❓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
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
How does USDFC maintain its peg to the US Dollar?
USDFC maintains its $1 peg through multiple mechanisms:
Over-collateralization: Minimum 110% FIL collateral backing
Redemption mechanism: Direct exchange of USDFC for FIL at $1 rate
Liquidation system: Automatic closure of under-collateralized positions
Stability Pool: Buffer that absorbs liquidated debt
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
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
How do I get started with USDFC?
To get started with USDFC:
Set up a wallet: Use a Web3 wallet like MetaMask
Acquire FIL: Purchase Filecoin on exchanges
Connect to platform: Access the USDFC interface
Create a Trove: Deposit FIL as collateral
Mint USDFC: Borrow against your collateral
Manage position: Monitor and maintain healthy ratios
Related: Getting Started Guide
Minting & Borrowing
How do I mint USDFC?
To mint USDFC:
Connect your wallet to the USDFC platform
Create a Trove by depositing FIL as collateral
Set collateral ratio (minimum 110%, recommended 150%+)
Mint USDFC against your collateral
Pay borrowing fee (0.5% base fee)
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
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
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
Can I mint more USDFC from an existing Trove?
Yes, you can mint additional USDFC from an existing Trove if:
Collateral ratio remains above 110% after minting
You pay the borrowing fee on additional USDFC
Sufficient FIL collateral supports the new total debt
Process:
Access your existing Trove
Calculate new collateral ratio
Mint additional USDFC
Pay borrowing fee on new amount only
Related: Managing Collateral Effectively
What happens if I want to close my Trove?
To close your Trove:
Repay all USDFC debt including any fees
Confirm closure transaction
Receive all FIL collateral back to your wallet
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
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:
Users deposit USDFC into the pool
Liquidated debt is paid using pool funds
Liquidated FIL collateral is distributed to depositors
Depositors typically profit from liquidation premiums
Related: Using the Stability Pool
How do liquidations work?
When a Trove's collateral ratio falls below 110%:
Liquidation trigger: Anyone can initiate liquidation
Debt payment: Stability Pool USDFC pays off the debt
Collateral distribution: FIL collateral goes to Stability Pool depositors
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
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
What are the risks of the Stability Pool?
Risks include:
USDFC reduction: Your deposit decreases during liquidations
FIL price volatility: Received FIL may fluctuate in value
Opportunity cost: Might miss FIL price appreciation
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
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:
Submit redemption request with USDFC amount
Protocol selects Troves with lowest collateral ratios
Receive equivalent FIL based on current price
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
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
What happens if the Stability Pool is empty during liquidation?
If the Stability Pool is empty when liquidation occurs:
Redistribution mechanism: Debt and collateral redistribute to all Troves
Proportional allocation: Based on each Trove's existing debt
Automatic updates: Positions adjust automatically
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
What if FIL price crashes significantly?
In case of severe FIL price decline:
Mass liquidations: Many Troves become under-collateralized
Recovery Mode: System automatically activates
Stability mechanisms: Built-in protections engage
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
Related Resources
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