all USDFC * **Monitor FIL price**: Consider market conditions * **Understand mechanics**: Know when liquidations likely occur **Related:** [Using the Stability Pool](https://github.com/Secured-Finance/secured-finance-docs/tree/main/getting-started/using-the-stability-pool.md)
## Advanced Topics
What is redemption and how does it work? Redemption allows USDFC holders to exchange their USDFC for underlying FIL collateral directly from the protocol at face value. **Process:** 1. **Submit redemption request** with USDFC amount 2. **Protocol selects Troves** with lowest collateral ratios 3. **Receive equivalent FIL** based on current price 4. **Pay redemption fee** (Base Rate + 0.5%, minimum 0.5%) **Use cases:** * **Arbitrage**: When USDFC trades below $1 * **Exit strategy**: Convert back to FIL * **Peg maintenance**: Helps maintain $1 peg **Important:** Redemptions target Troves with the lowest collateral ratios first. Maintaining a ratio above 150% reduces redemption risk. **Related:** [Redemption Process Details](https://github.com/Secured-Finance/secured-finance-docs/tree/main/core-mechanics/redemption.md)
What is Recovery Mode? Recovery Mode activates when the system's Total Collateral Ratio falls below 150%. It implements stricter rules to restore system health: * **Higher liquidation threshold**: Positions below 150% at risk * **No borrowing fees**: Encourages adding collateral * **Restricted operations**: Limited new borrowing **User actions:** Add collateral or repay debt to stay above 150%. **Related:** [Recovery Mode Details](https://github.com/Secured-Finance/secured-finance-docs/tree/main/advanced-topics/recovery-mode.md)
What happens if the Stability Pool is empty during liquidation? If the Stability Pool is empty when liquidation occurs: 1. **Redistribution mechanism**: Debt and collateral redistribute to all Troves 2. **Proportional allocation**: Based on each Trove's existing debt 3. **Automatic updates**: Positions adjust automatically 4. **No user action required**: System handles redistribution **Impact on Trove owners:** * **Debt increases**: Receive portion of liquidated debt * **Collateral increases**: Receive portion of liquidated FIL * **Ratio may improve**: Net effect often positive **Related:** [Liquidation Process](https://github.com/Secured-Finance/secured-finance-docs/tree/main/core-mechanics/liquidation.md)
What if FIL price crashes significantly? In case of severe FIL price decline: 1. **Mass liquidations**: Many Troves become under-collateralized 2. **Recovery Mode**: System automatically activates 3. **Stability mechanisms**: Built-in protections engage 4. **Market forces**: Arbitrage opportunities help stabilize **User protections:** * **Over-collateralization**: 110%+ provides buffer * **Liquidation premiums**: Incentivize quick liquidations * **Redemption mechanism**: Maintains peg pressure **Related:** [Recovery Mode](https://github.com/Secured-Finance/secured-finance-docs/tree/main/advanced-topics/recovery-mode.md)
## Related Resources * [Getting Started Guide](https://github.com/Secured-Finance/secured-finance-docs/tree/main/getting-started/README.md) * [Core Mechanics Documentation](https://github.com/Secured-Finance/secured-finance-docs/tree/main/core-mechanics/README.md) * [Advanced Topics](https://github.com/Secured-Finance/secured-finance-docs/tree/main/advanced-topics/README.md) * [System Overview](https://github.com/Secured-Finance/secured-finance-docs/tree/main/core-mechanics/system-overview.md) * [Developer Portal](/developer-portal/introduction) # Introduction Introduction to Secured Finance's Developer Portal and its resources Welcome to the Secured Finance Developer Portal, your comprehensive resource for building on top of Secured Finance's protocols. Whether you're a hackathon participant, a web2 developer exploring blockchain development, or a seasoned web3 developer, this portal provides the tools, documentation, and examples to help you integrate with our ecosystem. ## What You'll Learn * How to query Secured Finance protocol data using our subgraphs * How to integrate with USDFC and Fixed-Rate Lending protocols using our SDKs * Best practices for building applications on top of Secured Finance * How to participate in our Bug Bounty program ## Key Components ### API Reference Our API Reference provides comprehensive documentation for querying data from our protocols using GraphQL through The Graph's subgraphs: * [Fixed-Rate Lending Subgraph](/developer-portal/api-reference/fixed-rate-lending-subgraph) - Query data from the Fixed-Rate Lending protocol > **Note:** The USDFC Subgraph is currently under development and not yet deployed. USDFC data is only available through the [USDFC SDK](/developer-portal/sdk-reference/usdfc-sdk). ### SDK Reference Our SDK Reference provides detailed documentation for interacting with our protocols programmatically: * [USDFC SDK](/developer-portal/sdk-reference/usdfc-sdk) - Integrate with the USDFC stablecoin protocol * [Fixed-Rate Lending SDK](/developer-portal/sdk-reference/fixed-rate-lending-sdk) - Integrate with the Fixed-Rate Lending protocol ### Bug Bounty We maintain an active [Bug Bounty](/developer-portal/bug-bounty) program to incentivize security researchers to help us identify and fix vulnerabilities in our protocols. ## Getting Started If you're new to web3 development, we recommend starting with our [DeFi Starter Guide](/introduction/defi-starter-guide) to familiarize yourself with fundamental concepts. For experienced developers, you can dive directly into our API and SDK references to start building applications on top of our protocols. ## Related Resources * [USDFC Stablecoin Documentation](/usdfc-stablecoin/overview) * [Fixed-Rate Lending Documentation](/fixed-rate-lending/overview) * [GitHub Repositories](https://github.com/Secured-Finance) --- [Next Page](/llms-full.txt/1)