🟡FAQ
This page answers the most frequently asked questions.
đź“Ś General
1. What is Oracle Free Dollar (OFD)? OFD is a decentralized, overcollateralized stablecoin protocol on Binance Smart Chain (BSC). It allows anyone to mint a USD-pegged asset without relying on centralized price oracles.
2. What makes OFD different from traditional stablecoins? Unlike most stablecoins, OFD does not depend on external data feeds (oracles) or custodians. Instead, it uses collateral, transparent auctions, and community governance to maintain price stability.
🧱 System Mechanics
3. How is OFD kept stable without an oracle? Through overcollateralization and market-driven liquidation auctions. The system encourages users to maintain safe positions and allows anyone to challenge undercollateralized ones.
4. What happens if a position is undercollateralized? It can be challenged. If the challenge succeeds, the collateral is auctioned to repay the debt and reward the challenger. The protocol’s reserve pool covers any shortfall or gains. This ensures that all stakeholders in the system work together to maintain the peg.
5. How much collateral is required to mint OFD? OFD doesn't enforce a fixed minimum collateral ratio. Instead, each position defines its own liquidation price. If the market believes that the position is undercollateralized relative to that price, it can be challenged and liquidated through an auction. This design allows more flexibility, but puts responsibility on users to set realistic parameters — and on the market to keep positions honest.
6. What interest is charged when minting OFD? An upfront, non-refundable interest fee is charged when minting. It varies per position and is set by the user when creating or cloning a position. In order to not get a veto, it may be a good idea to consult the community before propsing a new collateral.
🧪 Using OFD
7. How can I mint OFD? You can mint OFD by either:
Cloning an existing approved position, or
Creating a new one by proposing your own collateral setup.
8. What is a "position"? A position is a contract holding collateral and a corresponding debt in OFD. It’s like a vault or trove in other systems.
9. What does "cloning a position" mean? Instead of setting up a new position from scratch, you can mint OFD using the same parameters as an existing one. This saves time and gas.
đź—ł Governance & OFDPS
10. What are OFDPS (Oracle Free Dollar Pool Shares) tokens? OFDPS is the governance and equity token of the system. Holders earn system fees and can veto risky proposals.
11. How can I get OFDPS? By depositing reserve capital into the system. OFDPS can be minted or redeemed based on the protocol's reserve valuation model.
12. What rights do OFDPS holders have?
Earn fees and liquidation profits
Participate in governance
Veto new collateral proposals
Carry residual liquidation risk
13. Can proposals be blocked? Yes. Any proposal (e.g. new collateral) can be vetoed if at least 2% of the voting power is used to reject it.
đź’¸ Payments & Use Cases
14. Can I use OFD for payments? Yes. 1 OFD is designed to always be worth $1. Payments work best with light clients or layer-two bridges for efficiency.
15. What are the core use cases for OFD?
Borrowing against on-chain collateral
Censorship-resistant savings
Interest arbitrage and capital-efficient yield strategies
⚠️ Risk & Strategy
16. What are the risks of using OFD?
Liquidation if your collateral value drops. This can be avoided by adjusting your position.
Losses for OFDPS holders if challenges fail. Given that all system participants are motivated by a stable system, this is unlikely.
Smart contract risk. Given that the OFD smart contract is public, this is unlikely.
17. What is interest arbitrage in OFD? Some actors might mint OFD at low interest and use it to buy OFDPS (if it is priced attractively), creating capital flow between borrowers and equity holders.
18. Why be early in the OFD ecosystem? Early users benefit from lower fees, better rates, and greater influence in governance. Participation early in the system lifecycle can be strategically valuable.
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