How Iron Finance Works

Let’s first take a look at what Iron is. The IRON token is a partially collateralized token, pegged to the US dollar, available on both the Polygon network and the BinanceSmartChain.

The protocol aims to maintain the price stability of the IRON token, i.e., the peg, by storing sufficient collateral in time-locked smart contracts. This collateral is used for redemptions, helping to maintain price stability. The collateral consists of two tokens. On the Polygon network, the USDC and the TITAN token, while on the BinanceSmartChain, the BUSD and the STEEL token are used. The USDC or BUSD token is deposited into the protocol when a user mints the IRON token, while the TITAN or STEEL token used for minting is burned. When the user redeems IRON tokens, the protocol returns USDC or BUSD tokens and mints the required amount of TITAN or STEEL tokens.

The ratio of USDC or BUSD and TITAN or STEEL tokens used by the minting and redeeming function is determined by the Target Collateral Ratio and the Effective Collateral Ratio respectively.

As you can see, it is not a stablecoin that is 100% backed by another stablecoin, being partially collateralized. You are going to be able to understand it better when you see how we can get IRON and once we want to exchange our IRON for USDC or BUSD.

Liquidity in Iron Finance

A positive aspect is that the platform already has more than 250 million in its IRON stablecoin. Which gives more security to have so much liquidity in its protocol and so quickly. Even so, before going to see the step by step, I would like to comment again that it is a fairly new platform and that carries its risk. So I recommend you to understand how IRON works before you start to stake it.

How to get Matic

The first thing you will need is to have your wallet configured in the MATIC network. I will leave you a video of how to do it and the configuration. In my case I use metamask. Once you have the matic network set up, you are going to need matic to pay for transactions. You can go to matic.supply to get matic for free which will give you about 100 transactions. In another video I will leave you with, I also show you how to buy matic with credit card or wire transfer.

Binance Smart Chain to Polygon/MATIC Bridge

With the matic network configured, in my case I had the funds in the binance Smart chain, as I imagine it will happen to many of you. For this, let’s see how to move them from the binance Smart chain to the matic network with a bridge. In my case, I already bought the USDC we are going to need in pancakeswap and I have them ready to pass them. To do this, we will go to xpollinate. Here you must connect your wallet and select the binance Smart chain network and on the other side the MATIC network. In this bridge, you are only going to be able to pass stablecoins, DAI, USDC and USDT. To see if there is USDC liquidity, scroll down and look at the matic network, where we want to send our USDC. Luckily, it has enough USDC liquidity to pass it. In my case I am going to pass 120$ for this example.

Back to the top, copy the address of our metamask wallet and paste it in reciver address, or paste the address where you want to send the USDC. Click on swap and follow the steps that will appear. Now we will have to wait a few minutes for the funds to be withdrawn from our wallet and deposited in our wallet that we have indicated in the Matic network. You will see that the commission of this bridge is really low, in my case it was 0.06 dollars.

After a few minutes, we will have the USDC in our Matic network wallet. Once you have them, go to iron.finance. The first thing is to change the network, usually comes standard binance Smart chain, click above and change to the polygon network. Now we must connect our wallet. Confirm in metamask and you are done.

How to Mint Iron

The next step is to go to Bank. Here, you will be able to create IRON in two ways. Using USDC and TITAN with the percentage it sends you, or just using USDC. In my case, as I had no titan, I clicked on use only USDC and that was it.

Remember that we are going to have to create an LP TOken, and therefore, we need to have the same amount of IRON as USDC. So, in my case that I was going with 120 USD, I change only 60 USDC to IRON.

Indicate the half of your USDC you want to use above, approve the USDC to be able to use them, and click on mint. In my case, I had trouble clicking on mint with $60, and had to indicate $30 and $30 for it to work. If the same thing happens to you, try entering smaller amounts and do it several times.

With the IRON amount in our wallet, let’s go to farms. Look for the IRON USDC farm. Here we click on add liquidity, and it will take us to sushiswap to create the LP TOKEN.

How to create the IRON-USDC LP Token

In sushiswap we must indicate the same amount of IRON and USDC. Now we will have to approve both IRON and USDC. Just click approve on each one and confirm in your wallet, you will see that the commission is very low. With both stablecoins approved, just click on confirm adding liquidity, confirm supply and confirm the transaction in your metamask.

Beefy Staking

Now, you will have your IRON and USDC LP TOKEN. Let’s go to the last step. Open beefy, in my case I already have it open. Otherwise search beefy.finance and go to Polygon network. Connect your wallet to beefy and that’s it. Once in beefy and the polygon network, look for the titan-USDC pair. In my case I already have it selected. Here, you will see that it detects our LP Token in balance and its value in dollars. Click on approve, confirm in our wallet and we will be able to deposit our LP token. Select the amount you want to deposit, in my case 100% and click on deposit all. Confirm in our wallet and that’s it.

With this, you will have your two stablecoins generating more than 300% per year for the moment. When you want to withdraw your LP Tokens with the profit, simply click on withdraw or withdraw all. Go back to sushiswap to undo your LP Token and you will have USDC and Iron again.

To switch IRON to USDC again, we go back to iron finance. Here, in bank, we must go to the reedem part. Indicate the amount of IRON you have, and you will see that you receive a percentage in USDC and another in titan of the total value. In this case, you will receive 91% in USDC and the other 9% in Titan. Even if you do not receive 100% of the USDC you have used, you can sell the titan you receive for USDC and get back the same amount of USDC as IRON.  

As you can see, since IRON is a partially collateralized stablecoin, you do not receive 100% of IRON in USDC. But since you get TITAN and you can sell it instantly, you will end up getting 100% or very close to USDC when you sell the small percentage of TITAN. Although if you take into account the annual % you get for staking IRON and USDC in beefy, losing a small % by switching from IRON to USDC, believe me you will not notice much difference, as you will have generated much more than staking only USDC, with 14% per year.

Remember to inform yourself before staking or buying any iron finance cryptocurrency, as it is a new project and it is important to know how it works.

I hope this video has helped you to know a way to make the most of stablecoins with some risk. Remember that if you don’t have an account with binance, you can create one just below.