# Peg Arbitrage Mechanism

Subject to successful whitelisting of address for minting right, there is a trading strategy for users to capitalize on the discrepancy between the market price of *USDX* and the real value. 

* Cross-market arbitrage: buy or sell *USDX* and mint or redeem with contract when market price of *USDX* deviates from its pegged value of $1

## Trading Strategies

Key considerations include:

* *USDX* is entirely backed by the protocol’s reserve assets.
* *USDX* can be minted and redeemed on demand, allowing approved participants to seamlessly transition between *USDX* and their digital asset of choice.
* The valuation and quantity of the collateral backing *USDX* remain stable, unaffected by price volatilities or dislocations across any Centralized/Decentralized Spot Market, Automated Market Maker (AMM) Protocols, and beyond.
* Even in turbulent markets leading to liquidity crunches, the collateral value supporting *USDX* remains stable.

### Cross Market Arbitrage

This approach permits any authorized individual to mint or redeem, benefiting from the price/quantity discrepancy between the minting/redeeming rate of *USDX* with usdx.money and its trading price in external markets. External markets encompass both centralized and decentralized spot markets like "*USDX/USDC/USDe*" and AMM platforms such as Uniswap or Curve.

<figure><img src="/files/xMRmIZR6Jb58vv0YnBhu" alt=""><figcaption></figcaption></figure>

Should *USDX* be undervalued in an external market compared to usdx.money, a user could:

1. Buy 1x *USDX* at $0.95 using *USDT,* *USDC or USDe*.
2. Redeem 1x *USDX* at $1.00 through usdx.money, receiving *USDT* in return.
3. Realize a profit.

Conversely, if *USDX* is overvalued in the external market compared to usdx.money, a user could:

1. Mint *USDX* by depositing *USDT, USDC or USDe* with usdx.money.
2. Sell newly minted *USDX* for more than $1.00 in USDT or USDC.
3. Realize a profit.


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