STABLECOIN FAI

The tutorial guide for stablecoin FAI

What is Stablecoin FAI

Stablecoin FAI is the first algorithm-based stablecoin on Starcoin Chain. Stablecoin as an infrastructure in the DeFi world, has plenty usage in all DeFi activities.

FAI was design and developed by BFly Studio, an independent developer team which are currently working with Starcoin Chain to develop its DeFi ecosystem.

How to get FAI?

There's two approaches to get FAI.

The first one is through minting feature at the stablecoin FAI website. The link is fai.bfly.finance/

The second one is to swap on Starswap. The link is starswap.xyz

Tutorial to mint FAI

Step 1: go to fai.bfly.finance/

Step 2: Connect your wallet to Starmask, and choose Barnard testnet

Step 3: Get STC

go to starcoin.org 》Developer 》Faucet 》Barnard

#Here is how you can set up Starmask wallet: https://starcoin.atlassian.net/wiki/spaces/WESTAR/pages/7635043/Starcoin

#Here is how you can get STC on Barnard:

https://starcoin.atlassian.net/wiki/spaces/WESTAR/pages/7636112/Starswap

Step 4: Supply FAI

Once you got STC on Barnard, you can supply STC through the website

If you are on the front page, you can input the amount of STC you want to supply. Then click the "Supply" button, pay the gas fee.

After supplying STC, the balance on STC will automatically updated on STC locked.

Step 5: Mint FAI

Click the second button "Mint", then we can mint FAI using the STC we locked as collateral. Click Max to see how much FAI you can mint.

Input amount smaller than the max amount and then click Mint button, pay the gas fee to mint FAI.

After minting, the FAI balance will be automatically updated.

You can also click the Mint FAI button on the left to to go to the minting feature.

Step 6: Withdraw STC

You can also withdraw your STC if you haven't use them as collateral or part of collateral.

Go to the third button which is withdraw, input amount of STC you want to withdraw.

You can also go to left bottom button to withdraw STC as shown on the picture.

Step 7: Repay FAI

You can repay FAI whenever you want. Just click on the Repay button or the Repay FAI button on the left, input the amount and hit repay.

After you repay your FAI, your FAI balance and STC balance will be both automatically updated. The STC collateral will be freed from collateral and is available to withdraw as you need.

Step 8: Account Information

The wallet balance is the STC balance on your Starmask wallet.

The protocol balance is the balance of STC that you put in the FAI Protocol.

Upper is the number of the account.

Step 9: Collateral Information

The minimum collateral Ratio is 300% which means you can borrow 1/3 of value in FAI against the value of STC in the protocol.

The minting fee is calculated using a linear function with a 3% APR. Minting fee changes as users deposit and minting FAI.

Step 10: STC information

This card represents the information on STC.

TVL is the total value of STC locked in the FAI protocol.

Current Price of STC is the USD price of STC getting from oracle.

Mechanism and Parameters of FAI

Mechanism of FAI Protocol

FAI follows the same mechanism as DAI.

The FAI Protocol allows users to generate/mint FAI by leveraging collateral assets like STC.

Usage of FAI

Since FAI is a stablecoin, it can be used as a storage of value in case the market is too volatile.

FAI can also be a medium of exchange to facilitate the sale, purchase and exchange of goods or services.

FAI can also seen as a Unit of Account. Since FAI has a target price of 1 USD, it can be used as a unit in trades.

Collateral

The FAI protocol currently accepts only STC as collateral. The collateral coverage ratio is 300%. This high CCR guarantees extremely low possibility to get liquidated.

The CCR entails a Loan to Value(LTV) as 33.33%. This means, if you have $100 STC, you can mint at most 33.33 FAI. Of course, users are suggested to mint less than 100% of your position. Typically, a 70%-85% is the what's suitable for a user position.

Minting Fee

FAI Protocol employs a 3% APY as minting fee rate. The calculating formula is as follows:

minting_fee = borrow_fai_amount * 0.03 * time_delta(seconds) / total_seconds_of_year

Liquidation

Currently, we didn't apply a liquidation mechanism on Barnard testnet. Liquidation bot will be applied when the protocol is released onto mainnet.

Basically, the FAI position will be liquidated when the price of STC drops to certain price when the CCR is larger than 300%. STC will be sold to protocol for a discounted price. The liquidation penalty is 15%. Be sure to check your position when the price of STC drops.