Borrowing

USDaf can be minted by borrowing against the 8 collateral assets, USDaf can also be purchased in the open market at any time.

With USDaf, users can select their own interest rate and LTV, opening up a trove. Users can manage or update their troves at any time.

What is a Trove?

A Trove is Liquity’s version of a 'vault'. Each Trove is linked to an Ethereum address, and each address can have multiple Troves.

Each Trove allows you to manage a loan, adjusting collateral and debt values as needed, as well as setting your own interest rate.

Is there a minimum borrow amount?

Yes, a minimum debt of 2,000 USDaf is required for borrowing.

When do I need to pay back my loan?

Loans issued by the protocol do not have a repayment schedule. Users can leave their Trove open and repay debt any time, as long as a healthy Loan-to-Value (LTV) is maintained.

Is there a lockup period?

There is no lockup period. Users are free to withdraw their collateral deposits whenever they want. As an exception, withdrawals by borrowers will be temporarily suspended if the total LTV of a borrow market goes above 75%.

How do I decide my LTV?

This depends on personal preference to individual risk tolerance and how actively a user wants to manage their position(s). To help with the decision, there are preset options and tooltips on the user interface that can serve as a guide.

Please note that these examples are for illustration purposes only and do not represent definitive risk or safety thresholds. It's essential to determine one's own risk tolerance and comfort level as a user.

If a user's LTV becomes too high, the position will be liquidated.

Technical Considerations

The Liquity v2 codebase requires all collaterals to have 18 decimals for precision. Two of the collaterals in USDaf natively only have 8 decimals (wBTC, cbBTC). In order to safely allow these collaterals to be deposited into USDaf, they must have 18 decimals. The solution for this is simple, both collaterals are seamlessly and simply wrapped (again) when users deposit. Any alternate solutions would require modifying the secure Liquity v2 codebase.

The process is seamless and will feel exactly the same as depositing any other collateral. Users will not see an additional transaction pop up as the wrapping process is bundled into their deposit or withdrawal transaction. The wrapper contracts are incredibly simple and are inhereted from OpenZeppelin's standard ERC20Wrapper.sol contract. In addition to this being a standard ERC20 library, the wrapper contracts have been audited twice by Electisec to ensure the utmost security.