UXD Protocol

What is UXD Protocol?

UXD Protocol is the first trustless algorithmic stablecoin that maintains its peg with the use of perpetual swaps. UXD Protocol is integrated with derivative dexes to create a delta neutral position to 100% back the stablecoin.

What happens when the funding rate is negative?

The insurance fund will pay the negative funding rate so that holders of UXD will never pay a negative interest rate.

How will the insurance fund be funded?

When the funding rate is positive, part of the interest generated from the delta neutral position will flow to the insurance fund. We will also have a liquidity mining program, where liquidity providers will gain the governance token in return for providing capital to the insurance fund.

Which cryptocurrency assets will be used to create the delta-neutral position?

We will accept various types of cryptocurrency assets such as BTC, SOL, ETH, SRM as collateral to back the stablecoin.

What happens if the insurance fund balance is depleted?

We will have an auction of the governance tokens and use the proceeds to refund the insurance fund.

Which perpetual swap protocol will you integrate with?

We will integrate with various perpetual swap protocols in the future but in the first iteration we will integrate with mango markets.

How do you know that UXD will be stable at all times?

Since UXD is 100% backed by a delta neutral position, users can always mint/redeem the UXD with an equivalent amount of cryptocurrency. If 1 UXD trades at a price that is different from 1 USD, arbitrageurs can make risk free profits and will push the price of 1 UXD to 1 USD.

Why should I use UXD over other stablecoins?

UXD is decentralized, stable, and capital efficient. You will also receive the interest generated from the delta neutral position from just holding on to UXD. These attributes make UXD an attractive alternative to other stablecoins.

Why doesn't UXD Protocol require over collateralization?

Since perpetual swaps are very liquid, UXD Protocol will be able to unwind the delta neutral position without much slippage. As a result, users can mint 1 UXD with 1 USD worth of cryptocurrency assets.
Last modified 2mo ago