What is Segment Finance?

Segment Finance is a trusted decentralized finance lending and borrowing protocol originally deployed on the BNB Chain. Launched in September 2023, it combines the security of the algorithmic money markets developed by Compound and Venus and extraordinary high yield opportunities, providing a simplified user experience and core capabilities in a single application.

How do I interact with Segment Finance?

Interacting with Segment Protocol is straightforward. Supply your chosen asset and the amount to start earning interest. Additionally, once you supply assets, you can also borrow against them. Any interest earned from supplying assets can help offset the interest you accrue when borrowing.

Where are my supplied funds stored?

Your supplied funds are stored in a smart contract on the blockchain. The contract's code is public, open-source, and has been formally verified and audited by external auditors. You can withdraw your funds on demand or receive sTokens representing your stake. sTokens are as freely tradable as any other cryptographic asset on BNB Chain.

What is the revenue source of Segment Finance?

Protocol revenue is generated from taking a fee based on reserve factors for different pools. The more riskier the pool is, the more fees will be generated this way. In addition Segment Finance will also earn DEX rewards through farming activities on SEF/USDT LP Tokens. Also the potential Chain rewards will be a source of income for the Segment Finance Protocol.

Why does my account health matter?

The account health (or the Health Factor) is the numeric representation of the safety of your deposited assets weighted against any borrowed assets and their underlying value. The higher the Health Factor value is, the safer the state of your funds is against a potential liquidation.

If the Health Factor is reduced to 1 or lower, liquidation will be triggered. In a liquidation, up to 50% of the borrowing debt is repaid and that value plus the liquidation fee is taken from the collateral available. After a liquidation, that amount liquidated from your debt is repaid.

What is liquidation?

A liquidation is a process that occurs when a borrower's Health Factor is reduced to 1 or lower due to their collateral value not properly covering their loan/debt value. This might happen when the collateralized asset decreases or the borrowed debt increases.

To reduce the risk of liquidation, you can repay any outstanding loans or deposit additional collateral to increase your Health Factor. An example:

  • Peter deposits 10 ETH and borrows 5 ETH worth of DAI

  • If Peter’s Health Factor drops below 1, his loan will be eligible for liquidation

  • A liquidator can repay up to 50% of a single borrowed amount (in this case, 2.5 ETH worth of DAI)

  • In return, the liquidator can claim a single collateral, which is ETH, at a 7.5% bonus

  • The liquidator claims 2.5 + 0.1875 ETH for repaying Roger's bad debt (2.5 ETH worth of DAI)

  • 0.1875 ETH is claimed by the protocol at a 7.5% bonus (15% total penalty)

  • After liquidation, Peter has 7.125 ETH (10-2.5-0.1875-0.1875 ETH) of supplied ETH collateral and 2.5 ETH worth of DAI borrowed.

What is the cost of interacting with Segment Finance?

Transactions on the Segment Protocol require BNB Chain fees, which depend on network congestion and the complexity of the transaction.

Is there any risk?

No platform can be considered entirely risk-free. Risks associated with Segment Protocol include smart contract risk and liquidation risk. However, every possible step has been taken to minimize these risks, including making the protocol code public and conducting thorough audits.

What are Isolated Pools?

Isolated Pools are a feature in Segment Protocol, designed to overcome the limitations of a single core pool. Each Isolated Pool is an independent collection of assets with custom risk management configurations. This setup allows users to better manage their risk and earn yield, while also preventing failures in one market from impacting others.

What is the Risk Fund?

In Segment Protocol, a risk fund is maintained for each pool. A percentage of the protocol's revenue is deposited into this fund, aiming to counterbalance bad debt and prevent potential market insolvencies.

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