# Core Concepts

#### **Synthetic Tokens (iTokens)**

iTokens represent underlying assets, e.g., "iUSDC" mirrors USDC stablecoin.

#### **Interest Rate Mechanics**

Market dynamics determine interest rates, with iTokens creating liquidity pools influencing these rates.

#### **Framework**

* **Market-Driven Lending:** The lending model responds dynamically to market forces.
* **Accessibility:** IFICHI is designed for easy integration, open to individuals and developers.
* **Security and Decentralization:** Built on ARB contracts, IFICHI emphasizes security, transparency, and decentralization.
* **Community and Governance:** Community governance plays a significant role in protocol direction.

#### **Collateralization and Security**

* **Over-Collateralization Policy:** Requires borrowers to deposit more than the loan amount in iTokens.
* **Code and Licensing:** Codebase is public on GitHub; smart contracts are initially under BUSL-1.1 license, transitioning to LGPL v3.
* **Governance System:** Based on Compound's GovernorBravo contracts, with a focus on community-led decisions.

#### **Progressive Decentralization and Security**

* **Decentralization Strategy:** Balances product development and smart contract security with gradual decentralization.
* **Security Measures:** Includes an upgradeable BalanceSheet contract, debt caps, operational pauses, and a bug bounty program.

#### **Liquidation Mechanics**

* **Liquidation Process:** Similar to Compound's system, with incentives for liquidators.
* **Pricing Data:** Relies on Chainlink Price Feeds for accurate pricing.