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What is Cygnus Finance?
Cygnus Finance is the first native stablecoin protocol on the Base chain. It uses short-term U.S. Treasury Bills as collateral to issue interest-bearing stablecoin cgUSD and allows users to mint using multi-chain assets.
How does Cygnus Finance work?
Through the rebase mechanism, cgUSD conveys the pure interest returns of U.S. Treasury bills to users. As interest is distributed, the balance of cgUSD increases accordingly. The total issuance of cgUSD remains consistent with the net value of its asset portfolio (on-chain stablecoins, the market value of U.S. Treasury Bills and interest) every New York banking day, ensuring that Cygnus Finance always supports a 1:1 redemption ratio of cgUSD to USDC.
What are the risks of investing in Cygnus Finance?
When investing using liquidity protocols, there are indeed some potential risks to consider:
Smart contract security: There is a risk that the protocol's smart contracts could have vulnerabilities or bugs. To mitigate this risk, Cygnus Finance typically undergo extensive code audits and have bug bounty programs in place to encourage the community to identify and report any security issues.
cgUSD price risk: When investing in Cygnus Finance, users receive cgUSD in exchange for their USDC. The value of these cgUSD can be influenced by various factors such as market demand and liquidity restrictions. Users risk an exchange price of cgUSD which is lower than inherent value due to withdrawal restrictions on Cygnus Finance, making arbitrage and risk-free market-making impossible.
What is cgUSD APR for Base?
cgUSD APR for Base = Protocol APR * (1 - Protocol fee)
Protocol APR — US Treasury Bills
Protocol fee — Transaction Fee and Management Fee of 35 basis points
More about cgUSD APR for Base you can find on the Docs.
What fee is applied by Cygnus Finance? What is this used for?
The Transaction Fee will mainly cover the operational costs of maintaining the US Treasury Bills across on-chain and off-chain venues
The Management Fee is collected by the Cygnus Finance protocol for the management of the cgUSD and the US Treasury-Bills portfolio.
What is cgUSD?
cgUSD is a transferable rebasing utility token and rebases daily
How can I get cgUSD?
You can get cgUSD in many ways, including interacting with the smart contract directly.
How can I use cgUSD?
You can use your cgUSD as collateral, for lending, and more.
How can I withdraw cgUSD?
You can use our Withdrawals Request and Claim tabs to withdraw cgUSD and receive USDC at a 1:1 ratio. Under normal circumstances, withdrawal periods can take anywhere between 5-7 days. After that, you can claim your cgUSD using the Claim tab.
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