The Foundry
Launched on 24 March 2021, the Foundry is the latest innovation developed by IRON team where users can stake their STEEL tokens to earn income generated from the protocol's reinvestments of idle and excess collateral assets. In more detail, the key differences between the Iron Finance Foundry and boardrooms of fully uncollateralized algorithmic stablecoins (BAC, BDO, BSC, MDO and others) is that rewards in our Foundry are backed by actual assets which yield a sustainable return (in BUSD — to be more specific) on investment. Such approach is in sharp contrast to uncollateralized stablecoins where rewards are not the result of returns on investments but generated by inflation during expansionary phases.
The Iron Protocol will distribute 100% of profits back to STEEL holders, meaning no performance fee, treasury fee or other charges will reduce the realized returns. The investable assets in IRON protocol come from multiple sources. While the variety and flexibility of sources will keep growing as the adoption and use cases of IRON further develop, we already have a variety of sources of profits to consider:
Excess Collateral Management (see Collateral Ratio and Buyback and Recollateralize) With an increasing demand for IRON, the Target Collateral Ratio (TCR) can be gradually reduced below 100% — which will bring the protocol in an excess- or over-collateralized state (ECR>TCR). This enables STEEL holders to profit from the collateral by simply staking their STEEL in the Iron Finance Foundry.
Idle Collateral Management Beside excess collateral, there is a huge amount of collateral sitting idle in the IRON protocol maintaining the IRON supply and price peg. The collateral is needed when users want to redeem IRON and receive back their collateral. However, only a fraction of this idle collateral is always actively needed for redemption. This leads to another use case: the idle collaterals can be used to gain extra incomes — such as by lending BUSD on Venus, providing liquidity on Belt.fi, Alpaca or participating in vSafe and bEarn BUSD vaults.
Parameters and profit distribution decisions will be governed by the Iron Finance DAO (scheduled to go live in Q2 2021) and can be adjusted via Governance voting in future. At Foundry launch, the following parameters are set:
Epoch length is 12-hours (2 epoch per day)
Withdrawal lockup: for each withdrawal or deposit of STEEL in the Foundry, or each claiming of BUSD profits, the deposit will be locked for 4 epochs starting from the current (ongoing) epoch.
Collateral Utilization Ratio (CUR): this represents the maximum percentage of excess collateral that will be distributed in one epoch. The initial CUR for the first 6 epochs is set at 0.5%.
