Frequently Asked Questions posed by Hundred Finance users
As with all cutting edge financial services, there are elements of risk to interacting with cryptocurrency and platforms such as Hundred Finance. In the case of an Ethereum-based protocol, the most pressing of these are smart contract vulnerabilities that affect the platform and the liquidation risk faced by end users. No platform should be considered 100% safe. That said, Hundred Finance has and continues to be extensively tested in order to mitigate risk and provide the UI necessary to protect user funds from undue loss. Smart contracts are reviewed thoroughly and risk assessments are conducted prior to additions to the protocols suite of services. What is more, a bug bounty program has now also been instigated to incentivize positive analysis of the protocol’s mechanics and infrastructure.
Assets supplied to Hundred Finance are sent to smart contracts. Only users have access to and full control over their funds. It is essential, however, that users properly secure the private keys of the wallets used to interact with the protocol. Loss of private keys equates with loss of funds as the protocol or the team behind it have no means of retrieving access.
Supplying assets to Hundred Finance is free. There is, however, a small, asset-specific fee generated from interest spreads. Referred to as the Reserve Factor, these fees are used to support the ecosystem and contribute to its growth.
The reserve factor used for each asset is recorded within this document.
Supplying a token to Hundred Finance simply means making it available to users who will pay interest on any amount they borrow. This interest, minus the reserve factor, is distributed to all those supplying the asset proportional to their portion of the available liquidity. Staking, on the other hand, refers to depositing a qualifying hTOKEN (that are received when an asset has been supplied) in its own staking contract in order to receive HND tokens in addition to the underlying interest received from borrowers.
It is important to note that all hTOKENS act as collateral and will thus allow those who supply the underlying assets to borrow against them as long as those hTOKENS remain in their wallet. As staking entails transferring hTOKENS out of a user's wallet, stakers cease to be able to borrow against them.
Hundred Finance allows users to stake their stablecoin-derived hTOKENS for HND emissions (assuming those hTOKENS are not collateralizing a borrow). These HND rewards are emitted at a default 1.0x but can be boosted up to 2.5x by staking HND. Until the hTOKENS have been staked, the protocol is unable to determine what boost an account has. For that reason, only once this has been done will the UI display the user's current APR.
In order to boost your APR on a qualifying hTOKEN, the hToken needs to be staked in the applicable staking contract using an account that has also staked HND to receive veHND. The boost received can be anything up to 2.5x depending on vote distribution across gauges and the composition of the staking contract, including factors such as total liquidity, an accounts own portion of the total liquidity and its relative veHND holdings when compared to other accounts currently staking.
The boost depends on the following parameters:
DollarProvided = $ amount of staked stable coin
TotalLiquidity = $ total amount of stable coin in the pool
VotingBalance = own amount of veHND locked
Voting Total = total amount of veHND locked
The value would be the minimum between the DollarProvided and a calculated value as per below
Min(DollarProvided, (DollarProvided * 40 / 100) + TotalLiquidty * VotingBalance /Voting Total * 60 / 100)
Yes, within the vote.hundred.finance UI we have built a calculator that can be used to estimate the amount of veHND to get a particular boost on any given gauge. Furthermore, the Staking UI includes at the bottom of the page a readout of a connected account's current boost on qualifying staked assets, as well as a dynamic calculation of how much additional veHND would be needed in that instance to boost the asset's APR to the maximum 2.5x. This figure appears as a popup modal when a user hovers over a current boost amount that is less than 2.5x.
If I can only vote once every 10 days but the epoch lasts 7, will I miss out on boosted APR during those 3 days?
Voting does not directly boost qualification, instead it determines the distribution of HND rewards. Assuming you voted for your the qualifying assets you have staked, you will always receive some form of boost even if voting for an epoch you were unable to influence heavily favored assets you do not have staked. With this in mind, votes could be picked just once and never altered, though the "gamification" of the protocol through tactical voting and the 10-day cooldown is intended an result of the veHND system.