# 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](https://curve.fi/#/arbitrum/pools/factory-stable-ng-18/swap)

> **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.

<details>

<summary>senUSD trading below $1</summary>

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.

</details>

<details>

<summary>senUSD trading above $1</summary>

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.

</details>

<details>

<summary>Market-to-market price discrepancies</summary>

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.

</details>

### 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.
