Product FAQ

Does Shell Finance Charge Any Fees?

When borrowers initiate a lending position, they will be charged a one-time loan origination fee equal to 0.5% of the loan amount. This means that users will only receive 99.5% of the borrowed $BTCX amount each time they borrow. For example, if Alice collateralizes $ORDI to borrow 1 $BTCX through Shell Finance, she will only receive 0.995 $BTCX, with the remaining 0.005 $BTCX being the loan origination fee charged by Shell Finance. Alice will need to repay 1 $BTCX to Shell Finance to unlock the collateralized $ORDI.

What is Partial Redemption?

Users can perform partial redemptions, but each position can only be closed once all debts have been fully repaid. Additionally, since the protocol offers interest-free loans, repaying a portion of the debt does not refund the fees incurred at the borrowing time.

Who Pays the Gas Fees?

During collateralization and redemption, users must transfer collateral or repay loans based on market prices and collateral ratios and pay a gas fee according to the Bitcoin network conditions to ensure the successful execution of the entire transaction.

How Can Leverage be Achieved via Shell Finance?

Users are allowed to engage in recursive borrowing to achieve leverage. They can borrow $BTCX loans by collateralizing inscription assets, then obtain $BTC through instant trading. Subsequently, they can use the obtained $BTC to mint or purchase more inscription assets as collateral, enabling them to borrow an additional $BTCX. By repeating this process, users can achieve financial leverage. It's important to note that while $BTCX is also an inscription asset, Shell Finance does not accept it as collateral for borrowing. The only ways to acquire $BTCX are through collateralizing other inscription assets for lending or acquiring them through secondary market trading.

What is the Insurance Fund?

The Insurance Fund is a protocol-level risk mitigation mechanism to provide additional security and assurance for protocol participants. Currently, the primary sources of the Insurance Fund in the Shell Finance protocol include:

• Protocol Fees: A portion of the borrowing fees is extracted to fund the Insurance Fund.

• Collateral Auction Proceeds: Positions that enter liquidation status will be auctioned off in the open market through Dutch auctions. Any premiums generated from the auction prices, which may exceed the collateral value, will also contribute to the protocol's revenue and enter the Insurance Fund.

• Community Donations: Donations or sponsorships from members of the protocol community.

The Insurance Fund will be managed through community proposals and, based on the voting results of the proposals, primarily used to mitigate systemic debt risks during extreme market conditions and maintain the stability of the protocol.