# CDPs On Mento V3, **CDP-backed stablecoins are FX stables**: they are created when users **borrow** against collateral. Mento’s CDP system uses **USDm as the collateral asset**: you lock USDm and **borrow** FX-pegged stables such as **GBPm**. This is a **stable-on-stable** setup rather than crypto collateral. *** ## What you can do * **Borrow** — Deposit collateral (USDm) and borrow the stablecoin (e.g. GBPm). You open a **trove**, set your interest rate, and can run multiple troves per address. * **Repay** — Return the borrowed stable to reduce or close your debt and free collateral. * **Stability pool** — Deposit the debt token (e.g. GBPm) into a stability pool used in liquidations; you may earn rewards. Troves can be **adjusted** (add/withdraw collateral, borrow more, repay) and **closed**. The system uses a **Stability Pool** and **liquidations** when troves become undercollateralized. Because all Mento CDPs are **FX CDPs**, they also inherit **FX market-hours restrictions** from `FXPriceFeed -> OracleAdapter -> MarketHoursBreaker`. *** ## How to do it **Via the Mento app:** Use the [**Mento app**](https://app.mento.org/borrow?chain=42220) for borrow, repay, and stability pool flows. Connect your wallet (e.g. on Celo), select the CDP product (e.g. GBPm), deposit USDm as collateral, and borrow the stable. **Via the SDK:** For programmatic or integrator use, the [**Mento SDK**](https://docs.mento.org/mento-v3/build/mento-sdk) provides `mento.borrow`: open/adjust/close troves, read trove data and system params, and predict upfront fees. See [Borrow (CDP)](https://docs.mento.org/mento-v3/build/mento-sdk/guides/borrow). The SDK identifies each CDP system by the **debt token** (the stable you borrow, e.g. GBPm). *** ## Mento CDPs and Liquity v2 **Mento CDPs are a fork of** [**Liquity v2**](https://www.liquity.org/)**.** The CDP contracts live in a **separate repository**: [mento-protocol/bold](https://github.com/mento-protocol/bold). The core mechanics (troves, user-set interest rates, liquidations, Stability Pool, redemptions) follow the Liquity v2 design. Liquity v2 uses ETH/LSTs as collateral and BOLD as the debt token; Mento’s fork uses **USDm as collateral** and **FX-pegged stables (e.g. GBPm) as the debt token**, with **one independent instance per FX currency** (each with its own TroveManager, StabilityPool, and FX price feed). For full protocol and contract documentation (state variables, liquidation thresholds, fee flows, redemption mechanics), use the **Liquity v2** documentation: * [**Liquity v2 documentation**](https://docs.liquity.org/) — protocol overview, technical resources, and contract behavior. * [**Liquity v2 whitepaper**](https://www.liquity.org/blog/liquity-v2-whitepaper) — design and economics. For **Mento-specific** implementation (USDm collateral, FX oracles, multi-instance architecture, and FXPriceFeed), see the [**mento-protocol/bold README**](https://github.com/mento-protocol/bold). *** ## Weekend And Holiday Impact Mento CDPs use `FXPriceFeed`, which reads the branch FX rate through `OracleAdapter.getFXRateIfValid(rateFeedID)`. As a result, normal price-dependent CDP actions are only available when the FX market is considered open. Under the current `MarketHoursBreaker`, FX is treated as closed: * from **Friday 21:00 UTC** until **Sunday 23:00 UTC** * on **Dec 25** and **Jan 1** * after **22:00 UTC** on **Dec 24** and **Dec 31** ### Not Possible While FX Markets Are Closed * **Open a trove** * **Adjust a trove**: add collateral, withdraw collateral, borrow more, repay, or make a combined adjustment * **Close a trove** * **Normal liquidations** * **Normal redemptions** * **Some advanced rate-management actions** if they require a fresh price for upfront-fee or collateral-ratio checks ### Still Possible While FX Markets Are Closed * **Deposit to the Stability Pool** * **Withdraw from the Stability Pool** * **Claim existing Stability Pool collateral gains** So the Stability Pool itself is **not shut down on weekends**. The important limitation is indirect: if liquidations are blocked, the Stability Pool will generally **not receive new liquidation-driven gains** until the FX market reopens. ### Emergency Shutdown Mode If a branch has already entered **shutdown**, `FXPriceFeed` returns its `lastValidPrice` instead of reading the live FX oracle path. In that emergency mode, shutdown-specific operations such as **urgent redemption** are governed by shutdown logic rather than the ordinary market-hours gate. *** ## Critical risk considerations Because Mento CDPs use **USDm as collateral** and **FX-pegged debt** (e.g. GBPm), the risk profile differs from crypto-collateralized systems like Liquity v2: | Risk | Description | | --------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | | **USDm depeg risk** | All FX instances use USDm as collateral. A USDm depeg would cause **correlated failure across all CDP instances** — every trove’s collateral would lose value at once. | | **FX exposure** | Unlike USD-pegged stablecoins, **borrowers and Stability Pool depositors** are exposed to **foreign exchange rate risk**: the debt token (e.g. GBPm) is pegged to GBP, which floats against USD. | | **Stability Pool FX loss** | When liquidations occur, SP depositors receive collateral (USDm) in exchange for burned debt (e.g. GBPm). Because of FX rate dynamics, **SP depositors may incur losses on liquidations** — the USD value of collateral received can be less than the USD value of the debt absorbed. See the [mento-protocol/bold README (Economics)](https://github.com/mento-protocol/bold) for details. | | **Double liquidation risk** | Troves can become undercollateralized from **two directions**: (1) **FX rate movements** (e.g. GBP appreciates vs USD, so debt value in USD rises), and (2) **USDm depeg** (collateral value in USD falls). Both can trigger liquidations. | Borrowers and SP depositors should understand these risks before opening troves or depositing to the Stability Pool. For full Mento-specific risk and economics analysis, see the [**mento-protocol/bold README**](https://github.com/mento-protocol/bold). *** ## Relation to FPMM liquidity Mento uses **CDPLiquidityStrategy** to rebalance FPMM pools that hold the CDP-backed stable (e.g. GBPm). On **expansion**, the strategy draws debt from the Stability Pool; on **contraction**, it sources collateral (USDm) via redemptions. See [Rebalancing & strategies](https://docs.mento.org/mento-v3/dive-deeper/fpmm/rebalancing-and-strategies) and [Liquidity strategies](https://docs.mento.org/mento-v3/build/smart-contracts/liquidity-strategies) in Smart Contracts. *** **See also:** [Getting Mento stables](https://docs.mento.org/mento-v3/other/getting-mento-stables) · [Overview](https://docs.mento.org/mento-v3/get-started/readme) · [CDP smart contracts](https://docs.mento.org/mento-v3/build/smart-contracts/cdps) (Build) · [Troubleshooting](https://docs.mento.org/mento-v3/build/troubleshooting)