FAQ

1. What is Bima Protocol? Bima Protocol is a decentralized finance (DeFi) platform that enables users to stake assets like BTC and Liquid Staked Tokens (LST) to borrow USBD, a stablecoin pegged to the US dollar. The platform offers secure vaults, collateralized lending, and opportunities to earn rewards through staking.

2. How does USBD maintain its stability? USBD is backed by over-collateralized assets, meaning that every USBD in circulation is secured by a higher value of crypto assets. Bima Protocol employs automatic liquidation mechanisms, stability fees, and decentralized oracles to maintain the peg and ensure that the stablecoin remains stable even during market fluctuations.

3. What assets can I use as collateral on Bima Protocol? You can use Liquid Staked Tokens (LST) and BTC as collateral. Each type of asset has its own collateralization ratio and debt ceiling, ensuring that all loans are sufficiently backed by valuable collateral.

4. What is the collateralization ratio, and why is it important? The collateralization ratio represents the minimum percentage of collateral required to secure a loan. For example, a 225% collateralization ratio means that you need to lock up $225 worth of assets to borrow $100 in USBD. Maintaining a healthy collateralization ratio helps protect your position from liquidation and ensures the platform’s stability.

5. What happens if my collateralization ratio drops too low? If your collateralization ratio falls below the required threshold, your position will be flagged for liquidation. Bima Protocol will automatically sell a portion of your collateral to repay the outstanding USBD debt and restore the position’s health. Liquidation helps prevent the protocol from becoming under-collateralized.

6. How can I avoid liquidation? To avoid liquidation, you should monitor your collateralization ratio closely and ensure it stays above the required threshold. You can deposit additional collateral or repay some of your borrowed USBD to restore a safe margin. Bima Protocol offers real-time monitoring and alerts to help you manage your position.

7. What fees are associated with using Bima Protocol? Borrowers are required to pay a stability fee, which is an interest rate on the USBD they borrow. This fee helps maintain the health of the protocol and prevents over-borrowing. There may also be gas fees for blockchain transactions like depositing collateral or repaying loans.

8. Can I earn rewards by staking on Bima Protocol? Yes, users can stake Liquid Staked Tokens (LST) in dedicated vaults to earn USBD stablecoins. By staking LST, you can leverage your assets to earn additional rewards while maintaining the security of your collateral.

9. What is the liquidation penalty? If your position is liquidated, a liquidation penalty is applied, meaning your collateral is sold at a discount to incentivize liquidators. This penalty ensures that the liquidation process is completed efficiently but may result in a loss of a larger portion of your collateral than the debt itself.

10. How does Bima Protocol ensure security? Bima Protocol uses smart contracts that are regularly audited for vulnerabilities. Additionally, the platform implements decentralized price oracles, automated liquidation mechanisms, and governance-controlled risk parameters to safeguard user assets and maintain the protocol’s overall security.

11. Can I withdraw my collateral at any time? Yes, as long as your collateralization ratio is healthy and you have repaid any outstanding USBD loans, you can withdraw your collateral from the vault. However, if your position is close to the liquidation threshold, you may need to deposit additional collateral or repay a portion of your debt before withdrawing.

12. How does governance work on Bima Protocol? Bima Protocol is governed by its community of users, who can propose and vote on changes to key risk parameters, such as collateralization ratios, stability fees, and debt ceilings. This decentralized governance ensures that the platform remains adaptable to market conditions and user needs.

If you have more questions or need further assistance, feel free to reach out to the Bima Protocol community or check our documentation for in-depth information.