What is FxDAO?
FxDAO is a decentralized borrowing protocol that allows the issuance of stablecoins by letting users lock Lumens into Vaults as collateral. The issuance of the stablecoins is open to the public, and so do the liquidations. Loans are paid out in selected denominations by the user (USD, EUR, GBP, etc.) or the one available at the moment. Users need to keep a minimum collateral ratio or could face a liquidation of the collateral.
FxDAO is decentralized, non-custodial, properly structured, permission-less and governed by its token holders.
Why is FxDAO special?
We believe our protocol is special thanks to these:
Decentralized from the ground: We have been watching other DAOs for the past few years and have learned how not to decentralized a project, FxDAO is structure in the correct way which the law allows it to be as decentralized as possible.
Low and flat interest loans: By using a simple and flat rate, borrowers can plan their positions without the risk of unpredicted rates.
Low collateral ratio: Thanks to an efficient redeem and liquidation process, the protocol can offer a competitive collateral ratio.
Open processes: Liquidation of Vaults who felt below the minimum requirements is open and everybody on the network can participate, stablecoins are redeemable at face value at any time and no permission is required for the creation of Vaults.
Community governed: With a fair distribution and clear rules which don't benefit big pockets, FxDAO is truly governed by its community.
Why will people use FxDAO?
There are multiple reasons why a protocol like FxDAO is needed but these are the key use cases for it:
Users who want liquidity against their lumens but don't want to sell them.
Users who prefer to diversify their funds between multiple stablecoins, currently on Stellar the only highly liquid and trusted stablecoin is USDC
Users who would like to participate in the protocol in order to earn its governance token.
Users who want to benefit from rewards given by the protocol
Users who would like to leverage their Lumens positions.
A Vault is a place where the collateral is deposited to issue stablecoins against the collateral.
The Collateral Ratio is the ratio between the value of your collateral in terms of the stablecoin issued, this ratio will fluctuate every time based on the Collateral. You can adjust this ratio either by paying off part of the loan or by adding more Collateral.
Minimum Collateral Ratio
This is the minimum ratio before a Vault fall into the Liquidation process. This is currently set at 110%*.
Any user, contract, etc who interacts with FxDAO.
Minimum Holding Requirement
The Minimum Holding Requirement is a rule which Participants need to comply to use some tools from the protocol. Currently, this is set at one* (1) Protocol's Token, this means that a Participant needs to hold one* (1) amount of the Protocol's Token when the transaction is sent to the network.
A Liquidator is any Participant who meets the Minimum Holding Requirement and closes a Vault that is in Liquidation status.
The Share Rate is the percentage at which an specific amount is split between Participants and the Foundation, currently set at 0.005* (0.5%).
* Value could change during the development