> 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/overview/why-how-what.md). # Why, How, What? #### Why OFD? Most stablecoins depend on centralized oracles to function. These oracles introduce critical vulnerabilities: they can be manipulated, censored, or become unavailable. Worse, they often act as the single point of failure in otherwise decentralized systems. Oracle Free Dollar (OFD) takes a different path. It is built on the belief that price stability can be achieved without external price feeds. By replacing oracles with transparent governance, market-based enforcement, and overcollateralization, OFD creates a more resilient and censorship-resistant alternative. #### How does it work? Users mint OFD by locking up collateral in smart contract positions. Each position defines its own liquidation price. If the market believes a position is undercollateralized relative to that price, anyone can initiate a challenge. Successful challenges trigger a liquidation auction to cover the outstanding debt. The protocol is governed by OFDPS holders (Oracle Free Dollar Pool Shares). They: * Provide reserve capital * Earn system fees * Vote and veto risky proposals Collateral types and system rules are managed through this governance process without relying on external data. #### What is OFD? OFD is a decentralized, overcollateralized stablecoin deployed on Binance Smart Chain. It is designed to maintain a soft peg to the US dollar without oracles. Key properties: * Minted through user-created or cloned positions * Backed by configurable on-chain collateral * Stabilized via liquidation and challenge mechanisms * Governed by veto power and system parameters set by OFDPS holders OFD is intended to be a stable, trust-minimized unit of account for users, builders, and investors seeking a truly decentralized alternative to oracle-dependent stablecoins. --- # 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. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://oracle-free-dollar.gitbook.io/ofd/overview/why-how-what.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.