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CDP vaults and collateral
vaults and acceptable assets to secure the minting of fxTokens
fxTokens are backed by user deposited collateral in a vault.
collateral is deposited to a 'vault' and 'locked' to provide the security to mint fxTokens - a form of debt.
users can have multiple vaults.
each vault can only issue one fxToken type, e.g. fxAUD, fxJPY, fxCNY but contain one or many forms of collateral.
collateral types differ across a range of risk attributes and as such is is assigned metrics to reflect this.
collateral metrics include:
- min collateralisation ratio (c-Ratio/CR)
- interest rate
- liquidation fee
the combined collateral in an fxToken's vault determines the maximum amount of fxTokens that can be minted, its combined interest rate, and the minimum c-Ratio.
eligible collateral will initially be ETH followed by wBTC, and DAI. As the protocol grows the range of acceptable collateral will expand from project tokens like CRV to interest bearing assets and more.
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each vault combines the risk metrics of its individual collateral assets to calculate a minimum c-Ratio, liquidation trigger, maximum fxToken minting limit and interest rate.
if a vault's c-Ratio falls below the minimum required, it enters the 'at risk', or 'underwater zone' where accrued become 'at risk' and it may become subject to a 1:1 redemption call by external fxToken holders.
vaults that fall below the c-Ratio liquidation trigger will be subject to forced liquidation, to bring the c-Ratio back to the acceptable minimum level for that vault.
Last modified 3mo ago