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How many stablecoins does the world need? At least one moreβ¦
Join us in issuing a hearty congratulations to Aladdin DAO on the successful launch of the highly anticipated $fxUSD.
The launch event coinciding with the festivities around ETHDenver is a clever gambit. Instead of non-attendees suffering from acute FOMO, for once itβs IRL attendees wishing they were at home at their keyboard aping furiously. Interest in the new stablecoin is feverish. The $fxUSD mint event saw markets sell out swiftly.
stETH only lasted a minute⦠set phasers to stunning!
Far more to take place now that the token has been successfully bootstrapped.
As of publication, about $3MM is backing the ascendant stablecoin.
Next up is liquidity bootstrapping, involving a variety of presently unseeded Curve pools.
Note that these pools will be dual-wielding rewards.
What the fxUSD?
Perhaps weβre burying the lede somewhat, in that we havenβt even touched on how the token works.
Protocol f(x) has about $30MM backing the successful $fETH, which cleaved ETH into stable and volatile components. The same strategy is being used to mint $fxUSD
Aladdin DAO docs are magically clear and worth a read to explain the concepts.
To create a stable-leverage pair, f(x) holds a reserve of some base token. To start, letβs consider stETH. Minted against that stETH reserve are two types of derivative tokens; one stable, and one volatile. At all times, the total market cap of the two derivative tokens is held equal to the value of the reserve, and any derivative token can be redeemed at any time for its share of the reserve base token.
As the price of the reserve token varies, so too does the amount of base token a user may redeem for each of the stable and volatile tokens. The stable token is held fixed at a USD value of $1, so as the price of stETH in the reserve rises, the volatile token price rises at a multiple rate of stETH. Based on the performance of xETH, this multiple generally varies between 1.5x β 4x though though it can rise as high as 4.3X before the protocol responds to limit it.
These rebalancing pools in turn deposit into and out of the fxUSD reserve, to keep the entire system stable.
Put it all together among several tokens, and you can zoom out to see the whole system take shape:
Finally, donβt forget that itβs all controlled by governance token $FXN.
Of course, this article being penned an author exploring the leftmost extreme of the curve, we gloss over some complexities. For kindred explorers at the rightmost extrema, we recommend further reading:
Finallyβ¦ if youβre voting for boosters, remember that tossing a few gwei towards CurveCap benefits Leviathan News!
Ape responsibly frens!