# FW (FiraWrapped)

## Overview

FW tokens wrap yield-bearing assets (e.g., USDC in an ERC-4626 vault) into a standardized ERC-20 interface. The FW token is the foundation of the protocol — BT and CT are minted from FW, and the AMM trades BT against FW.

{% hint style="info" %}
The first FW implementation is **USDCFW**, which wraps USDC through the SisuVault (an ERC-4626 vault). The FW exchange rate increases over time as yield accrues from the underlying vault.
{% endhint %}

## How it works

### Deposit

Users deposit a supported token (e.g., USDC) and receive FW shares. The number of shares depends on the current exchange rate. Deposits are validated against `isValidTokenIn` and protected by a `minSharesOut` slippage guard.

### Redeem

Users burn FW shares and receive the underlying token. The amount returned depends on the current exchange rate, which increases as yield accrues. Redemptions are validated against `isValidTokenOut` and protected by a `minTokenOut` slippage guard.

### Exchange rate

The FW exchange rate is the ratio of total underlying assets to total FW shares. It monotonically increases as the underlying vault generates yield. This property is critical: it ensures that BT+CT always represent at least as much underlying as the FW used to create them.

## Key features

* **Standardized interface** — Any yield-bearing asset can be wrapped into FW, allowing the rest of the protocol to work with a uniform API.
* **Yield accrual** — The exchange rate increases over time as the underlying vault earns yield.
* **Pause controls** — Three independent pause mechanisms: deposits-only, redemptions-only, or global pause (blocks all transfers).
* **Rehypothecation** — Underlying tokens are split between idle reserves (for instant redemptions) and vault deployment (for yield). See [Rehypothecation](https://docs.fira.money/developers/features/rehypothecation).

## BC Index

The **BC Index** is derived from the FW exchange rate and is used throughout the protocol for yield tokenization. It is defined as:

```
BCIndex = max(FW.exchangeRate(), previousBCIndex)
```

The BC Index is monotonically non-decreasing, which guarantees that BT+CT always represent at least as much underlying as the FW that was used to create them, even if the FW exchange rate temporarily dips.

## Related contracts

* [`FWBase.sol`](https://docs.fira.money/developers/token-contracts/fw-tokens) — Abstract base contract
* [`USDCFW.sol`](https://docs.fira.money/developers/token-contracts/fw-tokens) — USDC implementation
* [`BCIndex.sol`](https://docs.fira.money/developers/utility-contracts/libraries/helpers) — Type wrapper and conversion functions


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