> For the complete documentation index, see [llms.txt](https://jpydf.gitbook.io/jpy-defi/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://jpydf.gitbook.io/jpy-defi/readme.md).

# What is JPYdf

JPYdf is a **crypto-asset-backed stablecoin that aims to track the value of the Japanese yen**. It is issued on-chain on an over-collateralized basis against crypto assets and stablecoins, with a reference target of ¥1 per JPYdf.

“Stablecoin” describes a design aimed at value stability. JPYdf’s market price can rise above or fall below ¥1. Tracking the yen, price stability, redemption in yen, and preservation of principal are not guaranteed.

JPYdf is not fiat currency, a bank deposit, or stored-value money, and does not represent a yen-denominated monetary claim or a right to redemption in yen.

JPY DeFi is a friendly fork of Liquity v2.

## How it works

JPY DeFi is a CDP (Collateralized Debt Position) protocol in which users deposit collateral and borrow JPYdf. Each collateral type has its own independent market (branch), and the protocol works mainly through these mechanisms.

* **Borrowing**: Deposit wstETH or USDC as collateral and borrow JPYdf within the collateral-ratio requirements.
* **Liquidation**: A borrowing position whose collateral ratio falls below the required level is liquidated. Its debt is resolved either by offsetting it against JPYdf deposited in the Stability Pool or by redistributing it to other borrowing positions in the same branch.
* **Redemption**: Normal redemption exchanges JPYdf for collateral (dToken), with the amount calculated using a reference of ¥1 per JPYdf before fees and the protocol’s redemption price. This can create an incentive for the market price to move toward the target; fees and collateral exit conditions affect the outcome.

## Scope of permissions

The borrowing, liquidation, and redemption core inherited from Liquity v2 (the Core) can be used by anyone who meets its conditions, and it has no function to freeze a particular user's JPYdf. The Core and the JPYdf token contracts cannot be upgraded. The proprietary layers that hold and deploy collateral, however, are subject to governance powers to pause, recognize losses, and upgrade. Governance also replaces the price sources the Core uses and resumes branches paused by a price failure.

## App availability

The Foundation’s app is unavailable to Restricted Persons, including people residing or located in Japan, the United States or other Restricted Jurisdictions, sanctioned persons, and those acting on their behalf or for their benefit. The app, documentation and support are provided in English only. See the [excluded countries and territories](/jpy-defi/reference/interface-terms.md#restricted-jurisdictions) and the [Restricted Person definition](/jpy-defi/reference/interface-terms.md#restricted-persons) in the terms of use.