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:
Minting Fee: Charged when users mint USDFC by depositing collateral
Redemption Fee: Applied when users redeem USDFC for Filecoin (FIL) at face value
Interest Fee: Currently set to 0%, but may be adjusted in the future
Key Parameters
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 + 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.
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