The FX buffer (CHF loans)

CHF loans are secured by a Letter of Credit in EURC, a euro stablecoin. There is no widely used Swiss-franc stablecoin, so the LoC cannot be denominated in francs.

If the franc strengthens against the euro during your loan, a fixed amount of EURC buys fewer francs. To keep the Letter of Credit covering the full loan in that case, we size it larger than principal plus full-term interest. The extra amount depends on the term.

USD loans use USDT and need no buffer.

Loan currency	Letter of Credit asset	Buffer
USD	USDT	0%
CHF	EURC	By term, below

Buffer by term

The buffer is a percentage of principal plus full-term interest.

Term	Buffer
3 months	4%
6 months	6%
9 months	8%
12 months	10%

For any other term, the app shows the buffer when you request the loan.

What you see in the app

• Your Letter of Credit’s EURC amount is higher than your loan plus interest at today’s rate, by the buffer for your term.
• Displayed maximum LTV and liquidation LTV sit a little lower than for a USD loan. A longer term in the table above means a larger buffer, so those displayed LTVs sit a little lower still.
• Collateral you lock for a given LTV is unchanged. Labels change; the amount you need does not.

See Deposit & reserve collateral for the reservation step.

What happens in each scenario

You repay normally. You pay in CHF by bank transfer. Helva cancels the Letter of Credit and releases your collateral. This path never uses the buffer.

The franc strengthens. We track how much of the buffer has been used. The measure is the current value of the Letter of Credit in francs, divided by what you owe.

flowchart TD
    A[CHF/EUR moves] --> B{Buffer remaining}
    B -- Healthy --> C[No action]
    B -- About half used --> D[Information email]
    D --> C
    B -- Most used --> E[Add a supplementary Letter of Credit]
    E --> C
    B -- Almost exhausted, no extra LoC --> F[Loan can be called]
    F --> G[LoC redeemed, surplus EURC returned to your wallet]

• About half the buffer used: you get an information email. No action needed.
• Most of the buffer used: we ask you to add a supplementary Letter of Credit within a set deadline so the loan stays fully covered.
• Buffer almost exhausted and no supplementary Letter of Credit: the loan can be called. The Letter of Credit is redeemed, the loan is settled, and any EURC beyond what you owed is returned to you in EURC to your wallet. We do not convert it into francs.

Deadline for a supplementary Letter of Credit

The deadline to add a supplementary Letter of Credit is being finalized. The app and the email will state it when we ask.

Your collateral falls in value and the loan is liquidated. Liquidation happens on-chain when your collateral-to-debt ratio reaches the liquidation threshold. It converts only as much collateral as is needed to obtain the EURC in the Letter of Credit; the rest of your collateral stays yours. Because the Letter of Credit was sized with the FX buffer and with interest for the full term, it usually contains more EURC than you actually owe. The difference is returned to you in EURC to your wallet. We do not convert it into francs. Interest charged on liquidation is the interest accrued to the liquidation date, with a minimum of three months.

Taxes

Converting collateral may be a taxable disposal depending on your jurisdiction. Surplus returned in EURC is not converted into francs. See Repaying your loan.

Two separate risks

Collateral price and the exchange rate are watched independently, and they act at different moments. On-chain liquidation looks only at your collateral against EURC; CHF/EUR does not move that threshold. Exchange rate matters when EURC is converted into francs. Collateral leaves a cushion of roughly 30-40%, larger than normal CHF/EUR moves, so outside extreme market events the two do not compound.

See Managing your loan for collateral monitoring, and What happens if… for the liquidation path.