📀Minting USBD
Explaining the Minting Process
Collateral (like LSTs or other approved assets) must be locked in order to produce USBD tokens, which are subsequently usable throughout the DeFi ecosystem. By ensuring that every USBD is supported by enough collateral, the minting process preserves the stability and value of the stablecoin.
Users mint USBD in 5 steps:
Connect Wallet to the BIMA Protocol: Supported wallets include Ledger, MetaMask, XVerse, and other major wallets.
Select Vault for LST Staking or Bitcoin Staking: You will be able to see several vaults for each supported LST after linking your wallet. Choose the vault where you want to deposit your LST.
Stake Asset: Enter your preferred deposit amount for your LST or BTC. as well as the collateral ratio. The collateral value needs to match the necessary collateral ratio.
Transaction Confirmation: The transaction details, such as the quantity of USBD to be minted and the collateral to be locked, are reviewed by the users. The transaction is handled on the blockchain when it has been verified.
Claim USBD: The user's wallet is credited with the newly created USBD tokens. Users are able to check their updated balance and validate the transaction.
Minting Requirements and Calculations
The Minimum Collateral Ratio (MCR) will be 150%.
Users with more than 200% collateral ratio can open a trove.
A minimum of 200 USBD must be minted.
Users must deposit approximately 800 USD worth of BTC to mint more than 200 USBD.
Do I have to pay fees as a borrower?
When borrowing USBD from your Vault, a one-time borrowing fee is applied to the amount drawn and added to your debt. This variable fee (determined algorithmically) has a minimum value of 0.75% under normal operating conditions. During Recovery Mode, the fee is reduced to 0%.
A 200 USBD deposit, known as the Gas Compensation, is also required when opening a Vault. This acts as a safety deposit: if your Vault ever enters liquidation mode, this amount serves as an incentive for liquidators to process your liquidation. Liquidations aren't automatic and require an external call to our smart contracts. When a liquidator processes a liquidation, they receive this 200 USBD as compensation for the gas costs they incur, plus 0.5% of the collateral being liquidated.
If you never get liquidated and choose to close your position by repaying your debt and withdrawing your collateral, the 200 USBD Gas Compensation will be automatically burned. You won't need to pay any additional fees for this process.
Another consideration is the market price of USBD at the time of repayment. If USBD is trading above $1 (for example, at $1.03) when you need to repay your loan and you have to purchase it from the market, you're effectively paying a premium of 3%. You can avoid this by keeping your borrowed USBD available for repayment or by waiting for USBD to return to its peg with USD.
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