Round 2 / USDfil Stablecoin

Who is this project for?

• Storage Providers
  • All payments on FVM, to date, are denominated in the chain native token, FIL. However, FIL is a volatile currency and with fluctuating values, it is difficult to bill for service revenue and plan expenditure.
  • USDfil enables SPs to make and receive payments for storage with a dollar denominated currency. This enables SPs to hedge risk and manage volatility directly on FVM, making it easier for them to engage with customers and suppliers.
• Storage Users
  • Similar to Storage providers, storage users can currently only pay for storage on-chain using the FIL token. USDfil enables them to pay for storage with a dollar denominated currency directly on chain.
• Speculators
  • Support Filecoin economy through FIL token usage (FIL backs USDfil) in a neutral setting without taking on additional price risk.
  • Swap in and out of FIL with the click of a button directly on FVM
• Economy at large
  • USDfil generates a dollar denominated yield. This is in contrast to other DeFI protocols currently on chain, such as REPL and GLIF, which both generate FIL denominated yield. Users can only gain access to this yield if they buy FIL and deposit it into the USDfil smart contract. Therefore, USDfil’s yield creates a new use-case for buying the FIL token.
  • Increase FIL token usage in a neutral setting without taking on additional price risk. Holding the USDfil token gives USD exposure natively on FVM, but still uses FI, as USDfil is collateralized with FIL. This has the potential to increase the velocity of the FIL token, driving overall value to Filecoin.
• Investors & Grant Providers
  • Funders can send payments denominated in USD directly on-chain to their intended recipients.
  • For example, USDfil enables the Filecoin Foundation to make payments to grant recipients denominated in USD, directly on chain. Investors can use this same paradigm to invest in storage provider operations.

What pain points does it solve?

The primary pain point that USDfil solves is that there currently is no way to conduct transactions on-chain denominated in a stable currency. The only way to do on-chain transactions is through the FIL token, which is volatile. USDfil solves this problem.

What are the tangible benefits of this contribution?

The downstream effects of USDfil are as follows:

• Hedging against FIL volatility - storage providers and users need to make consistent payments or manage cash flows on FVM without worrying about FIL’s price swings. USDfil provides financial stability to Filecoin network participants, enabling them to plan long-term without worrying about speculative price risks.
• Denominating payments in USD on FVM broadens the ecosystem and encourages new participants to entire, who may previously have been hesitant to do so because of the lack of a stable payment mechanism.
• Dollar denominated yield - speculators may choose to get into the FIL ecosystem due to high Fil-on-FIL returns offered by GLIF and REPL. However, yield is still denominated in FIL, meaning that it is still subject to the same price-swings. Enabling FIL holders to gain access to yield denominated in USD can encourage new participants to enter the FIL ecosystem.
• Versatility and Financial Flexibility - Having liquid and flexible financial markets is a critical component of any well functioning economy. USDfil enables this and therefore adds a layer of versatility to the Filecoin economy that was previously non-existent.