Getting started with uSTONKS

This guide provides essential information in order to interact with the smart contracts. For additional information, please refer to the section USER GUIDES.

How do I mint or buy uSTONKS tokens?

You can get a uSTONKS token by either creating them by depositing collateral or trading for them on a DEX like Uniswap. Both can be done via our Degenerative.Finance site.

To Create/Mint uSTONKS:

Please refer to the Glossary for terms.

To mint uSTONKS tokens you must deposit USDC as collateral on degenerative.finance. A minimum of 1 uSTONKS token must be minted to start a position. When minting, the maximum number of uSTONKS tokens is determined by the Global Collateral Ratio (GCR). This provides a failsafe mechanism against undercollateralization errors for first-time users. With 840 USDC of collateral, the GCR = 4, and uSTONKS = 210 USDC you can mint exactly 1 uSTONKS token:

840USDC/210USDC/4GCR=x840 USDC / 210 USDC / 4GCR = x

To Buy uSTONKS:

Go to degenerative.finance and select which uSTONKS token you would like to trade from the drop down menu. Then click on LP/Trade to access the the links to the AMM to buy or sell that uSTONKS token.

How does withdrawing, depositing, redeeming & settling work?

Depositing Collateral

Depositing collateral is used to increase a open collateral position. If your collateral ratio gets too low because uSTONKS 2hr TWAP goes up, you can deposit additional USDC to increase your Collateral Ratio. See Glossary for definition of terms.

Withdrawing Collateral:

For example: You deposit 840 USDC and mint 1 uSTONKS tokens. At anytime you can redeem the token, then withdraw your 840 USDC collateral if you pay back exactly 1 uSTONKS token (using redeem function), no matter what the prices of the uSTONKS is at the time of mint or withdraw.

If you want to withdraw less than 840 USDC from your collateral it will depend on your Collateral Ratio, Global Collateral Ratio and Minimum Collateral Ratio. See Glossary for definition of terms.

  1. You can "Instant Withdraw" any USDC as long as your Collateral Ratio stays above the Global Collateral Ratio.

  2. You can "Request Withdraw" if withdrawing the USDC makes your Collateral Ratio lower than the current Global Collateral Ratio. There is a 2 hour wait before the withdraw is available to ensure that you do not withdraw below the Minimum Collateral Ratio. Only use this option if you are familiar with the degenerative.finance interface and mechanism!

Redeeming uSTONKS Tokens:

Before expiry

If uSTONKS contract is still active, you can only redeem USDC from your own open position. You can redeem up to the total number of uSTONKS tokens you have minted. This will unlock all of your USDC collateral. Then you can withdraw your collateral without risk of liquidation.

If redeeming less than total amount of uSTONKS tokens you minted, you must maintain at least 1 token and your position of 1 token will still be open.

After expiry

uSTONKS token expire on the first day of the following month, ie uSTONKS-APR21 expires on May 1st, uSTONKS-JUN21 token expires on July 1st. The index price is calculated at the time of expiry and anyone that holds uSTONKS tokens can go to https://degenerative.finance and click on the "settle" button to claim USDC for uSTONKS tokens.

What happens at expiry, if you have deposited collateral and minted uSTONKS tokens:

At expiry if you have a collateralized position open, the contract would calculate the value of the tokens you minted and unlock the rest of your USDC to be withdrawn. Remember that the value of the synth is akin to a debt obligation owed to the system.

For example, you deposited 8,400 USDC and minted 10 uSTONKS tokens. At expiry the index price is calculated at 420 USDC per token. The 10 uSTONKS tokens are worth 4,200 USDC, meaning that you "owe" 4,200 USDC to the platform but have collateral of 8,400 USDC backing this up.

Out of your 8,400 USDC deposit, you can immediately withdraw 4,200 USDC. If you still had the 10 uSTONKS tokens you can redeem another 4,200 USDC.

In case you sold or lost 1 uSTONKS, you would still hold 9 uSTONKS and be able to claim 8,400 USDC - 420 USDC = 7,980 USDC at expiry.

What happens at expiry, if you have bought uSTONKS tokens on Uniswap:

After expiry, you can settle the token on degenerative.finance and obtain the underlying collateral equal to uSTONKS price (at expiry)*number of uSTONKS held

So why deposit collateral and mint tokens?

  1. Liquidity mining rewards. If you mint and stake you are eligible to receive $YAM & $UMA rewards.

  2. You can take a short position. You can sell the uSTONKS tokens after you mint them effectively putting you in a short position because those tokens would need to be purchased later to redeem your collateral. It can also be left till expiry, which at that point you can withdraw your collateral less the value of the tokens you sold (at index close price).

  3. Potential earnings from Uniswap Market Maker fees.