PrimeFi Basics on XDC

⚠️ Reminder – Not Financial Advice The following is an operational description of PrimeFi, not advice to use it.

Before we talk about strategies, it helps to understand how PrimeFi behaves at a high level.

Core Concepts

• When you deposit an asset on PrimeFi (XDC, psXDC, USDC, etc.), you receive an interest‑bearing token (for example, pUSDC or ppsXDC).

• Borrowers pay interest; depositors earn interest.

• Some markets are additionally incentivized with PRFI rewards, which boost deposit or borrow APYs.

• psXDC is a liquid‑staking token representing staked XDC:

  • It accrues staking rewards from masternodes.

  • When deposited into PrimeFi, psXDC can earn both staking yield and protocol incentives.

• pLP (Prime Liquidity Provider token):

  • Locking pLP up to a certain threshold (e.g., around 5% of your deposit’s USD value) can unlock extra emissions on your deposits and borrows.

Health Factor & Liquidation

PrimeFi uses a Health Factor (HF) to track how safe your borrowing position is.

• HF > 1 → Position is healthy (not liquidatable at that moment).

• HF ≤ 1 → Position can be liquidated by others.

In practice:

• A higher HF = more safety buffer.

• For example, many users aim for HF ≥ 1.7–2.5 on leveraged positions to survive normal volatility.

If collateral prices fall or borrow amounts grow (through interest), HF decreases. If it drops too much, your collateral can be liquidated at a discount to repay your debt.

Risk Buckets

We refer to three broad categories:

• Conservative

  • No borrowing.

  • No liquidation risk.

  • Main risks: protocol risk, smart contract risk, asset price risk.

• Moderate

  • Borrowing without recursive loops.

  • Liquidation risk exists but is easier to manage if LTV is low and HF is high.

• Aggressive

  • Leveraged looping and more complex structures.

  • High liquidation risk, sensitive to APR changes, only for advanced users.

All strategies in the following pages sit somewhere in these three buckets.