senUSD

Overview

senUSD is a CDP stablecoin that is loosely pegged to $1.

senUSD adheres to LayerZero's Omnichain Fungible Token (OFT) standard.

Trade it on Curve

senUSD: 0xf36a65fd3b7dF848860d174115f1864e6aa2dB5E

How does senUSD work?

To maintain stability, senUSD tries to remain as closely tied to the USD as possible. This is achieved through arbitrage.

senUSD trading below $1

If senUSD is trading below $1, users who have open CDPs can purchase senUSD from the open market to repay their debt. By doing so, they're repaying their debt at a discount.

senUSD trading above $1

If senUSD is trading above $1, users can open CDPs to borrow senUSD to sell on the open market. They expect to be able to pay off their debt by then purchasing senUSD at a lower price. By doing so, they're making a profit.

Market-to-market price discrepancies

It's also possible for users to buy senUSD on one DEX where the price is below $1 and sell it on another DEX where the price is at or above $1.

This market-to-market arbitrage is usually done by automated bots that constantly scan pools for arbitrage opportunities.

Is there a Stability Pool? Is there any further peg mechanism needed?

senUSD needs neither a Stability Pool nor any further peg mechanisms.

Given enough deep senUSD liquidity and available senUSD to borrow, senUSD pricing is entirely driven by market forces.

CDP owners are always incentivized to buy senUSD from the market when it's trading below $1. By doing so, they're effectively repaying their debt at a discount.

In a similar fashion, if senUSD were to trade above $1, users would be incentivized to open new CDPs and to instantly sell the borrowed senUSD, expecting the price to quickly go back to $1. This way, they're then able to repay their debt for less, achieving a profit in the process.

The variety of Chambers ensures that there may always be attractive opportunities for users to proceed with this arbitrage process.

Is senUSD overcollateralized?

senUSD is overcollateralized by design, as users may never borrow more than what the maximum loan-to-value of the Chambers they deposit collateral into imposes.

If the value of the collateral goes down, loan-to-value may become higher than the maximum allowed; hence, the position may be flagged for liquidation.

Forcible liquidations ensure that positions at risk are automatically repaid, with the liquidators and the protocol earning a fee in the process. senUSD debt is then cleared, with the maximum loan-to-value being a buffer to ensure there's enough room to liquidate positions even during high volatility moments.

The diversity of collateral assets means that senUSD is resilient and doesn't suffer from individual failure points, as globalized risk lending markets and CDP platforms adopting a single whitelisted collateral do.