Dear Fellow Navigators of the Financial Future,

In the aftermath of the LIBOR scandal, a hopeful vision emerged amidst the challenges of centralized power in financial intermediaries. Secured Finance wasn’t merely born; it arose, guided by an unwavering belief that through the blockchain, we can reshape our financial destiny, constructing a future where every transaction is not just a procedure but a testament to transparency and reliability.

Here, our smart contracts diligently manage the entire financial trade lifecycle, orchestrating every step from bond issuance to redemption. But at Secured Finance, we see beyond transactions; we envision a bridge that seamlessly connects the reliability of traditional finance with the boundless possibilities of decentralized finance.

Vision and Mission

We dream of a world where financial systems are not just robust but are pillars of democratization and equality, where every individual, regardless of their background or location, can unreservedly access financial services. Our mission is not merely to create a platform but to sculpt a universe where a suite of financial services, from the simplest transactions to the most complex financial products, are underpinned by transparency, security, and inclusivity. At Secured Finance, we’re not just building; we’re nurturing a genuine yield curve for decentralized finance, crafting an ecosystem that is not just efficient but radiates fairness and equal opportunity.

Our Team

Steering this venture is our team, a dynamic coalition of seasoned financial experts, software engineers, and visionary digital strategists, each contributing profound expertise in both traditional finance and blockchain technology. We are more than a team; we are pioneers of a revolutionary spirit, passionately and unrelentingly navigating toward innovative financial solutions that resonate with the vibrant rhythms of our global economy. Our steadfast commitment to transparency and continuous learning is reflected luminously in our regular updates and the insightful articles we thoughtfully share with our community.

Join us as we sail towards a future where finance is not merely a system but a steadfast ally, ensuring every transaction is not only secure and inclusive but also radiates unbridled innovative potential.

In the Spirit of the Hopeful Forward Movement, Secured Finance Team

Executive Summary

Secured Finance is a decentralized finance (DeFi) platform that provides a unique solution to the liquidity problem in the industry. Our protocol enables peer-to-peer lending and derivatives trading for fixed-income investments and hedging, offering a more efficient and cost-effective alternative to traditional financial institutions.

By utilizing a smart-contract-based platform, we eliminate the need for intermediaries and provide a transparent, robust, censorship-resistant, and low-cost way of transacting. Our OTC market for digital assets ensures that primary and secondary markets have enough liquidity, while our smart-contract-based central clearing counterparty model guarantees transparent and efficient transactions.

Moreover, our unique features, including the standardization of plain vanilla products, order-book-based price discovery, on-chain orderbook matchmaking, smart-contract-based collateral management, and auto-rolling, provide a hassle-free solution that benefits long-term investors and borrowers. These features offer a solution to the DeFi industry’s challenges, paving the way for an inclusive, accessible, and efficient financial system.

Secured Finance has a clear roadmap for growth, a strong use case and a dedicated team committed to building a strong and vibrant community around the Secured Finance ecosystem. We welcome anyone who shares our vision to join us on this exciting journey.

You can read the full article in our blog.

Executive Summary

The convergence of Eurocurrency and cryptocurrency markets has become a vital topic in the finance world, offering new opportunities for the transition from centralized to decentralized monetary systems in global financial transactions.

While both currencies share common characteristics of being non-regulated, stateless, representing potential regulatory and risk control challenges, it is due to their similarities that they could have the most significant impact on the future of finance by offering increasingly flexible and efficient liquidity solutions within global financial transactions.

This paper explores the implications of the convergence of the Eurocurrency and cryptocurrency markets by specifically concentrating on developing over-the-counter (OTC) markets for cryptocurrencies and proposes solutions to address some of the key regulatory and risk control challenges.

We will also explore the need for industry-wide standardization efforts, embedded supervision, and the development of a peer-to-contract architecture to provide a safer trading environment while continuing to maintain the key benefits of the blockchain system within a decentralized finance (DeFi) setting.

Visit the full article for more details.

2025 Q2+

• New Pool-based AMM Fixed-Rate Lending White Paper

• SFC Launch & DAO Governance

• SFC Tokenomics Announcement

• SFC Token Sale (TBD: Private & Public)

• USDFC Stablecoin Official Launch on Filecoin Mainnet

• USDFC Stablecoin Beta Launch on Filecoin Mainnet

2025 Q1

• USDFC Stablecoin Alpha Launch on Filecoin Mainnet

• USDFC Fixed-Rate Lending Market Launch

• USDFC Stablecoin Smart Contract 2nd Audit (Report)

• USDFC Stablecoin Smart Contract 1st Audit (Report)

• Collaboration Announcement with Parasail

• Partnership Announcement with Lighthouse

• Parasail's wpFIL integration

• MAR2024 Markets Itayose & Auto-roll (Pre-Order 3/21-3/27: Report)

Welcome to Secured Finance

Secured Finance is a Decentralized Finance (DeFi) protocol that empowers you to engage directly with next-generation financial infrastructure. By connecting your wallet, you can access our services without intermediaries like banks or brokers—no third-party custodians required. With Secured Finance, you hold the keys to permissionless financial freedom.

Our platform is built on two core protocols:

• USDFC Stablecoin: A dollar pegged token on the Filecoin blockchain

• Fixed-Rate Lending: Fixed-rate, Fixed-term lending & borrowing of tokens

Getting Started

• USDFC - Beginners Guide

• Fixed-Rate Lending - Beginners Guide

Points Program Participants: Based on the TVL milestone achievements, SFP holders will be eligible for SFC airdrops up to 3% of total supply.

Active Community Participants: Based on the community participants such as Galxe campaign and OAT holders will be eligible for SFC airdrops.

September 2023

• Week 1-3:

  • Development & Launch Version 0.6.0 on Testnet Major UI & smart contract upgrades

• Week 4:

  • SEP25 Itayose & Auto-roll Simulation

October 2023

• Week 1:

  • Orderbook Test

• Week 2:

  • Delisting & Liquidation Simulation on Dev

• Week 3:

  • Launch V0.6.5

  • Global Emergency Settlement Test

• Week 4:

  • Launch V0.7.0

November 2023

• Week 1:

  • Global Itayose Simulation

• Week 2:

  • Open Sourcing & Trading Strategy AMA

• Week 3:

  • Security & Attack Simulation

• Week 4:

  • Market Vulnerability Testing

December 2023

• Week 1-2:

  • Market Readiness & Onboarding Campaign

• Week 3-4:

  • Mainnet Launch V1.0.0 🚀

  • Official Global Pre-Open Market & Itayose 🚀🚀

  • Trading Live! 🚀🚀🚀

Why Secured Finance launch Stablecoin protocol?

Secured Finance is a decentralized financial platform that aims to provide institutional-grade capabilities and greater financial flexibility for everyone, offering more liquidity and new ways to grow your digital assets.

We have two core protocols: Fixed Income Lending and the USDFC Stablecoin. Each protocol addresses the distinct needs of DeFi users by delivering both fixed-income investment opportunities and flexible borrowing solutions for digital assets.

Through Fixed Income Lending, users can borrow and lend at fixed rates, structured as zero-coupon bonds and tokenized debt. This setup ensures predictable and stable returns for specific time periods, appealing to those seeking secure, fixed-rate yields.

We introduce the USDFC Stablecoin to provide immediate access to a USD-pegged stablecoin without requiring a traditional counterparty or relying on external liquidity for exchange. The system enables you to open a Trove where you can manage your collateral and debt, offering a decentralized and efficient way to mint, borrow, and repay USDFC.

By integrating a stablecoin into the Secured Finance ecosystem, USDFC can seamlessly connect with Fixed Income Lending market, serving as a ready source of order book liquidity. In turn, this gives USDFC added utility, allowing it to earn stable returns within the protocol.

The Role of USDFC in the Filecoin Ecosystem

USDFC is exclusively backed by Filecoin, with all operations occurring on the Filecoin Virtual Machine (FVM). By choosing Filecoin as collateral, we leverage its robust ecosystem, which is poised for growth amid rising data storage needs in the AI-driven era.

Through direct integration of USDFC stablecoin on the FVM, Secured Finance aims to boost Filecoin’s DeFi landscape as MakerDAO's DAI did for Ethereum DeFi ecosystem. As the first decentralized stablecoin fully collateralized by Filecoin, USDFC provides liquidity for Filecoin stakeholders, miners, and DeFi users alike. This, in turn, strengthens liquidity across the Filecoin network and establishes a solid basis for expanded DeFi development.

Secured Finance envisions delivering financial flexibility to everyone and spurring DeFi sector growth via stablecoin and fixed-income markets—supported by Filecoin and the wider blockchain community. By leveraging the FVM, our protocol promotes stability and composability for Filecoin assets, adding another layer of utility to the network and advancing the sustainable, long-term development of the Filecoin economy.

3 Steps for Minting USDFC

1. Connect Wallet

2. Open Trove and Deposit FIL

3. Mint USDFC!!

Where is my Money?

1. After successfully 'Open Trove', you will see your USDFC on top right corner.

2. Your USDFC is already in your connected wallet address. To see it in your wallet such as MetaMask, you should import the USDFC tokens. The USDFC contract address can be found here.

How can I get back my collateral?

You can 'Close Trove' to repay entire debt or 'Adjust' your balance to withdraw your collateral whenever you want!

What you can do with USDFC

After minting USDFC, you have many options, including pledge into the 'Stability Pool', 'Provide Liquidity for DEX', 'Lend USDFC through the Secured Finance Fixed Income Market', 'Cross-Chain Swap for the payment', and more!

1. Stability Pool

Deposit your USDFC into the Stability Pool to help secure the protocol. You’ll receive a portion of liquidated FIL in return with discount.

2. LP for DEX

Pair your USDFC with FIL and LP into the 'SushiSwap Pool' to earn trading fees.

3. Lend through Fixed-Income market

You can lend your USDFC in Secured Finance’s Fixed Income Market and earn interest from borrowers.

4. Cross-Chain Bridge and Swap

You can easily bridge and swap USDFC from FVM to currency on other chains powered by Axelar.

Test Token Faucet for Calibration testnet

You can obtain tFIL Test Token Faucet from here. See more details through Filecoin Docs.

What is Secured Finance Points (SFP) v2?

Secured Finance Points (SFP) v2 is a simplified and user-friendly reward system designed to enhance user experience while reflecting individual contributions to the Secured Finance Protocol. These electronic points serve as a versatile metric to quantify user engagement, determine community rankings, and allocate rewards in a transparent and equitable manner. By streamlining the system, SFP v2 ensures a seamless and rewarding experience for all participants.

When is the SFP launch?

The point system pre-launch phase started on the Filecoin blockchain on June 19, 2024, at 12:00 AM (UTC). The global launch followed on June 28, 2024, at 12:00 AM (UTC), expanding to Ethereum, Arbitrum, Avalanche, and Polygon zkEVM. The updated v2 system will be implemented starting December 27, 2024 at 12:00 AM(UTC). Accumulated points will remain intact, and new points will be added to the existing totals.

SFP and SFC

SFP: Non-transferable points with no economic value, representing user activities and contributions.

SFC: Governance tokens distributed periodically, using SFP as a reference for reward calculations.

• Initially, 1% of the total SFC supply is allocated for airdrops.

• This allocation can increase to:

  • 2% if the protocol's TVL reaches $50M.

  • 3% if TVL reaches $100M.

Original contributors from early campaigns will be rewarded separately with SFC tokens, acknowledging their foundational support.

How to earn SFP?

SFP can be earned through various activities within the Secured Finance ecosystem:

• Increasing TVL.

• Providing order-book liquidity.

• Introducing new users via referrals.

• Logging in daily to the platform.

Visit the Points Dashboard to track your points, rankings, and referral activit

Points Dashboard Page

The Points Dashboard is designed to monitor earned points from various activities and quickly identify tasks for user contributions from active quests. Users can see their points, ranking, a referral link, and active quests on the dashboard.

Points Calculations

Secured Finance has introduced a points system to quantify and reward user contributions to the ecosystem's success. Points can be earned through five primary activities: Deposits, Limit Orders, Active Positions, Referrals, and Daily Login.

As new products and features are added, additional ways to earn points may also emerge. The points accumulated are directly tied to future airdrops.

1. Deposit Points:

• Purpose: Rewards users for deposits, which provide the foundation for protocol liquidity.

• Earning Method: 1 point per $1 deposited per 24 hours.

2. Limit Order Points:

• Purpose: Incentivizes users to provide order-book liquidity and improve market efficiency.

• Earning Method: 2 points per $1 per 24 hours, for orders placed within 20% of the Mark Price.

• Eligibility: No points are awarded for orders placed beyond 20% of the Mark Price.

3. Active Position Points:

• Purpose: Rewards users for maintaining active positions, which contribute to ecosystem growth.

• Earning Method: 2 points per $1 per 24 hours, irrespective of position duration.

4. Referral Points:

• Purpose: Encourages user referrals to grow the community.

• Referrer Benefits:

  • Earn 5% of the points earned by referred users.

• New User Benefits:

  • Receive 50 welcome points when joining via a referral link.

  • Earn a 5% bonus on all points earned.

5. Daily Login Points:

• Purpose: Encourages regular engagement with the platform.

• Earning Method: 10 points per day for logging in and connecting your wallet.

Recovery Mode is activated when the Total Collateral Ratio (TCR) of the protocol falls below 150%. It is designed to protect the protocol from a systemic risk of under-collateralization by prioritizing debt repayment and collateral distribution.

Key Changes During Recovery Mode

1. Liquidation Threshold Jump (110% to TCR) Troves with a collateral ratio below TCR are immediately eligible for liquidation, receiving a 10% penalty upon liquidation.

2. Zero Minting Fee The borrowing fee is set to 0%, encouraging users to add collateral and stabilize the protocol.

3. Minting Restrictions Borrowing that would lower the TCR is blocked. New USDFC can only be issued if it improves a Trove’s collateral ratio or establishes a new Trove at 150% or higher. Adjustments reducing collateral ratio are permitted only if the resulting TCR exceeds 150%.

Purpose

The goal of Recovery Mode is to restore the TCR to 150% or higher and prevent a cascade of liquidations that could threaten the protocol’s stability.

Risk to Trove Holders

• Trove holders should maintain a high collateral ratio during Recovery Mode to avoid liquidation.

• Low-collateral Troves (below 150%) are more vulnerable and can be liquidated immediately.

Example Scenario

1. The TCR falls to 145%, triggering Recovery Mode.

2. Troves below TCR (145%) are prioritized for liquidation.

3. Users are incentivized to add collateral to protect their positions and restore system stability.

How do liquidations work in Recovery Mode?

• ICR = Individual Collateral Ratio

• MCR = Minimum Collateral Ratio (110%)

• TCR = Total Collateral Ratio

• SP = Stability Pool

Secured Finance's stablecoin protocol introduces a variety of innovative features that enable users to efficiently mint, manage and utilise USDFC, our decentralized, Filecoin-backed stablecoin. Below are the key features:

Mint & Borrow

Mint USDFC by locking Filecoin (FIL) as collateral with a minimum collateralization ratio of 110%. This ensures capital efficiency while allowing users to extract liquidity from their FIL holdings.

Liquidation with Stability Pool

The Stability Pool secures the protocol by covering liquidations. Users who deposit USDFC into the pool can receive discounted FIL from liquidated positions.

Redemption for Peg Mechanism

USDFC maintains a 1:1 peg to the USD through a redemption mechanism, allowing users to exchange USDFC for FIL at its peg value, stabilizing its price.

Recovery Mode

If the system-wide collateral ratio drops below 150%, the protocol enters Recovery Mode, prioritizing liquidations and restricting new borrowing to restore stability.

What is the Stability Pool?

The Stability Pool is a reserve of USDFC dedicated to absorbing liquidations when a borrower's collateral ratio falls below the required 110%. The pool is used solely for liquidations, ensuring that under-collateralized positions can be settled and the system remains stable.

How the Stability Pool Works

• Purpose: The Stability Pool repays the debt of liquidated borrowers using the deposited USDFC.

• Depositor Rewards: When USDFC from the pool is used, depositors receive Filecoin (FIL) from the liquidated collateral at a discount.

What are Liquidations?

Liquidations occur when a Trove’s collateral ratio falls below 110%, ensuring that all USDFC remains fully collateralized. In liquidation, the Stability Pool covers the Trove's debt, and its collateral is distributed to Stability Pool depositors. The Trove owner keeps their borrowed USDFC but loses collateral, typically incurring around a 10% loss. To avoid liquidation, maintaining a collateral ratio of 150% or higher is recommended.

Liquidation Process

1. Triggering Liquidation: When a Trove’s collateral ratio falls below 110%, a Liquidator triggers the liquidation.

2. Debt Repayment: The Stability Pool covers the Trove’s debt by burning the corresponding amount of USDFC.

3. Collateral Distribution: The collateral (FIL) from the liquidated Trove is distributed to the Stability Pool depositors based on their pool share, minus the Liquidator’s compensation.

Role of the Liquidator

• The Liquidator is responsible for triggering the liquidation process.

• As a reward, the Liquidator receives:

  • The Liquidation Reserve (a 20 USDFC reserve set aside during minting to cover gas fees).

  • 0.5% of the liquidated collateral (FIL), incentivizing them to initiate liquidations.

Stakeholders in the Liquidation Process

1. Stability Pool Depositors: Provide USDFC to the pool and receive FIL at a discount when liquidations occur. (Buy FIL Cheaper)

2. Liquidated Borrowers: Have their Trove liquidated when their collateral ratio falls below 110%, losing a portion of their collateral to repay their debt. Trove will be closed. (Sell FIL Cheaper)

3. Liquidators: Trigger the liquidation and receive gas compensation (Liquidation Reserve of 20 USDFC) plus 0.5% of the liquidated collateral.

Price Oracle

Secured Finance uses Pyth as the primary oracle to determine the FIL price. Pyth provides accurate and reliable real-time price feeds essential for system operations.

Fallback Mechanism

In case of extreme conditions where the Pyth price feed is unavailable, the protocol switches to Tellor as a backup:

• Pyth price not updated for over 4 hours.

• Pyth response reverts, returns invalid data, or shows an invalid timestamp.

• Price change between consecutive updates exceeds 50%.

This dual-oracle approach ensures that the protocol maintains accurate pricing and stability, even under extreme conditions.

What Happens If the Stability Pool Is Empty?

If the Stability Pool is empty during a liquidation, the protocol switches to a redistribution mechanism. In this case, the debt and collateral from the liquidated Trove are redistributed proportionally to all other existing Troves, based on their collateral amount.

Example of Redistribution

1. Trove Liquidation: A Trove is liquidated, but the Stability Pool has insufficient USDFC.

2. Debt and Collateral Redistribution: The debt and collateral are proportionally distributed to other active Troves.

3. Impact on Troves: Troves receiving the redistributed collateral and debt may see their collateral ratio lower, while the net USD value increase.

What is Secured Finance Points (SFP)?

SFP represents electronic points that reflect users' contributions to the Secured Finance Protocol. These points can be used for various purposes, such as determining a user's rank within the community or measuring their involvement and support when calculating rewards.

When is the SFP launch?

The point system pre-launch phase started on the Filecoin blockchain on June 19, 2024, at 12:00 AM (UTC). The global launch followed on June 28, 2024, at 12:00 AM (UTC), expanding to Ethereum, Arbitrum, Avalanche, and Polygon zkEVM. Here's the announcement on the Medium blog.

SFP and SFC

SFP is an electronic point without economic value and cannot be transferred. At TGE and periodically thereafter, SFP serves as a reference for community activities to determine the distribution of SFC rewards. The SFP to SFC ratio will be calculated and announced before each distribution. Initially, 1% of the total SFC supply is allocated for airdrops. This can increase to 2% if the protocol's TVL reaches $50M, and up to 3% if TVL reaches $100M.

Original contributors from early campaigns will be rewarded separately, such as through SFC, based on their contribution level, acknowledging their early support and participation in the ecosystem.

How to earn SFP?

Users can earn SFP through various activities within the Secured Finance Ecosystem, such as increasing TVL, providing order-book liquidity, and introducing new users. The easiest way to earn SFP points is by joining active quests featured on our dedicated Points Dashboard. Oftentimes, we feature specific quests with special incentive points via a dedicated Campaign page.

Points Dashboard Page

The Points Dashboard is designed to monitor earned points from various activities and quickly identify tasks for user contributions from active quests. Users can see their points, ranking, a referral link, and active quests on the dashboard.

Points Calculations

Secured Finance has introduced a points system to quantify and reward user contributions to the ecosystem's success. Points can be earned through five primary activities: Deposits, Limit Orders, Active Positions, Referrals, and Daily Login.

As new products and features are added, additional ways to earn points may also emerge. The points accumulated are directly tied to future airdrops.

1. Deposit Points:

Any user with current deposits on Secured Finance has been earning points. The more you deposit, the more points you earn. The longer you deposit, the more points you earn.

• Earning Method: 1 point per $1 deposited per 24 hours.

2. Limit Order Points:

Limit orders provide liquidity to Secured Finance and improve market efficiency. Limit Order points are awarded based on the amount placed in the order book and its distance to the Mark Price.

• Earning Method: Up to 2 points per $1 per 24 hours, based on the order’s proximity to the Mark Price.

• Slippage Distance Adjustment: Orders within 2% of the Mark Price receive full points, while points decrease for orders placed further away, with no points awarded for orders beyond 15% from the Mark Price.

3. Active Position Points:

Active positions drive the growth of the Secured Finance ecosystem. Active Position points are awarded based on the amount and duration of positions held by users.

• Earning Method: 2-3 points per $1 per 24 hours, based on duration of the position.

• Duration Adjustment: Between 1-1.5, where 1 is for the minimum duration (0 years) and linearly increased by duration to 1.5 for the maximum duration (2 years).

4. Referral Points:

Users can earn points by referring new users. The referring user earns 15% of the points their referred users earn. Additionally, referred users receive a welcome bonus and a percentage increase in their points earnings.

• Referrer Benefits: Earn 15% of the points earned by referred users.

• New User Benefits:

  • 500 welcome points.

  • 5% bonus on all points earned.

5. Daily Login Points:

Users can earn 10 points daily by logging in, visiting, and connecting their wallet to our web application. Additional incentives may be rewarded for consecutive login days.

• Earning Method: 10 points per day, visiting and connecting wallet to our web application.

How It Works

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 liquidation. This ensures the safety and stability of the system. The process involves the following steps:

1. 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.

2. Mint USDFC

   • Once the FIL amount and USDFC amount is set, check that the minting costs is 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.

   • Please import the USDFC contract address to your wallet so you can use it anywhere.

3. Maintain Collateral Ratio

   • The minimum collateralization ration (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.

4. 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.

5. 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.

Minting Costs

When you mint USDFC, the following costs apply:

1. Liquidation Reserve:

• 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.

2. One-Time Minting Fees:

• 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.

Total Debt Calculation Example

• 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.

0% Interest Rate Fee:

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:

Base Rate Explanation

The Base Rate is a dynamic component of the borrowing fee that adjusts according to market conditions and redemption activity:

Dynamic Range:

• 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%.

Calculation:

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

Decay:

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.

Purpose:

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.

Redemptions in the Secured Finance protocol allow USDFC holders to exchange their USDFC for Filecoin (FIL) at an equivalent USD value, ensuring that USDFC maintains its peg to the USD. This function is available anytime while profitable when USDFC trades below 1.0 USD in exchanges.

Redemption Process

• Who Can Redeem: Anyone holding USDFC can initiate a redemption, swapping USDFC for FIL at the peg value (1 USDFC = 1 USD worth of FIL).

• Purpose: This is not a debt repayment mechanism for borrowers. Instead, it is an exchange or swap function, allowing users to convert their USDFC holdings into FIL.

• Steps:

  1. A user submits a redemption request to the protocol.

  2. The protocol uses the FIL collateral from the most under-collateralized Troves to fulfill the request.

  3. The user receives FIL, while the Trove with the highest risk has its debt reduced but also loses collateral.

Key Consideration

Not Debt Repayment: Redemption does not mean repaying borrowed USDFC. Instead, it allows the holder to exchange USDFC for FIL directly. Borrowers must repay their debt separately if they wish to close or manage their positions.

Redemption Fee

The Redemption Fee is calculated as Base Rate + 0.5%, which ensures a minimum fee of 0.5%. This fee dynamically adjusts depending on redemption activity:

• Fee Calculation:

• Base Rate increases with frequent redemptions and decays over time when redemptions are low. It can never fall below 0.5%, ensuring that the minimum fee is always charged.

• The more redemptions occur, the higher the Base Rate will rise, while a lack of redemptions leads the rate to decay back to the 0.5% minimum.

Peg Mechanism

The peg mechanism in the Secured Finance protocol ensures that USDFC maintains its stability around 1.0 USD.

Below Peg (USDFC < 1.0 USD):

• When USDFC trades below 1.0 USD, users can redeem USDFC for FIL at a 1:1 rate, profiting from arbitrage. This reduces the circulating supply of USDFC, pushing its price back toward the peg.

• Note: Even in this scenario, the redemption fee (Base Rate + 0.5%) still applies, meaning users should factor in the cost of redemptions when calculating arbitrage opportunities.

Above Peg (USDFC > 1.0 USD):

• In this scenario, minting USDFC by depositing FIL becomes attractive because users can borrow USDFC at the 1:1 rate and sell it at a premium. This increases the circulating supply and pushes the price back toward 1.0 USD.

• Note: Minting requires over-collateralization (at least 110% FIL) and incurs a one-time minting fee (Base Rate + 0.5%), meaning users should account for these costs when minting USDFC above the peg.

Example of a Redemption

1. Market Situation: USDFC trades at 0.98 USD.

2. Redemption Initiation: Buy 1,000 USDFC with 980 USD and user redeems 1,000 USDFC.

3. Redemption Fee: Assume the Base Rate is 1.0%.

   • Redemption Fee = (1.0% + 0.5%) of 1,000 USDFC = 15 USDFC.

4. Net Redemption: The user receives FIL equivalent to 985 USD after the fee is deducted. Net profit of 5 USD.

This chapter provides a detailed overview of Trove operations within the Secured Finance Stablecoin Protocol. You’ll learn how to open and close Troves, how liquidations work, how Recovery Mode changes certain calculations, and the significance of important parameters like the Borrowed Amount, Liquidation Reserve, Borrowing Fee, and Collateral Ratio.

1. Key Concepts and Definitions

1.1 Trove

A Trove is your personal vault within the protocol where you lock up Filecoin (FIL) as collateral in order to borrow USDFC. Each Trove tracks:

• The amount of collateral you have deposited (in FIL).

• Your Total Debt (in USDFC), which includes your Borrowed Amount, the Liquidation Reserve, and any applicable Borrowing Fee.

If your Collateral Ratio becomes lower than specific threshold, your Trove may be liquidated.

1.2 Borrowed Amount

The Borrowed Amount is how much USDFC you borrow when opening (or adjusting) a Trove.

• There is a minimum borrow amount of 180 USDFC.

1.3 Liquidation Reserve

An amount of USDFC (currently 20 USDFC) added to your Debt to cover gas costs if your Trove is liquidated.

• Refunded when you close your Trove.

1.4 Borrowing Fee (Minting Fee)

A one-time fee based on your Borrowed Amount:

• Deducted from the borrowed USDFC.

• Fee Rate can vary from 0.5% to 5%.

• Waived in Recovery Mode.

• No recurring interest is charged (it’s just this one-time fee).

1.5 Total Debt

You must repay this (minus the Liquidation Reserve that’s refunded) to reclaim all your collateral.

1.6 Collateral Ratio

• Minimum: 110% (Normal Mode).

• Recommend >150% to avoid liquidation in Recovery Mode; many users keep 200–250% as an extra buffer.

2. Action-Specific Debt Calculations

2.1 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

2.2 Liquidation (Risky Troves)

If your Collateral Ratio is too low, your Trove can be liquidated. No additional fee applies at liquidation, but you risk losing collateral.

1. Normal Mode

   • Collateral Ratio below 110% ⇒ subject to liquidation.

   • You effectively swap your collateral for the borrowed USDFC.

2. Recovery Mode

   • Triggered if the system’s Total Collateral Ratio (TCR) < 150% (for example).

   • Troves below that TCR can be liquidated.

   • Up to 110% of your Debt (in collateral value) can be seized; the remainder stays with you.

2.3 Closing a Trove

To close your Trove, you must repay your Total Debt. However, because the protocol immediately refunds the 20 USDFC Liquidation Reserve, you only need to prepare the net amount (i.e., Total Debt – Reserve).

Example:

• Borrowed Amount: 180 USDFC

• Liquidation Reserve: 20 USDFC

• Borrowing Fee: 0.90 USDFC

• Total Debt: 200.90 USDFC

• Amount You Need to Prepare: 200.90 – 20 = 180.90 USDFC (because the 20 USDFC reserve is automatically offset and returned).

Hence, your actual out-of-pocket requirement is 180.90 USDFC to close the Trove.

3. Additional Notes

• Interest-Free Borrowing: Only a one-time Borrowing Fee applies (no ongoing interest).

• Monitor Collateral Ratio: Aim above 150% to reduce liquidation risk, especially in volatile markets.

• Parameters May Vary: Check the official docs for the latest Fee Rates and Liquidation Reserve settings.

For more on redemptions (and how they support the USDFC peg), see the Redemption as Peg Mechanism. Understanding these basics helps you manage your Trove effectively and protect your collateral.

o1

2024 Q4

• Stablecoin Testnet Launch

• Stablecoin Smart Contract Internal Audit

2024 Q3

• Stablecoin Development (like DAI on Filecoin Chain)

• Zero-Coupon Bond Tokenization

• UI/UX Major Upgrade

• Cross-Chain Bridge Integration

• Partnership announcement with GLIF

• SEP2024 Markets Itayose & Auto-roll (Pre-Order 9/20-9/27)

2024 Q2

June:

• FVM Launch (Filecoin mainnet deployment)

• SFP Launch (Filecoin, Ethereum, Arbitrum, Avalanche, Polygon zkEVM)

• Filecoin Infinity Quest Stage 1 - Deposit FIL/iFIL

• Filecoin Infinity Quest Stage 2 - Limit Orders and Active Positions

• JUN2024 Markets Itayose & Auto-roll (Pre-Order 6/21-6/28)

May:

• FVM launch is ready

• UI/UX major upgrade done & ready for development

• Secured Finance Point (SFP) incentive design & system development

April:

• UI/UX audit for the advanced trading terminal (24 improvements)

• FVM support and testnet deployment

2024 Q1

March:

• Historical chart deployment

• Zero-Coupon Bond Tokenization Deployment

• MAR2024 Markets Itayose & Auto-roll

February:

• Subgraph revamp for improving order state and historical charts

• Incorporate ERC-2612 to combine approval & transfer to enhance UX

January:

• Multi-chain Strategy & Launch (Arbitrum, Avalanche, Polygon zkEVM)

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. Below is a breakdown of these fees and how they contribute to the Fee Reserve.

Fee Structure

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.

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.

Summary of Fee Allocation

Contract Addresses

Audit Report

Video

User Guide

Architecture Diagram

Normal Mode

Recovery Mode

Secured Finance: A Fixed-Rate DeFi Protocol

At the core of our platform is a unique Zero-Coupon Bond instrument, powering secure and efficient crypto asset lending and borrowing. We simplify the complexities of traditional bond and loan lifecycle management, delivering a transparent, cost-effective, and user-friendly alternative. Whether you’re a borrower or an investor, Secured Finance offers a streamlined DeFi experience.

Expanding into the Future

In 2025, as DeFi evolves and traditional capital flows into Real-World Assets (RWA) and stablecoins, Secured Finance is broadening its horizons. We’ve introduced RWA-collateralized finance solutions, including a Filecoin-backed stablecoin and expanded token lending options for our community. Join us as we redefine the future of decentralized finance.

Overview

Get started

How to Deposit

2. Connect Your Wallet

3. Click the Deposit Button!!!

How to Provide Liquidity on Orderbook

2. Set the Condition - Chose Currency and Maturity - Lend or Borrow - Limit order or Market order - Price (APR) - Order Amount

3. Click 'Place Order'!!!

DeFi Apps Onboarding Guide

This guide will walk you through the steps you need to take to start using DeFi apps. You’ll learn how to set up your MetaMask wallet, connect it to DeFi apps, and get test ETH from Sepolia faucets.

Secured Finance Testnet User Guide

This guide offers a concise walkthrough of the platform, covering key aspects from preparing test tokens and managing collateral to executing transactions. It also delves into advanced trading strategies that are unique to Secured Finance.

Overview

Secured Finance supports a carefully selected range of digital assets for lending and borrowing, tailored to meet the needs of diverse users across multiple blockchains. This section provides an overview of the assets currently supported on our platform and their unique characteristics.

Supported Currencies

Lending & Borrowing Currencies

Secured Finance supports five major digital assets for lending: Filecoin (FIL), USD for Filecoin Community (USDFC), Ethereum (ETH), USD Coin (USDC), and Wrapped Bitcoin (WBTC). These assets were chosen for their stability, utility, and role in the digital asset ecosystem. Note that the availability of certain assets may vary depending on the blockchain.

Collateral Currencies

Secured Finance also accepts collateral from a similar set of assets, but their use as collateral is defined by chain compatibility:

Asset Highlights

Filecoin (FIL, iFIL, and axlFIL)

• Availability: Filecoin mainnet (FVM), Ethereum mainnet

• Filecoin (FIL) powers the decentralized storage ecosystem, facilitating payments and data retrieval.

• Liquid staking derivatives, such as iFIL, are also supported on the Filecoin Virtual Machine (FVM), unlocking additional utility and lending opportunities.

Ethereum (ETH)

• Availability: Ethereum mainnet, Arbitrum

• ETH is a core DeFi asset, powering decentralized applications and smart contracts. Its stability and widespread use make it ideal for lending and borrowing.

USD Coin (USDC)

• Availability: Ethereum mainnet, Arbitrum

• As a stablecoin pegged to the US dollar, USDC is an attractive choice for users seeking price stability and predictable returns.

Wrapped Bitcoin (WBTC)

• Availability: Ethereum mainnet, Arbitrum

• WBTC enables Bitcoin's value to integrate into the Ethereum ecosystem, allowing users to leverage its liquidity and utility within DeFi protocols.

USD for Filecoin Community (USDFC)

• Availability: Filecoin (FVM)

• USDFC is a stablecoin pegged 1:1 to the US dollar, designed specifically for the Filecoin Community. It is supported for both lending/borrowing and collateral purposes exclusively on the Filecoin Virtual Machine (FVM).

Expanding Asset Options

Looking ahead, Secured Finance plans to introduce additional digital assets and liquid staking derivatives to further diversify options for users. Our focus remains on enhancing flexibility and utility, ensuring the platform continues to meet the evolving needs of the DeFi community.

Secured Finance's Loan Market Platform supports two primary types of orders: limit orders and market orders. These order types provide users with flexibility and control over their trading strategies.

What are Limit Orders?

A limit order is an order to buy or sell a zero-coupon bond at a specific price or better. This type of order allows users to specify the maximum price at which they are willing to buy or the minimum price at which they are willing to sell. If the market doesn't reach these prices, the limit order will not be executed. If the market already exists at executable prices (overlapping limit orders), such orders will be executed immediately, and non-overlapping orders will remain as open. This ensures that users can control the price points at which they enter or exit their positions. By placing limit orders, users effectively act as market makers, contributing to the liquidity and depth of the market.

What are Market Orders?

A market order is an order to buy or sell a zero-coupon bond immediately at the best available current price. Market orders are typically executed quickly unless the market is exceptionally volatile. While market orders do not guarantee a specific price, they ensure the order will be executed. By placing market orders, users effectively act as market takers, accepting the prices currently offered in the market without contributing to the liquidity.

By offering these two types of orders, Secured Finance's Loan Market Platform caters to both users who prioritize price control (limit orders) and those who prioritize quick execution (market orders).

In the next section, let's look at how those orders begin and end and how you can check your order status. 👀

Welcome to the Secured Finance platform. In this section, we introduce what you can do with our web application and provide detailed explanations of the six main tabs. These tabs are designed to help you make the most of the platform.

What You Can Do on the Platform

Secured Finance is a next-generation DeFi platform offering advanced financial services. Through our user-friendly interface, you can:

In the following sections, we will provide detailed explanations of the functions and usage of each tab. This will enable you to maximize the use of the Secured Finance platform and manage and operate your assets more effectively.

Life Cycle Representation by Order Statuses

1. Open

   Exclusive to Limit Order. This state indicates an order is awaiting execution, pending the market price reaching the specified limit.

2. Partially Filled

   Applicable to both Market and Limit Order. Indicates that only a portion of the order has been executed, due to limited liquidity at the desired price.

3. Filled

   Relevant for both Market and Limit Orders, signifying complete execution. Market Orders achieve this state almost immediately at current market prices, while Limit Orders do so once the market price meets the specified limit.

4. Killed

   Specific to Market Orders that have been partially filled. This state indicates that the order cannot proceed to full execution due to insufficient liquidity.

5. Blocked
6. Canceled

   This state is possible for Limit Order. The trader can cancel the order if it has not yet been executed.

7. Expired

   Specifically for Limit Order, this state is reached when an order remains unfulfilled by the time the underlying bond reaches its maturity in the order book. After an order expires, any funds that were allocated but not used for the trade are returned to your collateral vault.

A unique aspect of our order lifecycle is the occurrence of combined states, particularly for orders that still need to be fully executed. These include states such as 'Partially Filled & Cancelled' or 'Partially Filled & Blocked', which serve as final designations for an order. Such combined states are crucial for understanding the nuanced outcomes of your trading actions, indicating that an order has been initiated but not completed due to specific conditions and, subsequently, the action is taken (canceled, blocked, etc.) as a resolution.

Overview

What is Zero-Coupon Bond Trading?

In ZC bond trading, you have the flexibility to buy or sell zero-coupon bonds at any time. When buying a bond, you’re effectively lending assets, while selling a bond equates to borrowing assets. All transactions occur on our Orderbook, which pairs trades directly with counterparties via smart contracts.

How Does Trading Work on Secured Finance?

When you buy a ZC bond, you lend your assets to the smart contract. Your order is matched with another user, and over time, your initial investment accrues interest, reaching face value at the bond’s maturity. Conversely, selling a bond means borrowing assets: you receive funds upfront and repay the bond's face value upon maturity.

Benefits of Zero-Coupon Bond Trading

Our ZC bond trading offers a flexible, efficient way to earn interest or borrow assets. You can adjust your positions as needed, giving you full control over your investments by trading against the Orderbook market.

Need to Unwind a Trade?

If you want to exit a position, you can unwind a trade with ease. For lenders, this means selling your bond, while for borrowers, it involves repaying your loan. The platform’s design ensures a seamless process for finding counterparties, allowing for smooth and efficient trade unwinding.

What Happens When My Loan Matures?

How Does Secured Finance Protect My Loan?

Order Status and Order Types

Orderbook Scenario:

Our scenario unfolds within the bounds of an order book, structured around three key order types: 'Market Order', 'Overlapping Limit Order', and 'Non-Overlapping Limit Order'. Let's consider the following order book setup:

Market Orders:

Filled

• Example: Buy 10 at market.

• Transition: Order is Filled purchasing 10 units at 91.

Partially Filled & Killed

• Example: Buy 20 at market.

• Transition: Order is Partially Filled with 10 units at 91, remaining 10 units are Killed due to lack of liquidity up to the upper limit.

Partially Filled & Blocked

• Example: Sell 10 at market.

• Transition: Order is Partially Filled with 5 units at 89, remaining 5 units are Blocked then Killed due to no liquidity at the lower limit.

Overlapping Limit Orders:

Filled

• Example: Buy 10 at 91.

• Transition: Order is Filled with 10 units at 91.

Partially Filled

• Example: Buy 15 at 93.

• Transition: Order is Partially Filled with 10 units at 93. Remaining 5 units are kept open at 93 but cannot be executed until the market moves and the circuit breaker price is adjusted to allow execution.

Canceled

• Example: After being partially filled, cancel the remaining order.

• Transition: Remaining order is Canceled.

Expired

• Example: Buy 15 at 91; remaining 5 units are kept open. Then no fill and lending market matures.

• Transition: Order Expires after the maturity time passes.

Non-Overlapping Limit Orders:

Open

• Example: Buy 10 at 89.

• Transition: Order is Open, awaiting a match.

Partially Filled

• Example: Buy 10 at 89 (total 15 Open on the orderbook), then another trader sells 10 at 89.

• Transition: Order is Partially Filled with 5 units at 89, 5 units remain open.

Canceled

• Example: After being partially filled, cancel the remaining order.

• Transition: Remaining order is Canceled.

Expired

• Example: Buy 10 at 89, no fill and lending market matures.

• Transition: Order Expires after the maturity time passes.

What is Collateral?

Collateral is an asset that borrowers pledge to back a loan. It acts as a safety net for lenders, giving them the assurance that borrowers have a strong reason to repay their loans. If a borrower defaults, the lender can seize the collateral to recover the outstanding loan amount. Collateral can take various forms, such as real estate, vehicles, or other valuable assets, but it's a cornerstone of secured loans. It often allows borrowers to enjoy lower interest rates due to reduced lender risk.

The Dual Role of Collateral in Secured Finance

Collateral serves two main purposes in Secured Finance:

1. Risk Reduction: It reduces the risk of loan default. If a borrower's Loan-to-Value (LTV) ratio crosses a certain threshold, or if the collateral's value falls below the loan's required value, the loan becomes eligible for liquidation. This mechanism protects lenders and builds confidence in our platform.

2. Inclusivity: It eliminates the need for traditional credit checks, aligning with the DeFi ethos of open and inclusive financial services.

Collateral Currencies

Secured Finance accepts various cryptocurrencies as collateral, tailored to each supported blockchain network to provide users with effective and flexible options.

Collateral Currencies on Ethereum and Arbitrum

We continue to support these collateral assets on Ethereum and Arbitrum:

Wrapped Bitcoin (WBTC)

Represents Bitcoin on Ethereum, allowing BTC holders to tap into Ethereum’s DeFi ecosystem.

Ethereum (ETH)

Native asset of the Ethereum network, widely used for smart contracts and DeFi applications.

USD Coin (USDC)

A stablecoin pegged to the US dollar, offering minimal volatility.

Collateral Currencies on Filecoin Virtual Machine (FVM)

With the launch of the Filecoin Virtual Machine (FVM), Secured Finance now supports different collateral assets unique to this network:

Filecoin (FIL)

Filecoin is the native cryptocurrency of the Filecoin network, a decentralized storage system aiming to "store humanity's most important information." FIL is used to pay for storage services and incentivize network participants. It can now be used as collateral on Secured Finance within the FVM network.

USD for Filecoin Community (USDFC)

USDFC is a FIL-backed stablecoin minted through a Collateralized Debt Position (CDP) approach on the Filecoin Virtual Machine (FVM). By locking FIL as collateral, users can generate USDFC—maintaining a 1:1 peg to the U.S. dollar—without selling their underlying assets.

iFIL and pFIL (Filecoin Liquid Staking Token)

iFIL and pFIL are a liquid staking token for Filecoin. It represents staked FIL tokens and provides liquidity to users who stake their FIL. For example, by staking FIL through the GLIF platform, users receive iFIL tokens, which can be used as collateral on Secured Finance within the FVM network.

Future Plans: Expanding Collateral Options

While WBTC, ETH, USDC, FIL, iFIL, pFIL, and USDFC are our current collateral options across supported networks, we continue to explore additional assets that align with our commitment to flexibility, security, and open DeFi principles. Stay tuned for updates on new collateral integrations and chain support as we further evolve the Secured Finance platform.

Key Metrics

Upon accessing the Market Dashboard, you'll find several critical metrics displayed prominently:

Digital Assets

• Total Digital Assets: Shows the total number of different digital assets currently being traded on the platform.

Total Value Locked (TVL)

• Definition: Represents the total value of all assets currently locked in the platform's smart contracts.

Total Trading Volume

• Overview: Displays the cumulative trading volume.

Total Users

• User Base: Shows the total number of active users engaging with the platform.

Yield Curve

One of the standout features of the Market Dashboard is the Yield Curve section:

• Purpose: Illustrates the interest rates (yields) across different loan maturities for various digital assets.

• Visualization: Interactive charts allow you to compare yield curves for multiple assets and maturities.

• Analysis: Helps you understand market expectations for future interest rates and make informed lending or borrowing decisions.

The Bridge tab lets you easily transfer assets between different blockchain networks directly within the Secured Finance platform. Powered by Axelar, it provides a simple and secure way to perform cross-chain swaps without the need for external exchanges.

What You Can Do with the Bridge

• Cross-Chain Swaps: Exchange tokens from one blockchain network to another (e.g., swap USDC on Ethereum for FIL on the Filecoin network).

• Obtain Native Tokens: Acquire native tokens required for transaction fees on other networks, such as FIL for the Filecoin network or ETH for Ethereum.

• Expand Your Portfolio: Access assets and opportunities available on multiple blockchain networks.

How to Use the Bridge

1. Connect Your Wallet

   • Click Connect Wallet at the top right corner.

2. Select Networks and Tokens

   • From Network: Choose the blockchain and token you are swapping from (e.g., Ethereum and USDC).

   • To Network: Select the destination blockchain and token you want to receive (e.g., Filecoin and FIL).

3. Enter the Amount

   • Specify the amount of the token you wish to swap.

4. Approve Token Use

   • If prompted, click Give Permission to Use Token.

5. Review and Confirm

   • Check the transaction details, including estimated time and fees.

6. Verify Receipt

   • Once completed, check your wallet on the destination network to confirm the arrival of your tokens.

Powered by Axelar

The Bridge feature utilizes Axelar's cross-chain technology to ensure secure and efficient asset transfers between supported networks.

Things to Keep in Mind

• Transaction Fees: Be aware of network fees that may apply to your swap.

• Network Support: Ensure your wallet is compatible with the destination network.

• Processing Time: Swaps typically complete within a few minutes but may vary based on network conditions.

By using the Bridge tab, you can seamlessly manage and transfer your assets across different blockchain networks, opening up new opportunities within the decentralized finance ecosystem.

Overview

• Campaign Details: Information about each campaign, including its name and objectives.

• Duration: Start and end dates with a countdown timer to keep track of the campaign period.

• Quests and Rewards: Specific tasks or challenges to complete for extra points or rewards.

• Progress Tracking: Monitor TVL and see progress toward campaign goals.

By participating in campaigns, you can maximize your rewards and enhance your experience on Secured Finance.

Your Portfolio

This feature provides a comprehensive overview of your financial activities on the platform and consists of the items below:

Net Asset Value

This displays the total value of your digital assets on the platform. It's calculated by adding the value of your active contracts and the value of your collateral.

Active Contracts

Here, you can view all your active lending and borrowing contracts. This includes details such as the contract's maturity date, interest rate, and the amount of digital asset involved.

Lending PV and Borrowing PV

These metrics provide a snapshot of your lending and borrowing activities in terms of Present Value. They give you an idea of the current worth of your lending and borrowing contracts.

Asset Management

This section provides a detailed overview of your assets with Secured Finance's vault.

Collateral Balance

This feature displays the total value of the assets you've pledged as collateral on the platform. It's an important tool for managing your risk and ensuring that your loans are adequately backed.

Collateral Assets

This lists the specific assets you've pledged as collateral. It allows you to see at a glance what assets are backing your loans and to manage your collateral portfolio effectively.

Non-collateral Assets:

These are your borrowed assets that are held under Secured Finance's Vault.

Collateral Utilization

This feature shows the percentage of your collateral that's currently being used to back your borrowing contracts. It's a crucial metric for risk management, as it helps you ensure that you're not over-leveraged.

Liquidation Risk

This feature provides an estimate of the risk that your collateral will be liquidated due to a drop in its value. It's a crucial tool for risk management, helping you to monitor market conditions and adjust your collateral if necessary to avoid liquidation.

Transactions

This section provides a comprehensive view of your trading activities on Secured Finance.

Active Positions

This tab provides a detailed view of your current lending and borrowing positions. It includes information such as the contract's maturity date, interest rate, and the amount of digital asset involved.

Open Orders

Here, you can view all your current open orders. This includes details such as the order's price, quantity, and status (filled, partially filled, or unfilled).

Order History

This tab provides a historical record of all your orders. It allows you to track your trading activity over time and can be a useful tool for analyzing your trading strategy and performance.

My Transactions

This tab provides a record of all your transactions on the platform. It includes details such as the transaction type (order placement, order cancellation, etc.), the transaction date and time, and the transaction status.

Overall, the Portfolio Management tab is designed to give users full control over their assets and contracts. It's an essential tool for effective portfolio management on the Secured Finance platform, allowing users to make informed decisions about their digital assets.

Overview

The Points system rewards you for your contributions to the Secured Finance Protocol. By engaging in various activities on the platform, you can accumulate points that reflect your involvement and support.

How to Earn Points

You can earn SFP through several activities:

• Deposits: Earn points by depositing assets into the platform.

• Limit Orders: Provide liquidity to the order book and improve market efficiency.

• Active Positions: Maintain active trading positions to drive ecosystem growth.

• Referrals: Invite new users and earn a percentage of the points they earn.

• Daily Login: Earn points by logging in and connecting your wallet daily.

Points Dashboard

The Points Dashboard allows you to:

• Track Your Points: Monitor the points you've earned from various activities.

• View Leaderboards: See how you rank within the community.

• Access Quests: Participate in active quests to earn additional points.

• Referral Link: Find your unique referral link to invite new users.

More Information

For detailed information on the SFP system, including point calculations and reward structures, please visit our Secured Finance Points (SFP) page.

Why the Zero-Coupon Standard?

The Zero-Coupon standard was chosen for its cost efficiency, simplicity, and low risk. With only two cash flows involved in the transaction - the initial and final exchanges - it saves on gas and operational costs. Investors can enjoy the simplicity of not having to track or reinvest coupon payments. The frequency of transactions is minimized, reducing operational risks.

How does the Zero-Coupon Standard work?

Zero-Coupon bonds are debt securities that do not pay interest (coupons) but are traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value. On the Secured Finance platform, bonds are redeemable at 100.

Example: Consider an example where Bob lends 1,000 FIL for 1 year at 80.00 through our platform. At maturity, he will receive 1,250 FIL, which is calculated as 1,000 * 100 / 80. The Annual Percentage Yield (APY) of this transaction is 25%, as Bob earned 250 FIL from his initial investment of 1,000 for 1 year.

Secured Finance's Loan Market Platform incorporates an on-chain orderbook system, a pioneering application in the DeFi space. This system facilitates the trading of Zero-Coupon bonds with a specific maturity date. To ensure clarity, we've defined some key terms used on our platform:

What is an Orderbook?

It is an electronic list of buy and sell orders for Zero-Coupon bonds, organized by price level. It enhances transparency by providing visualized information on price, availability, depth of trade, and more.

What is a Borrow Order?

It refers to an order to borrow crypto assets, equivalent to selling a bond on our platform. After pledging sufficient collateral, you can place a sell order, selling a Zero-Coupon bond and receiving the equivalent cash upfront. You then owe the obligation to repay the money with interest at maturity.

What is a Lend Order?

This is an order to lend, equivalent to buying a bond. You buy a Zero-Coupon bond at a discount, which will be redeemable at par at expiration.

What is a Zero-Coupon Bond (ZC bond)?

A Zero-Coupon bond is a debt security that doesn't pay interest (coupons) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value. On our platform, bonds will be redeemable at 100.

At Secured Finance, we offer our users the innovative opportunity to use Zero Coupon Bond (ZC) as collateral for borrowing. This feature allows participants to leverage yield spread trading while enjoying the benefits of lending and borrowing on our platform. However, it's important to understand the specific conditions and risks associated with using ZC as collateral.

Collateral Valuation

When leveraging Zero Coupon Bonds (ZCs) as collateral on our platform, the valuation haircut is strategically set at 20% for loans in the same currency as the ZC. Conversely, for loans in a currency different from that of the ZC, a 100% haircut is currently applied.

This nuanced approach to collateral valuation is essential for users to understand as they devise their trading strategies and manage their collateral assets effectively, with the added dimension of community-driven governance enhancing the platform's adaptability and responsiveness to user needs.

Understanding Collateral Utilization Ratio and LTV with Zero Coupon Bonds

Leveraging Zero Coupon Bonds (ZCs) as collateral on our platform requires an understanding of both the collateral utilization ratio and the Loan-to-Value (LTV) ratio, especially for loans in the same currency as the ZC. Our approach aims to maximize the efficiency of your assets while maintaining a prudent risk profile.

ZC Collateral Utilization

When you secure a loan in the same currency as your ZC, our system implements a specialized collateral utilization strategy. If you're borrowing against a ZC that's denominated in the same currency, the platform prioritizes this ZC as your primary collateral. This prioritization allows for the ZC to be utilized first, up to 80% of its Present Value (PV), before any cash collateral is considered. This method ensures that your ZC assets are leveraged effectively, enhancing your borrowing capabilities. Our platform display the ZC utilization ratio for each currency by the formulaic below.

Adjusted Loan-to-Value (LTV) Calculation with ZC Collateral

The standard formula for calculating the Loan-to-Value (LTV) ratio is:

However, when the obligation currency matches the currency of the ZC you own, the LTV calculation adjusts to incorporate the ZC collateral. The adjusted formula becomes:

In this formula, ZC Collateral is considered alongside cash collateral. We aggregate the cash and the Consumed ZC amount to cover the obligation. The system is designed to cover 125% of the obligation and utilize up to 80% of the total ZC amount.

Even without pledging any Cash Collateral, you can still borrow in the same currency to engage in Yield Spread Strategy.

Liquidation Process with ZC collateral

In the event of a liquidation trigger, liquidators have the flexibility to choose the currency of both the obligation and the collateral, which may include the ZC. It's important to note that even if the Loan-to-Value (LTV) threshold is breached due to fluctuations in one currency, your position may be subject to liquidation in another currency along with the collateral.

This mechanism underscores the importance of vigilant collateral management. Users must be aware that the liquidation process can lead to scenarios where the collateral, including ZC, is liquidated in a currency different from the one that triggered the LTV threshold.

Risk Management

Utilizing ZC as collateral offers a unique avenue for capitalizing on yield spreads. However, it comes with its set of risks, primarily due to price fluctuations and the potential for liquidation in a different currency. We urge our users to exercise caution and continuously monitor their collateral positions to mitigate risks and avoid unintended liquidations.

This case study aims to elucidate the practical application of Zero Coupon Bonds (ZC) as collateral within our platform, focusing on the calculation of ZC utilization ratios, the overall collateral utilization ratio, and ZC collateral liquidation. Through a detailed example, we will explore how these metrics are displayed and calculated, providing insights into effective collateral management.

Example Scenario: Leveraging ZC Bonds Without Cash Collateral

Consider an user A who holds a ZC bond with a Present Value (PV) of 1,000 USDC. Opting to use this ZC bond as collateral, the user A seeks to borrow without pledging any cash collateral. Under our platform's guidelines, he is eligible to borrow up to 80% of the ZC's PV, equating to 800 USDC.

Upon borrowing the 800 USDC, the ZC utilization ratio for the user A reaches 80%, reflecting the proportion of the ZC bond's value that has been leveraged. However, the total collateral utilization ratio presents a more comprehensive view of his position.

Calculating Total Collateral Utilization Ratio

The total collateral utilization ratio is calculated by considering both the borrowed amount and the utilized ZC as part of the collateral base. This calculation is crucial for understanding the full scope of collateral engagement on the platform. In this scenario, the formula is applied as follows:

Given that the his obligation is 800 USDC and the utilized ZC amounts to 1,000 USDC, the presence of the borrowed 800 USDC as part of the collateral (under the Secured Finance Vault) modifies the equation. Thus, the total collateral base is the sum of the ZC's PV and the borrowed cash, totaling 1800 USDC. The calculation becomes:

This results in a collateral utilization ratio of approximately 44.44%, illustrating a more favorable leverage position than indicated by the ZC utilization ratio alone.

In the scenario described, User A has the capability to withdraw up to 800 USDC cash into their wallet. Consequently, both the ZC utilization and the overall Collateral utilization ratios stand at 80%. It's crucial to remain vigilant regarding potential sudden fluctuations in the ZC bond price. Should these ratios exceed 80%, it would initiate a liquidation process.

Case Study: Liquidation of ZC Collateral

In this scenario, let's consider User A, who has utilized a Zero Coupon Bond (ZC) as collateral to borrow funds. User A successfully borrows 800 USDC, which leads to a ZC utilization of 80% and a collateral utilization also at 80% without any cash collateral position.

Liquidation Mechanics

Should the price of the ZC bond experience a sudden decline, the liquidation process may be initiated. Same as the normal liquidation process, the liquidator is permitted to liquidate up to 50% of User A's obligation, which amounts to a maximum of 400 USDC. The liquidation process involves User A losing a portion of their collateral equal to the liquidated amount plus a liquidation fee. The total cost to User A, including the liquidation fee of 7% (5%:fee for liquidator, and 2%:reserve fund), would be 428 USDC (400 USDC + 28 USDC).

Post-Liquidation Position

After the liquidation, User A's remaining obligation is reduced to 400 USDC, while the ZC collateral is diminished to 572 USDC (1000 USDC original collateral - 428 USDC liquidated amount). Consequently, the ZC utilization ratio post-liquidation adjusts to approximately 69.93%, calculated as follows:

Overview

The Secured Finance platform is equipped with unique features designed to enhance user experience and efficiency. This section provides an overview of these features and how they contribute to the platform's functionality.

On-Chain Orderbook System

Our platform leverages a sophisticated on-chain orderbook system, enabling users to place and manage market and limit orders efficiently and securely with reduced gas costs.

Zero Coupon Bond Standard

A groundbreaking bond standard that allows users to purchase bonds at a discount and receive the full face value upon maturity, eliminating the need for periodic interest payments.

Fixed Maturity Standard

Our fixed maturity standard ensures that all lending and borrowing positions have predetermined maturity dates, offering transparency and predictability for users.

Auto-Rolling

With our innovative auto-rolling feature, users' positions are automatically extended to a new maturity date upon reaching maturity, simplifying the process and maximizing returns.

Itayose Process

Our Itayose process enables batch matching of orders at specific intervals, optimizing order execution and enhancing liquidity on the platform.

The Itayose is a key process in our protocol that determines the 'opening price' for a new orderbook every quarter when the nearest orderbook matures. We accept 'pre-open orders' 7 days before the new orderbook starts trading and use the Itayose process to set the opening price. Only limit orders are accepted before trading begins.

Itayose Rules

Before Itayose

Seven days before the launch of new tenor periods, our platform will indicate that these new tenor periods are available for users to place their pre-open orders. Users can only place 'limit orders' on one side. One hour before the launch, the orderbook will be frozen, and users will not be able to take any action on the orderbook. This includes placing, amending, or canceling orders.

During Itayose

Once the orderbook is frozen, the Smart Contract for the Itayose process will be activated. This process consolidates all overlapping bids and offers. If there are no overlapping orders, there will be no matching, and the market will open without an opening price.

For all overlapping orders, we calculate the opening price based on:

• The sum of the lend amount

• The sum of the borrow amount

• The execution amount of the opening price ("first come, first serve")

• The imbalance between the lend and borrow

• If there is no imbalance, the mid-price is taken

After Itayose

All orders that were not filled by the Itayose process will remain in the Orderbook and start trading normally after the market opens. All orders that were executed by the Itayose process will be filled at the 'opening price'.

The Itayose Method is a critical part of our protocol, ensuring a fair and efficient opening of each new orderbook.

Secured Finance aims to provide a diverse range of loan assets to its users. To achieve this, we have established procedures for both listing new assets and delisting existing ones. This page outlines these processes in detail.

Listing Process: Itayose Method

Pre-Open Orders

Seven days before the launch of new tenor periods for a newly listed asset, users can place pre-open 'limit orders' on one side of the orderbook. The orderbook is frozen one hour before the market opens, preventing any further actions like placing, amending, or canceling orders.

Orderbook Expansion

Initially, four orderbooks are opened, representing approximately a 1-year duration. Every week, an additional 3-month orderbook is added, eventually expanding to eight orderbooks to cover a 2-year duration, aligning with other assets on the platform.

Delisting Process: Redemption

Auto-Rolling Cessation

The first step in the delisting process is to stop the auto-rolling feature for the asset in question. This means that matured loans will not be automatically reinvested into the nearest 3-month bucket.

Loan Expiry

Loans for the delisted asset will be allowed to expire naturally, without any forced liquidation or closure.

Repayment and Liquidation

After the loan's maturity, borrowers have a one-week window to repay their debt. Failure to do so will result in the liquidation of the borrower's collateral, ensuring lenders can recover their funds and maintain protocol stability.

Asset Redemption

Finally, after the 7-day repayment period, lenders can redeem their entire asset along with the accrued interest.

By following these procedures, Secured Finance ensures a smooth transition for both listing and delisting assets, maintaining the integrity and stability of the marketplace.

In traditional finance, bond redemption at maturity requires manual reinvestment, which can be cumbersome. Secured Finance, however, has integrated an auto-roll feature into its protocol, streamlining the reinvestment process for users. This feature automatically reinvests matured loans into the nearest 3-month bucket, offering several key advantages:

Mitigation of Reinvestment Risk

Reinvestment risk, the possibility of not finding similar reinvestment conditions at maturity, is a common concern with fixed-term investments. The auto-roll feature mitigates this risk by rolling over positions to the nearest market at a close-to-mid price.

Cost Efficiency

By eliminating the need to find another counterparty on the order book for reinvestment manually, the auto-roll feature reduces operational costs. This not only results in cost savings for users but also helps maintain the total value locked (TVL) in the protocol.

Continuous Growth

The auto-roll feature ensures a seamless reinvestment process, fostering continuous growth for users and enhancing the overall value proposition of the Secured Finance platform.

In essence, the auto-roll feature is designed to provide an easy, efficient, and smooth reinvestment experience, contributing to the overall user-friendliness of the Secured Finance platform.

Secured Finance's Loan Market Platform operates on a Fixed Maturity Standard, with up to eight distinct order books each representing a unique time horizon. These range from 3 months to 2 years, with a maturity gap of three months. Each order book exists until its maturity, with the duration shortening day by day. All currencies adhere to the same "Maturity".

When is the Maturity?

The maturity of our Loan Market is set on the last Friday of the contract month every March, June, September, and December. This convention aligns with the listed future market, providing maximum utility to our users for reference and hedging purposes.

What happens at Maturity?

To keep the orderbooks current, at Maturity, we will deactivate the orderbook that is expiring each quarter and start a new orderbook with the Itayose process. This new orderbook is added to the farthest term, currently the 2-year order book. For more details, please refer to the 'Orderbook Life Cycle' section.

The auto-rolling price discovery mechanism is a critical component of Secured Finance's platform. It ensures that the pricing for the quarterly roll is calculated accurately and fairly, preventing potential price manipulation. This mechanism is designed to adapt to varying market conditions, ranging from normal and liquid conditions to less liquid or extreme situations with no liquidity.

The mechanism operates in three stages, each corresponding to a different market condition:

Normal and Liquid Condition

In a normal and liquid market condition, we observe the transactions that occur within the 6-hour window before maturity. The roll price is calculated based on the volume-weighted average price of these transactions. This method ensures that the roll price accurately reflects the market conditions and transaction volumes during this period.

Less Liquid Condition

Extreme Condition

In an extreme market condition, where no transactions have occurred for the last 3 months, we use the price of the previous roll. This method ensures that the roll price is still determined based on market data, even in situations of extremely low liquidity.

Special Case (Only for the Initial Roll)

In the special case of the initial roll, if no transaction occurs on the 2nd order book until the first roll, we use the opening price of our product launch, adjusted for duration. This method ensures that the initial roll price is still based on market data, even if no transactions have occurred.

This mechanism is part of our commitment to providing a transparent, fair, and efficient platform for our users. By carefully designing our price discovery process, we aim to minimize the potential for price manipulation and ensure that our prices accurately reflect market conditions.

Trading Fees

Only the price taker will pay the transaction fee of 0.25% (25 basis points) of the loan notional amount for a 3-month duration on our loan platform. You pay 'No' transaction fee if you place a limit order. While you place the market order, you pay 0.25 ETH (or equivalent currency) when you borrow or lend 100 ETH for a 3-month duration.

The market taker fee will linearly increase/decrease depending on the duration (1% annum), included in the transaction, and charged by Future Value.

Liquidation Fees

As a DeFi project, Collateral Management is critical to secure the protocol. Hence, we ask borrowers to pledge over-collateral before borrowing the fund. And the liquidation mechanism is similarly crucial for our protocol to secure the lenders' money. We charge 7% of the liquidated notional value as a fee slashing from collateral, which will be split between the recovery fund and the liquidators depending on the duration.

Auto Roll Fees

Fee Reserve and Distribution

We reserve part of the fee above to our 'Reserve Fund' to secure the protocol from the incidents, i.e., the black swan event. The rest of the fee will be distributed to the community depending on the contribution.

Protocol Safety Measures are a critical aspect of our protocol. We have implemented robust mechanisms to ensure the safety and stability of our platform. This includes the Emergency Termination Procedure and the Circuit Breaker.

Mark to Market is a standard accounting practice adopted at Secured Finance, which entails recording the fair value of assets and liabilities, thereby providing a realistic appraisal of the financial health and the risk profile of positions on our platform. This practice is indispensable for maintaining transparency and accuracy in financial reporting, which in turn fosters trust and confidence among our users. The Mark to Market mechanism also plays a pivotal role in ensuring that the pricing of assets is aligned with the current market conditions, which is vital for effective risk management.

The Circuit Breaker is a protective mechanism used in the bond market to prevent excessive price movements and maintain stability. It is an automatic mechanism that temporarily suspends trading if there is a sudden and significant price movement. The Circuit Breaker is triggered when the price of bonds rises or falls beyond a certain pre-determined limit during one block.

The Minimum Collateral mechanism is a crucial safeguard designed to ensure that every position on our platform is sufficiently backed by collateral. This practice minimizes the risk of financial loss, both to the individual trader and the broader market, especially in volatile market conditions. By stipulating a minimum collateral requirement, we create a buffer against adverse market fluctuations, ensuring that positions remain solvent and the system resilient.

Emergency termination is a crucial functionality designed to address unforeseen situations that could compromise the integrity of our protocol. This includes scenarios such as hacks or unexpected bugs. When this functionality is executed, all markets are immediately halted, and the protocol becomes non-operational. Users can then only redeem their positions and withdraw their tokens.

In the Secured Finance ecosystem, Liquidators play a crucial role in maintaining the health and stability of the decentralized loan protocol. As a Liquidator, you have the unique opportunity to participate in the liquidation process, ensuring the safety of lenders' funds while potentially earning rewards for your efforts. This section will guide you through how you can become a Liquidator, how the liquidation process works, and the associated risks and rewards.

Becoming a Liquidator:

To become a Liquidator, you don't need to meet any specific criteria. Any user, even if smart contracts, can call the liquidation process.

How Liquidation Works:

When a borrower's collateral value falls below the liquidation threshold, their loan becomes susceptible to liquidation. As a Liquidator, your role is to step in and purchase the undercollateralized loan at a discounted price, providing the borrower with an opportunity to recover their position. By liquidating the loan, you allow lenders to recoup their funds and mitigate the risk of defaults.

Risk and Rewards:

Being a Liquidator comes with both risks and rewards. The main risk is the potential price volatility of the assets involved in the liquidation process. The value of the collateral may fluctuate rapidly, affecting the profitability of the liquidation.

On the other hand, the rewards for successful liquidations can be lucrative. Liquidators stand to receive a portion of the discounted collateral acquired during the liquidation. This reward serves as an incentive for participants to actively engage in the liquidation process and contribute to the protocol's stability.

What is Mark to Market

Mark to Market is a pricing methodology where the value of an asset is calculated based on its current market value. In this methodology, the asset is valued at the current market price instead of its book value. We use this price to evaluate Profit and Loss (PnL) and Loan to Value (LTV) ratio.

Our Method - Mark Price

In our approach to mark-to-market valuation, we focus on zero-coupon bond market pricing, utilizing the 'Mark Price' as our benchmark. This price is derived from the Volume Weighted Average Price (VWAP) calculated over the duration of a single block. Notably, our methodology emphasizes the use of Future Value (FV) in these calculations, as opposed to the more traditional Present Value (PV) approach.

Example of FV approach for the VWAP

In the scenario where transactions A and B occur within the same block, a traditional application of the Volume Weighted Average Price (VWAP) would give a value of 93.00, as illustrated in the example below. However, this traditional VWAP calculation does not adequately represent the relationship between Present Value (PV) and Future Value (FV). To address this, we calculate our Block Price by adopting a methodology centered on the FV approach, ensuring a more accurate reflection of market dynamics and valuation in our decentralized finance context.

To safeguard against potential price manipulation within a block, we have implemented a minimum volume threshold. This measure ensures that only transactions meeting this specified volume criteria contribute to the block's pricing, thereby maintaining the integrity and reliability.

Current Volume Threshold

Should the trading volume within a block fall below our established threshold, we opt not to record the block price for that particular interval. Instead, we continue using the price from the most recent block that met or exceeded this volume threshold for our mark-to-market calculations. This threshold is not arbitrary; it is meticulously calculated for each currency based on the spot price provided by the Chainlink oracle, ensuring accuracy and relevance to current market conditions.

Waterfall Mechanizm

1. Use ‘Opening Price’ for ‘Mark Price’ when Itayose Process Executed

2. Use ‘Auto-roll Price’ for ‘Mark Price’ if there are no block price

3. Use ‘Last traded price’ and/or ‘VWAP’ for ‘Mark to Market’ price during the same block if there is no matching orders have been executed before and no ‘Mark Price’ exist

   • If there are no ‘Mark Price’ exist yet, we remove the Volume Threshold above and use ‘last traded price’

Why Liquidation process is important?

The liquidation process holds paramount importance for Secured Finance as a Decentralized Loan Protocol, primarily for two crucial reasons:

1. Mitigating default risk: Through the liquidation process, lenders are safeguarded against the risk of default by borrowers. When a borrower's collateral value falls below the liquidation threshold, their loan becomes eligible for liquidation, ensuring the lenders can recover their funds.

2. Maintaining protocol stability: The liquidation process plays a pivotal role in preserving the stability of the DeFi loan protocol. It prevents the accumulation of undercollateralized loans. Excessive loan defaults can deplete the protocol's reserves, potentially leading to system instability. By executing liquidations, the protocol can maintain a healthy balance and ensure its overall stability.

How does it work?

Loan to Value

The ratio of the borrower's debt to the collateral, also known as Loan to Value (LTV), indicates the buffer available until liquidation. The platform displays this ratio in the image below, where Green represents low risk, Yellow indicates moderate risk, and Red signifies high risk on the portfolio management tab.

Threshold

The liquidation threshold for all currencies in our protocol is currently set at 80%. However, we continuously assess and adjust this ratio based on market conditions, taking into account factors such as the volatility and liquidity of each digital asset. It is imperative for each borrower to be initially over-collateralized to ensure the security and stability of the lending process.

Price Oracle

We use an on-chain live calculation based on the chainlink price feed for the collateral value.

Liquidation Penalty

There would be 2 main patterns that trigger the liquidation. One is your collateral value decrease against your borrowed asset. The currency exchange rate represents this. The other is the borrowed asset value increase compared to your collateral. This might occur when the borrowing rates go lower.

Case study

Bob borrowed 1,000 FIL with 15,000 USDC for 1y (365 days) at 20% at FILUSDC 10.0. Hence Bob's borrowed value is 10,000 USDC (= 1,000 FIL * 10.0 FILUSDC FX rate), and his LTV is 66.7% (10,000/15,000).

IF the FILUSDC exchange rate spike to 12.0 from 10.0 right after he borrowed, the value of his collateral decreases against his liability. In other words, his liability increased to 12,000 USDC (=1,000 FIL * 12.0 FILUSDC FX rate). As a result, 50% of his position will be subject to liquidation since LTV reached 80% (12,000/15,000).

Our Smart-contract will repay half of his obligation, helped by the liquidator, which is 500 FIL. Instead, Bob will lose his collateral of 6,420 USDC (=500 FIL * 12.0 FILUSDC FX rate * 107% penalty).

After the liquidation process, Bob's position will be 500 FIL cash, 500 FIL borrowed with 8,580 USDC collateral (15,000 - 6,420 USDC). His LTV recovered to 69.9% (=500 FIL * 12.0 FILUSDC FX rate / 8,580 collateral).

Emergency global settlement is a critical functionality designed to address unforeseen situations such as hacks or unexpected bugs that could compromise the integrity of our protocol. When this functionality is executed by an admin, all markets are immediately halted, and the protocol becomes non-operational. Subsequently, users can only redeem their positions and withdraw their tokens.

The Emergency Global Settlement process:

1. Admin initiates an emergency global settlement.

   • All markets and the Token Vault are brought to a stop.

   • Caches of all price feeds are taken for reference.

2. Users execute redemptions.

   • The collateral token ratios in the Token Vault are calculated.

   • Users' total assets and positions in the Present Value (PV) are computed using the price feed caches. Based on the ratios, their assets and positions are replaced with collateral tokens.

   • Positions of users are reset after the replacement.

3. Users can then withdraw the replaced tokens after redeeming them.

It's important to note that even users who only have deposits without positions will have their deposits replaced with collateral tokens based on the ratios in the Token Vault.

Example Scenario

Let's illustrate the emergency global settlement process with the following example:

Token Vault Holdings:

• Total USDC: $100,000

• Equivalent ETH Value: $200,000

Ratio: 1 USDC to 2 USD worth of ETH

User's Positions and Deposits:

• ETH and FIL Lending Positions (PV value: $10,000)

• ETH Deposits (Valued at $5,000)

Total Funds: $15,000

After Emergency Global Settlement:

• The user's lending positions and deposits are reset.

• The user receives tokens worth $5,000 of USDC and ETH valued at $10,000 as per the replacement.

• The user can withdraw $5,000 in USDC and $10,000 worth of ETH from their account.

In the case of Zero Coupon Bonds, which begin trading at a significant discount and mature at par value (100 on our platform), borrowers are required to progressively increase their collateral over time.

To safeguard borrowers from the risk of liquidation, while also minimizing insolvency risks for our protocol, we mandate a minimum collateral requirement that varies based on the currency and the duration of the loan.

To secure user assets and protect the protocol from market exploitation, we introduce the minimum collateral base price (Base Price: BP). It will be used to calculate the required collateral for borrowers such that the input bond price is lower than the BP.

The BP is determined according to the following formula and pre-set reference base prices, categorized by the asset's yield range. It is an interpolated value with the corresponding duration of the bonds t: time to maturity, using two reference base prices, BP at Maturity and BP of 1y Duration.

Formulaic:

Example:

1) Category A, 0.25y Duration:

2) Category C, 1.0 Duration:

3) Category F, 1.5y Duration:

Setting Category

Category will be set depending on the APR of the currency.

Current Category

We review the category in quarterly basis and revise if needed with community vote on the APR movement during the observing period.

The Circuit Breaker is a protective mechanism used in the bond market to prevent excessive price movements and maintain stability. This user guide will explain what the Circuit Breaker is and why it is important for bond market participants.

What is the Circuit Breaker in Bond Market?

The Circuit Breaker in Bond Market is an automatic mechanism that temporarily suspends trading if there is a sudden and significant price movement. The Circuit Breaker is triggered when the price of bonds rises or falls beyond a certain pre-determined limit. The purpose of the Circuit Breaker is to prevent market participants from trading under extreme market conditions and to protect investors from significant losses due to sudden price fluctuations.

Why is the Circuit Breaker Important?

The Circuit Breaker is important for several reasons. First, it helps prevent panic selling or buying during periods of extreme volatility, which can cause prices to move rapidly and unpredictably. This can lead to significant losses for investors who are not able to react quickly enough. Second, it provides market participants with time to assess the situation and make informed decisions about their trades. This helps to prevent knee-jerk reactions that can lead to further market disruption. Finally, the Circuit Breaker promotes overall market stability by reducing the likelihood of extreme price movements and volatility.

Any specific benefit from Circuit Breaker for crypto trading?

By setting the value threshold of the Circuit Breaker to dynamically change based on interest rates or loan duration, you can effectively mitigate the impact of a Flash loan attack. Restricting the price movement within a single block ensures that any potential damage is contained and doesn't escalate rapidly.

How does it work for Secured Finance platform?

At our trading platform, we have implemented a circuit breaker mechanism that effectively sets price limitations for market movements within a single block. This mechanism applies to both our 'market order' and 'limit order' functions, ensuring that all orders adhere to a well-defined 3-threshold system. By doing so, we guarantee that orders remain within acceptable price ranges, effectively preventing extreme volatility and maintaining stability in our Zero Coupon bond market. The circuit breaker serves as a crucial tool to promote a secure and reliable trading environment, safeguarding both traders and the overall integrity of our platform. For a more detailed calculation, please consult the 'Formulaic for Circuit Breaker'.

First of all, it is necessary to identify the target user through off-chain actions before executing liquidation. The function getCoverage() is used for this purpose. A user becomes a target for liquidation if this function returns a value of 8000 or higher. For more details, refer to the documentation at TokenVault Documentation.

To execute with liquidation, you must specify the currency of the collateral to be received, the currency of the debt to be liquidated, and its maturity. This is done by calling the function executeLiquidationCall(). To maximize the profit of the liquidation in the case that users have collateral or debt in multiple currencies, you need to estimate each case and choose one of them through off-chain action. For more details of the function, refer to the documentation at LendingMarketController Documentation.

Upon executing this process, the liquidator receives the liquidated debt and the collateral plus a 5% fee. However, if the liquidator's collateral coverage exceeds 80% at the end of the process, this liquidation process will fail.

When executing the liquidation process through a smart contract, functions executeOperationForCollateral() for receiving collateral, and executeOperationForDebt() for receiving debt, can be set as callback functions. For usage, please refer to the sample contract at Liquidator Contract.

During the liquidation process, these callback functions enable the handling of received collateral by swapping it through external services or unwinding the received debt. The process flow is as follows:

All audit reports are stored at the links listed below.

Contract Addresses

Audit Report

Our trading platform incorporates a circuit breaker mechanism to regulate price fluctuations within a single block. This feature is applicable to both 'market orders' and 'limit orders,' and operates to ensure that orders are executed within acceptable price ranges. The primary objective of the circuit breaker is to mitigate extreme volatility and maintain equilibrium in our Zero Coupon bond market.

Circuit Breaker Calculation

• Limitation on Downward Price Movement:

  The platform restricts the downward price movement to 5% from the Moving Average of the most recent 5 Reliable Block Prices.

• Limitation on Upward Price Movement:

  Conversely, upward price movement is capped at 10% from the Moving Average of the last 3 Reliable Block Prices.

• Minimum Price Fluctuation:

  The market is permitted to move a minimum of 2.00 for downside and 7.00 for topside.

Case Study for Practical Understanding

Consider a situation where the last 5 reliable Block Prices are 80.60, 80.40, 80.30, 80.10, and the most recent is 79.60.

• Downward Price Limit:

Moving Average of the most recent 5 reliable block prices is

Since movement is limited to 5% to downside, the lowest bound will be

No orders lower than 76.19 will be executed during the next block.

• Upward Price Limit:

Moving Average of the most recent 3 reliable block prices is

As topside can move up to 10%, the upper limit will be

• Exceptional Case: Minimum Movement:

  For instance, if the last 5 reliable block prices were 20.00, 18.00, 16.00, 14.00, and 12.00, the Moving Average would be 16.00. Normally, the downward movement would be limited to 15.20 which is 95% of the 16.00. However, the platform allows for a minimum market movement of 1.00, setting the lower limit at 14.00 (= 16.00 - 2.00).

A Red Black Tree is a balanced binary search tree that enables various operations such as data insertion, deletion, and search to be executed with a computational complexity of O(log n). In the context of Secured Finance, each node of this tree represents the Price in the order book, and it is linked to the corresponding Open Orders using a LinkedList, allowing efficient data management.

By utilizing the Red Black Tree, the gas cost associated with open order creation and deletion is significantly reduced to O(log n), resulting in substantial gas cost reductions. Moreover, for data updates, it is only necessary to update the target data and its adjacent data, eliminating the need to update the entire dataset and consequently avoiding gas costs proportional to the total data volume.

Furthermore, Secured Finance extends the functionality of the Red Black Tree by introducing a process to Unlink specified nodes. This Unlink operation effectively detaches all the data associated with the subtree rooted at the specified node. As a result, by simply Unlinking certain nodes in the tree, all the data related to matched orders in the market can be removed from the order book.

Within a single order book, there are two separate Red Black Trees for managing Borrowing Orders and Lending Orders separately.

For more details on the process of unlinking nodes in the tree, please refer to the following documentation. (TBD)

Particularly, gas-intensive processes such as creating open orders, executing market orders, and auto-rolling result in increasing gas costs proportional to the data volume, according to Solidity's characteristics. In some cases, these processes may even approach Ethereum's block gas limit, potentially causing execution issues.

The key points of Gas cost for On-chain orderbook:

These challenges prompted Secured Finance to address them effectively and enable a practical gas cost for the full on-chain orderbook system. To achieve this, we introduced red-black trees, lazy evaluation, and the concept of Genesis Value. These solutions ensure the smooth operation of the on-chain orderbook system, optimizing gas costs and enhancing the overall efficiency and performance of the platform.

In the Secured Finance protocol, Genesis Value (GV) revolutionizes asset management by offering a more efficient and cost-effective approach to auto-roll and position calculations. GV is a dynamic value derived from a combination of Future Value (FV) and Compound Factors. This section aims to provide a comprehensive explanation of what is Genesis Value, how it works, and why it is utilized.

What is Genesis Value:

Genesis Value represents the Asset Value of the Genesis Date. This serves as an important pillar of the protocol's Lazy Evaluation mechanism and allows for rational asset management without the need to frequently recalculate individual positions on the contract.

How Genesis Value Works:

The Genesis Value calculation is initiated based on a predetermined Genesis Date, which marks the starting point. For instance, if the Genesis Date is set to 30th June 2020, the protocol will begin GV calculations for this date.

Upon auto-roll, as the nearest order book matures, the protocol captures the Compound Factor for the next 3-month tenor. This Compound Factor acts as the auto-roll price to calculate Future Value. Simultaneously, shorter than 3-month positions are converted into Genesis Value using the Compound Factors.

Why Genesis Value is Utilized: