> For the complete documentation index, see [llms.txt](https://oracle-free-dollar.gitbook.io/ofd/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://oracle-free-dollar.gitbook.io/ofd/collateralised-minting/opening-a-new-position.md). # Opening a New Position You want to mint OFD, but your preferred type of collateral is not available yet? In that case, you can propose a new collateral type. To do so, head over to the [My Positions page ](https://app.oraclefreedollar.org/positions)and select "Open New Position" on the left. This will begin the 6-step process. At first, you will need to have 1,000 OFD in your wallet. This is the cost of proposing a new position. While it may seem high, this is absolutely vital to avoid the inflow of bad collateral and guarantees that each proposed new collateral is a well thought-out decision - and not an attempt to bring bad collateral into the system. This fee is not returned if the position is denied and goes to the equity holders. In addition to being liquid enough, there are a few more requirements for a collateral token: * The token must adhere to the ERC-20 standard. * The collateral must be freely transferrable. Mandatory allowlisting (also known as whitelisting) is not acceptable as that would jeopardize the challenge mechanism. * The token's transfer function must revert on failure as required by the ERC-20 standard. The Frankencoin system ignores the return value of the transfer method. Tokens that returning "false" to indicate a failure cannot be accepted. * There should be no admin functions in the token. Tokens that are upgradable or tokens that contain functions like "pause" or "freeze" can only be accepted if the holder of the admin keys is known and enjoys an outstanding reputation with regards to respecting the token holders rights. Furthermore, such tokens will be subject to a risk premium when calcualting interest rates and limits. * ERC-777 tokens are not allowed. Frankencoin is not safe to use with collateral that supports transfer hooks. The initialization period has to be at least 3 days. This gives other system participants enough time to veto or to challenge the new position. A veto can only be cast by qualified pool share holders by calling the "deny" method on the position. If a position is denied, it cannot ever be used to mint OFD, but it can still be challenged. New positions can be challenged immediately using the normal challenge mechanism. Next, financial terms must be set. The annual interest is charged upfront and can be set by the user. With a maturity of 12 months, this is the entire fee that is charged. Of course, if the maturity is set to 6 months for example, the final interest changes accordingly. The minting limit describes the maximum amount of OFD that can be minted against this position and its clones. When the position is cloned, the remaining amount is split between the original and the clone. The purpose is to limit the exposure of the system to a single collateral. The OFD should be able to withstand the total failure of one or more related collaterals, even if all their positions are maximally minted. After that, we focus on initial and minimum collateral. First of all, the collateral token needs to be selected. Remember to approve handling of that token in MetaMask. The chosen collateral should be freely traded on the market and have a somewhat stable value. The minimum collateral section is the minimum acceptable amount of collateral. It is not possible to decrease the collateral in a position below the minimum without closing it entirely. The last section is the initial amount of collateral. This will be automatically transferred to the newly created position during the minting. The initial collateral must be equal to or larger than the minimum collateral. The last remaining box is located on the bottom right. Here, the (potential) liquidation process is discussed. The liquidation price can be set freely but must result in a position liquidation of at least the chosen minimum. If a potential auction ends at a price below the liquidation price, the position is liquidated. The "Retained Reserve" should be set to ensure a very high confidence that challenges do not end significantly below the liquidation price, assuming the market price has just fallen slightly below it at the start of the challenge. The more volatile the collateral and the longer the challenge period, the higher the reserve requirement needs to be to mitigate risks. The "Auction Duration", describes how long an auction should be. For highly liquid collaterals such as Wrapped ETH, the challenge duration can be quite short, possibly ranging from hours to even minutes, especially with automated bidders in the market. For less liquid collaterals that are harder to evaluate, challenges might last up to two weeks to allow bidders to organize. The longer the challenge duration, the higher the required reserve should be to ensure the position remains economically sound. Once all parameters are set, you can hit the "Propose Position" at the bottom of the page. If there's no veto within the initialization process, you will have successfully opened a new position! After that, you can head back to the "My Positions" subpage and start minting using your new position. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. 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