Questions about Balanced? Find the answers to common queries here.
sICX is a share of an ICX staking pool. Users contribute ICX to the staking pool in exchange for sICX. The ICX is delegated, i-score is claimed, and the total ICX in the staking pool continues to grow, which increases the value of each sICX token. You can convert ICX to sICX for free on the Balanced exchange.
When you deposit ICX as collateral, it's first converted to sICX, and the value increases over time based on ICON's reward rate and the claiming of rewards by the staking pool. You'll always see the ICX value in the UI, but you'll receive sICX when you withdraw it. You won't be able to use your sICX while it's in the collateral pool.
If you want to convert your sICX to ICX, there are two ways to do it:
- 1.Unstake it from the wallet section.
- 2.Swap it for ICX (unstake instantly – you'll receive 1% less ICX)
If you unstake sICX from your wallet, it's often faster than the unstaking period on the ICON Network. When people deposit ICX as collateral or convert their ICX to sICX, that ICX is first used to fill any pending unstaking requests.
To keep bnUSD close to $1, a rebalancing mechanism can be triggered whenever there’s a significant price difference between the oracle and the Balanced exchange. This ‘rebalancing threshold’ is set to 10%, but can be adjusted by the community at any time.
When bnUSD falls below the rebalancing threshold, Balanced sells borrowers' sICX collateral at a high price, and uses the bnUSD proceeds to repay a larger amount of their debt.
When bnUSD is above the rebalancing threshold, Balanced increases borrowers' debt (free of charge), then uses the bnUSD to buy sICX at a cheap rate and add it to the borrowers' collateral.
Rebalancing is done in groups of 50, using a maximum of 0.05% of the group’s debt. Each borrower is affected the same, percentage wise. After they’ve been rebalanced, every other borrower will take a turn before it happens to them again.
The value of collateral sold through rebalancing can never be more than the amount you borrowed. Rebalancing works on a percentage-basis, so if 10% of all bnUSD was burned through rebalancing, your debt would decrease by 10%, on average. If you have less debt, less value of collateral can be sold.
To mitigate the effects of rebalancing, you can participate in the sICX/bnUSD liquidity pool. Rebalancing trades borrowers' collateral against the sICX/bnUSD pool, so if you maintain similar percentages of the liquidity pool and total debt, your position in the sICX/bnUSD pool will counteract the effects of rebalancing. Be aware that participation in the sICX/bnUSD pool comes with its own risks.
To monitor the changes to your position, keep an eye on your rebalancing values in the position details section.
Open ICONex, then click the 3 dots next to your public key and choose Add Token. Enter the contract address for each asset:
Open MyIconWallet, go to Settings > Manage tokens, and select Balance Token, Balanced Dollar, and Staked ICX.