FAQs

General

1. What is Secured Finance?

   • Secured Finance is a decentralized protocol offering both fixed-income lending and a stablecoin (USDFC), backed by Filecoin as collateral. It aims to provide users with transparent, secure borrowing and liquidity management.

2. What is USDFC?

   • USDFC is the protocol’s USD-pegged stablecoin, minted by collateralizing Filecoin. It maintains a 1:1 peg to USD through mechanisms like redemptions and Stability Pool operations.

3. How can I use USDFC?

   • After minting USDFC, you can:

     • Provide liquidity to the Stability Pool.

     • Supply liquidity to decentralized exchanges (DEXs).

     • Lend it out via Secured Finance’s fixed-income markets.

4. What is the minimum collateral ratio?

   • The protocol enforces a minimum collateral ratio (MCR) of 110% during normal operations, which increases to 150% during Recovery Mode to ensure overall system stability.

Minting and Borrowing

1. How do I mint USDFC?

   • Users deposit Filecoin to create USDFC, maintaining at least a 110% collateral ratio. The process involves a one-time minting fee (Base Rate + 0.5%) but no annual interest, unlike MakerDAO.

2. What are the costs associated with minting?

   • The total minting cost includes the one-time minting fee and a 20 USDFC liquidation reserve to cover potential liquidation gas costs.

Stability and Liquidations

1. How does the Stability Pool work?

   • The Stability Pool holds USDFC to cover liquidations. When a Trove is liquidated, the pool burns an equivalent amount of USDFC and distributes the liquidated Filecoin to depositors at a discount.

2. What happens if the Stability Pool is empty?

   • If the pool is empty, the protocol shifts to redistribution. The debt and collateral from liquidated Troves are proportionally distributed to other active Troves, ensuring continued system solvency.

Recovery Mode

1. What is Recovery Mode?

   • Recovery Mode is triggered when the Total Collateral Ratio (TCR) falls below 150%. It enforces stricter liquidation rules, blocking actions that would lower the TCR further and setting borrowing fees to 0% to encourage stabilizing the system.

2. How should users manage their Troves during Recovery Mode?

   • To avoid liquidation, users should maintain their Troves’ collateral ratio above 150% by adding collateral or repaying some of the debt.