Issuance mechanism
Similar to most synthetic asset protocols:
- jFIATs are minted by depositing collateral approved by the governance.
- jFIATs are burnt to redeem their collateral.
- There is a flat minting and burning fee and no interest charged.
- jFIATs are over-collateralized and can be liquidated if the collateral ratio falls under a certain threshold.
But unlike other protocols, jFIATs can be minted through borrowing or buying them.
Borrow and repay: self-minting
Anyone can self-mint jFIATs by borrowing them against depositing collateral. As of today, USDC and UMA are the only approved collateral.
There is no user interface to borrow jFIATs, yet.
Buy and sell: pool-minting
Anyone can buy jFIATs from a protocol's liquidity pool, with collateral, or sell jFIATs to a pool, for collateral. As of today, only USDC on Polygon, BUSD on BNB Chain and WXDAI on Gnosis Chain, are approved as collateral (hereafter referred as "USD", "collateral" or "USD stablecoin(s)").
The trade happens without price impact, at the oracle's price (provided by Chainlink). The pool self-mints jFIATs at a fixed collateral ratio (CR) that depends on the jFIATs' volatility against USD stablecoins.
- Whenever a user buys jFIAT, the pool deposits USD to mint them and sell them; for example, if a user buys for 80 jEUR worth $100, the pool mints them at a 110% CR them by depositing 110 USD, and then sells them for 100 USD to the buyer;
- whenever a user sells jFIAT, the pool buys them back and burns them to redeem the USD; for example, if a user sells 80 jEUR worth $100, the pool pays 100 USD to the seller, and then burns the jEUR to redeem 110 USD.
From the user perspective, it is a swap between jFIAT and USD without price impact.
Last modified 3mo ago
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