How to Start Earning with DCNTRL Network’s Stability Pool: Beginners Guide
👋Welcome DCNTRL Network Community! We recently launched USDEFI our new BNB-backed stablecoin on BNB Chain, and today we’ll share a user guide with you that’ll help you understand our stability pool. Keep reading to find out how you can start earning from your USDEFI tokens as soon as you mint them.
What is the Stability Pool?
The Stability Pool is a cornerstone of the DCNTRL Protocol, serving as a multi-faceted mechanism designed to maintain the stability and integrity of the $USDEFI stablecoin. It acts as a financial buffer, absorbing the impact of market volatility and ensuring that the $USDEFI token remains pegged to the U.S. dollar.
How It Works
When users mint $USDEFI by depositing BNB as collateral, they always have to supply a minimum of 110% collateralization. This means that for every $100 of BNB supplied a user could borrow a maximum of $90 of USDEFI. It is important to remember that given the nature of the crypto market there is always a risk that the value of BNB could fall, potentially destabilizing the $USDEFI token.
The Stability Pool acts as a safeguard against this risk. It holds a reserve of $USDEFI tokens staked by users, which can be used to absorb bad debt or liquidate under-collateralized positions, thereby maintaining the protocol’s overall health.
Liquidation Process
When a user’s collateral ratio falls below a certain threshold, their position is at risk of being liquidated. The Stability Pool steps in by using its staked $USDEFI to cover the debt, thereby preventing a cascading series of liquidations that could destabilize the entire system.
Why It’s Important
In a volatile market, the Stability Pool serves as the backbone of the DCNTRL Protocol, ensuring that $USDEFI remains a reliable and stable asset. When a $USDEFI position is liquidated, the Stability Pool uses its staked $USDEFI to cover the bad debt. In return, the stakers earn a portion of the liquidated BNB collateral and DCNX tokens as rewards. These rewards are proportional to the amount of $USDEFI you’ve staked in the pool.
The Stability Pool is engineered to minimize risks for stakers. While it’s true that stakers risk losing some $USDEFI if a position is liquidated at a collateral ratio below 100%, the protocol has multiple layers of security measures to prevent this from happening, such as Recovery Mode and secondary liquidation mechanisms.
How to Start Earning from the Stability Pool: A Step-by-Step Guide
Step 1: Visit the DCNTRL Network App & Connect your wallet.
Step 2: Minting $USDEFI
If you haven’t minted $USDEFI yet, discover how to mint and manage your USDEFI position by following the steps outlined in our Minting Guide.
Step 3: Navigating to the Stability Pool
Once you’re on the dashboard, locate the ‘Stability Pool’ section.
Step 4: Depositing $USDEFI into the Stability Pool
Enter the amount of $USDEFI you wish to stake.
Click on the ‘Confirm’ button to initiate a transaction request.
Confirm the transaction in your wallet.
Step 5: Earning Rewards
After staking, you’ll start earning Liquidation Fees in BNB and bonus DCNX rewards. These rewards accumulate automatically and can be claimed at any time.
Although the DCNX rewards accrue every minute, the value on the UI only updates when a user transacts with the Stability Pool. Therefore you may receive more rewards than is displayed when you claim or adjust your deposit.
Tips and Best Practices
Always keep an eye on your collateral ratio to avoid liquidation.
It’s recommended to keep the collateral ratio above 150% for safety.
You can adjust your collateral ratio by adding more BNB or repaying some of your $USDEFI debt.
Conclusion
In summary, the DCNTRL Network’s Stability Pool offers a robust and innovative solution for maintaining the stability of the $USDEFI stablecoin on the BNB Chain. By participating, you’re not only safeguarding the integrity of a decentralized financial ecosystem but also earning tangible rewards in the form of BNB and DCNX tokens. The protocol is engineered with multiple layers of security measures, making it a reliable avenue for staking your $USDEFI tokens.
As we continue to grow and innovate, community involvement remains a cornerstone of our success. Your active participation in the Stability Pool doesn’t just benefit you; it strengthens the entire DCNTRL Network, making it more resilient and efficient. So, whether you’re new to the world of DeFi or a seasoned veteran, the DCNTRL Stability Pool offers a rewarding and secure way to get involved.
Ready to start earning? Head over to app.dcntrl.network and take the first step towards contributing to a more stable and rewarding DeFi landscape on the BNB Chain.
