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
Collateral: The amount of FIL you deposit to secure your borrowed USDFC
Total Debt: The sum of your borrowed USDFC, liquidation reserve, and any applicable fees
Collateral Ratio: The ratio of your collateral value (in USD) to your total debt (in USDFC)
Trove Lifecycle
Opening a Trove: Deposit FIL collateral and specify how much USDFC to borrow
Managing a Trove: Add collateral or repay debt to maintain a healthy collateral ratio
Closing a Trove: Repay all debt to reclaim your collateral
Liquidation: If your collateral ratio falls below the minimum threshold, your Trove may be liquidated
Key Parameters
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
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
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:
Recovery Mode:
(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.
Related Topics
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