USDFC aims to provide financial stability for the Filecoin network and unlock growth potential
On November 11, 2024, Zug — Secured Finance is pleased to announce the launch of USDFC, which represents "the dollar for the Filecoin community," or simply "USDF Coin." It is not just a stablecoin but a catalyst for the next phase of growth for the Filecoin network, providing the long-awaited stability, flexibility, and financial infrastructure for Filecoin users. Our mission is clear: to create a financial tool that not only stabilizes and enhances the ecosystem but also opens up new possibilities for the future of Filecoin.
Addressing the need for stability
In the decentralized finance (DeFi) space, stablecoins play a key role in providing stability and facilitating ecosystem development. Take DAI, for example, which has a valuation exceeding $5 billion, bringing significant stability to Ethereum and fostering prosperous ecosystem growth. USDFC aims to bring the same stability to Filecoin, addressing the current lack of stablecoin options like USDC or USDT.
Secured Finance CEO Masa Kikuchi stated: "Just as DAI revolutionized DeFi by introducing stability to Ethereum, USDFC will achieve the same breakthrough in the Filecoin ecosystem. We believe USDFC will create new opportunities for transactions, investments, and growth within the Filecoin ecosystem."
Challenges faced
Secured Finance initially focused on creating a fixed-rate lending market. However, the team quickly realized that maintaining liquidity under fixed rates and redemption dates is a well-known issue in traditional finance, especially in emerging markets due to liquidity mismatches.
"We recognize the need for a unique approach to meet the specific needs of the Filecoin community," said Masa Kikuchi, CEO of Secured Finance. "Drawing on traditional market solutions, we turned to developing a stablecoin that can directly address these challenges."
Introducing USDFC: A tailored solution
The solution is USDFC—a collateralized debt position (CDP) stablecoin backed by FIL. By collateralizing FIL, users can access stablecoin liquidity without having to sell their holdings. USDFC offers stability, predictable lending, and greater liquidity, directly addressing the needs of borrowers and lenders in the Filecoin ecosystem.
"USDFC draws on solutions from commodity markets, aiming to support capital acquisition while maintaining liquidity," added Masa Kikuchi. "It is not just a stablecoin but a financial tool designed to empower the Filecoin community."
Addressing the yields for Filecoin holders and storage providers
Filecoin holders and storage providers often face a fundamental issue: their operational costs, such as hardware, electricity, and maintenance, are typically denominated in dollars. Currently, they have to sell FIL assets to cover these expenses, leading to a drop in FIL prices and reducing their long-term holdings.
By enabling USDFC issuance collateralized by FIL, storage providers can obtain USD funding while holding their FIL for the network, maintaining asset value and market stability, and allowing more FIL to be used for data storage work. This method is similar to asset-backed loans in traditional finance, allowing users to raise funds while retaining potential gains from their assets.
How USDFC works
Minting stablecoins: Deposit Filecoin (FIL) through the Stablecoin application (https://usdfc.secured.finance) to mint USDFC.
Payments: USDFC, as an ERC-20 token, can be quickly paid using popular wallets like MetaMask or hardware wallets.
Receiving funds: Merchants accepting USDFC can share their wallet address via QR codes or text for easy payment reception.
Conversion: Convert USDFC into any fiat currency through bridging services, then transfer it to an exchange in your region.
Earn yields: Deposit USDFC into Secured Finance's fixed-income lending application for stable returns.
Expansion of USDFC use cases
Secured Finance plans to expand the use cases of USDFC within and outside the Filecoin ecosystem:
Cross-chain trading: Supporting cross-chain exchanges of USDFC with major cryptocurrencies like FIL, ETH, USDC, and USDT.
Ecosystem collaboration: Building partnerships to make USDFC a recognized payment method within the Filecoin ecosystem.
Real payment integration: Integrating with major payment gateways to enable users to use USDFC as dollars in real transactions.
Yield features: Launching an 'earn' feature that allows users to stake USDFC to earn yields through delta-neutral strategies.
Focused on using FIL as the sole collateral for stablecoins
Secured Finance initially focused on using FIL as the only collateral for USDFC. The single-asset approach maintains market stability and liquidity accessibility. While tokens like GLIF's iFIL and other liquid staking tokens are not included in the stablecoin system, they are popular in the lending market, allowing users to borrow USDFC with them.
Building trust through historical precedents
Historically, financial instruments backed by a single asset have effectively stabilized markets and facilitated the development of commodities and currencies. From gold-backed loans to oil financing, these tools have enabled participants to raise funds while maintaining ownership of their assets. USDFC aims to follow this model, providing liquidity and stability within the Filecoin ecosystem, creating a secure framework for users.
Risk management
Secured Finance recognizes the potential risks associated with single-asset collateral, such as the impact of FIL price volatility. To effectively address these risks, USDFC employs over-collateralization and real-time monitoring systems, drawing on established techniques from the traditional financial industry. By ensuring sufficient collateral support, we aim to provide users in the ecosystem with a reliable, secure, and stable stablecoin, thereby minimizing associated risks.
Conclusion
USDFC is not just a stablecoin—it is a powerful tool for financial flexibility and ecosystem growth. USDFC aims to enhance liquidity, bring new opportunities to Filecoin, and create a reliable flow of funds that empowers users. With a roadmap that includes cross-chain exchanges, real payment integration, yield generation, and collateral trading, USDFC is poised to become a significant asset in the DeFi space.
"Now is the time to launch a stablecoin backed by Filecoin," said Masa Kikuchi. "We invite the community to join us in shaping a new era of financial possibilities within and beyond Filecoin."
About Secured Finance
Secured Finance is a leading blockchain-based financial services company dedicated to building advanced financial tools for the decentralized economy. Secured Finance focuses on innovation and security, aiming to connect traditional finance with decentralized finance and empower users globally.
