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Assets accepted as collateral for minting the $USC stablecoin
USC can be minted from all collateral that the CDP module supports.
USC is Cosmos-native and supports IBC tokens (e.g. ATOM, OSMO) as collateral. This makes USC a secure, Cosmos-native stablecoin that can be used on other IBC-enabled chains securely (without having to rely on bridged stablecoins, which are often the target of exploits).
As Carbon is inter-operated with Ethereum, BNB Smart Chain, Neo N3, Zilliqa, Arbitrum and Polygon via Poly Network, USC can support assets from these chains as collateral as well.
In a nutshell, a myriad of assets can be used as collateral for minting USC so long they have been whitelisted as acceptable collateral.
If the collateralization ratio of the loan falls below the minimum ratio, the CDP becomes under-collateralized. Anyone (i.e. liquidators) may then call a function on the contract to liquidate the loan and receive a percentage of the collateral as a reward (i.e. liquidation bonus), in exchange for backing the value of the stablecoin minted. This ensures that all stablecoins are sufficiently backed and will maintain their peg.
Consequently, by repaying the loan and its accrued interest, the returned USC is automatically burnt (i.e. destroyed) and the collateral will be made available for withdrawal.
The collaterization ratio varies depending on the individual assets used as collaterals. As some assets have higher collateralization ratio and others lower, one's collateralization ratio is a weighted average of all available collaterals.