How to use USDA
Minting Process
To mint USDA from CeDeFi CDP provided by Avalon, there are 2 methods:
Minting USDA with Collateral: Users deposit collateral into Avalon CeDeFi. Currently, collateral options include FBTC, with plans for expanding to more assets soon. Once collateral is deposited, users can request USDA loan. The amount of USDAavailable for borrowing is determined by the Loan-to-Value (LTV) ratio based on the type of collateral. Users have the flexibility to borrow multiple times as long as they maintain the required LTV.
Minting USDA with USDT: Users deposit USDT into Avalon CeDeFi and get USDA at 1:1 ratio.
The process is similar to Avalon's CeDeFi lending. In fact, CeDeFi CDP and lending share the technology and fund flows.
Withdrawing Process
To withdraw collateral from CeDeFi Lending, users follow these steps:
Initiating Withdrawal: Users initiate a withdrawal request for their collateral. The withdrawn amount must meet LTV requirements. If users wish to withdraw all collateral, they must first repay the entire borrowed amount, including principal and interest.
Claiming Collateral: Collateral can be claimed by users within one business day of initiating the withdrawal request.
Repayment Process
To repay USDA loan, users can repay any desired amount up to the total borrowed amount, which includes both principal and interest.
USDT Conversion Process
The unique advantage of USDA is that USDA guarantees its conversion to USDT at 1:1 ratio. To convert USDA to USDT, users need to bridge their USDA to Ethereum mainnet and deposit the USDA to conversion vault. Users will be able to claim their USDT in one business day.
Liquidation Process
If the Loan-to-Value (LTV) ratio exceeds the liquidation threshold, a portion of the collateral will be liquidated to bring the LTV back to a target level. During liquidation, the underlying collateral is sold on a centralized exchange using Avalon's proprietary high-frequency trading algorithm to minimize any impact on market prices.
Integration with DeFi
USDA is an omnichain stablecoin with DeFi composability and will be integrated into Avalon Labs DeFi lending. Isolated pools will be set up for different collaterals to borrow USDA at stable borrow rate.
Savings Account
USDA can be deposited into Avalon savings account to earn yield in USDA. The yield is generated from interest rate revenue from borrowing USDA.
Last updated