Mint & Borrow
The main feature to generate USDFC and borrow it into your connected wallet
Last updated
The main feature to generate USDFC and borrow it into your connected wallet
Last updated
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.
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
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 . This ensures the safety and stability of the system. The process involves the following steps:
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
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 to your wallet so you can use it anywhere
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
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
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
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)
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.
When you want to close your trove completely, you should repay borrowed amount + minting fees in USDFC.
When you mint USDFC, the following costs apply:
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
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
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
The Base Rate is a dynamic component of the borrowing fee that adjusts according to market conditions and redemption activity:
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%
The Base Rate is initially set at 0% and adjusts based on the redemption activity. The formula for updating the Base Rate is:
Where: m = amount of USDFC redeemed n = current total supply of USDFC
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:
Where: δ = hourly decay factor (e.g., 0.944) Δt = time elapsed (in hours) since the last redemption or loan issuance
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.
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:
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.