Everything you need to know about Flux Finance — lending, borrowing, and earning yield on tokenized US Treasuries.
All Questions
Getting Started
What is Flux Finance and how does it work?
Flux Finance is a decentralized lending and borrowing protocol built on Ethereum. It allows users to lend stablecoins such as USDC, USDT, DAI, and FRAX to earn yield, while institutional borrowers can use OUSG — a tokenized US Treasury product from Ondo Finance — as collateral to borrow those stablecoins. Flux Finance is a fork of Compound v2, a battle-tested protocol that has been running since 2019, adapted to support permissioned collateral types. The protocol is governed by ONDO token holders through the Ondo DAO, ensuring decentralized control over its future development.
Who can use Flux Finance to lend stablecoins?
Anyone can lend stablecoins on Flux Finance. There are no restrictions on the lender side — retail users, DAOs, and institutions alike can supply USDC, USDT, DAI, or FRAX to the protocol and immediately begin earning interest. To get started, simply connect a compatible wallet such as MetaMask, Coinbase Wallet, Fireblocks, Ledger, or Gnosis Safe to the Flux Finance app and deposit the stablecoin of your choice. The protocol will issue fTokens (such as fUSDC or fDAI) representing your deposit plus accrued interest.
What wallets are compatible with Flux Finance?
Flux Finance is a decentralized protocol accessible via any Ethereum-compatible wallet or custody solution. Supported access methods include MetaMask (one of the most widely used browser wallets), Coinbase Wallet (a non-custodial wallet developed by Coinbase), Fireblocks (an institutional MPC custody platform), Ledger hardware wallets (for maximum self-custody security), and Gnosis Safe (a multi-signature wallet popular with DAOs and treasury management). Because Flux Finance is decentralized, you can also interact directly with its smart contracts through any EVM-compatible interface.
Lending & Borrowing
What are fTokens and how do I earn interest with Flux Finance?
When you supply stablecoins to Flux Finance, you receive fTokens in return — for example, fUSDC when you deposit USDC, or fDAI when you deposit DAI. These fTokens are ERC-20 tokens that represent your proportional share of the lending pool, including any interest accrued. Interest compounds automatically over time, meaning the value of your fTokens relative to the underlying stablecoin increases continuously. When you wish to withdraw, you redeem your fTokens for the original stablecoin plus all accumulated interest. You can also transfer fTokens to other wallets or use them in other DeFi protocols that support them.
What collateral does Flux Finance accept for borrowing?
The only collateral accepted on Flux Finance is OUSG, a tokenized US Treasury product issued by Ondo Finance. OUSG currently invests primarily in the BlackRock USD Institutional Digital Liquidity Fund (BUIDL), with the remainder allocated to BlackRock's FedFund (TFDXX), bank deposits, and stablecoins. Because OUSG is backed by short-duration US Treasuries, it provides a highly stable and predictable collateral base. Access to OUSG — and therefore to borrowing on Flux Finance — requires KYC/AML verification through Ondo Finance, making the borrowing side of the protocol permissioned while keeping the lending side open to all.
How are interest rates determined on Flux Finance?
Interest rates on Flux Finance are determined algorithmically based on supply and demand within each lending pool. As utilization of a pool increases (i.e., more of the supplied assets are borrowed), the interest rate rises, incentivizing more lenders to supply and discouraging additional borrowing. Conversely, when utilization is low, rates decrease. This model, inherited from Compound v2, ensures that rates automatically adjust to market conditions without any manual intervention. Current rates for each supported stablecoin — USDC, USDT, DAI, and FRAX — are visible in real time on the Flux Finance Markets page.
Security & Governance
How secure is Flux Finance and has it been audited?
Flux Finance is built on Compound v2, which has been live since 2019 and has processed billions of dollars in transactions. The core lending infrastructure is therefore among the most battle-tested in DeFi. The changes made to the Compound codebase — primarily the permissioning system that restricts certain collateral types to verified participants — have been audited by Trail of Bits, OpenZeppelin, Certora, and code4rena. In addition, Flux Finance operates a $550,000 bug bounty program through Immunefi to incentivize responsible disclosure of any potential vulnerabilities. Despite these measures, as with all smart contract protocols, users should be aware that risks cannot be fully eliminated.
How is Flux Finance governed and who controls protocol changes?
Flux Finance is governed by the Ondo DAO, a decentralized autonomous organization composed of ONDO token holders. Any changes to the protocol — including interest rate parameters, supported collateral types, and treasury decisions — must go through a community governance process. Proposals can be submitted by any sufficiently large token holder, discussed on the Flux Finance Forum, and voted on through Tally. This structure ensures that no single party controls the protocol and that all participants have a voice in its future direction. Token holders are encouraged to stay engaged with governance discussions and cast votes on active proposals.
Integrations & Ecosystem
Can fTokens be used in other DeFi protocols?
Yes. Because fTokens are standard ERC-20 tokens, they can be transferred and used across the broader Ethereum DeFi ecosystem. Reserve Protocol, for example, has enabled fUSDC and fDAI to be used as collateral backing for its RTokens. Additionally, CoW Swap users can buy and sell fTokens easily and efficiently through the Seasolver integration by Yearn Finance, enabling zap-in and zap-out functionality without needing to interact directly with Flux Finance's interface. The composability of fTokens is a key advantage of the Flux Finance design, allowing lenders to stack yield-bearing assets across multiple protocols simultaneously.
Where can I find documentation and get support for Flux Finance?
Comprehensive documentation for Flux Finance is available at docs.fluxfinance.com, covering everything from protocol mechanics to smart contract references. For community discussion and governance, visit the Flux Finance Forum. You can also connect with the community and get support on Discord and follow the latest updates on Twitter. The official blog at blog.fluxfinance.com publishes announcements, protocol updates, and in-depth articles about the Flux Finance ecosystem.