# Meet USDX A Synthetic USD stablecoin
*USDX* is a synthetic USD stablecoin built for the crypto ecosystem. It offers a crypto-native stablecoin solution that does not rely on traditional banking infrastructure which is censorship-resistant, scalable, and highly stable. Furthermore, it provides a multiple-layer savings tool including funding rate and crypto ecosystem yield accessible worldwide in USD denomination. *USDX* will ensure the stability of the peg through a delta-neutral portfolio strategy. At the same time, it will provide denominated returns to holders or ecosystem participants of *USDX*. ## **Tokens** ### ***USDX*** [***USDX***](/a-synthetic-usd/usdx-basics) is a synthetic USD stablecoin that employs a multicoin arbitrage strategy as backing, maintaining a delta neutral approximate dollar position through balanced trading across various digital assets. This token will be the focal point of liquidity provision in AMMs and CEX order books. *USDX* peg stability is maintained by employing delta hedging strategies with derivatives positions, counterbalanced against collateral held by the protocol. ### *sUSDX (staked USDX)* [***sUSDX***](/a-yield-bearing-token/staking-usdx) is the token representing staked *USDX*. Users are able to receive a portion of the protocol's generated yield by staking their *USDX* and receiving *sUSDX* automatically in return. *USDX* that is staked is not rehypothecated or otherwise utilized to independently generate the value accrual for *sUSDX*. *sUSDX* is a reward-bearing token, similar to *cbETH* and *rETH* in the case of ETH, meaning its value appreciates instead of its quantity increasing. This is unlike *stETH*, which modifies its total supply via rebasing. ## Features ### **Permissionless Acquire** *USDX*. Buy or sell USDX with stablecoins including *USDT*, *USDC* and *USDe* in Liquidity Pool (LP) Swaps. ### **Stake** *USDX* for *sUSDX*. Receive a proportionate share of the generated yield. ### Provide Liquidity & Lock LP Tokens. Earn X-Points rewards to claim token airdrops. ### Direct Mint USDX Institutions can apply for direct minting rights. Upon successful completion of onboarding, whitelisted addresses can directly interact with the minting functions of the protocol. ### **Direct Redeem** *USDX*. Upon successful completion of onboarding, whitelisted addresses can deposit *USDX* and redeem into *USDT* in 7 days. For faster conversion into aforementioned stablecoins, users can exit positions through liquidity pools (LPs). ## Official Links Stables Labs Website: USDX Website: Twitter: DC: TG: Medium: # USDX Basics usdx.money manages the issuance and redemption of *USDX*, a synthetic USD stablecoin. ## Peg Stability Mechanism *USDX* achieves stability in value under all market conditions by implementing an automated delta-neutral hedging strategy on the target assets, thereby offsetting the risk of price fluctuations and ensuring the value stability of *USDX*. Delta-neutral hedging is a strategy to reduce the impact of market volatility on the value of a portfolio, by establishing opposing investment positions to balance potential price movement risks. In the context of *USDX*, this means if the price of the collateral assets (such as Bitcoin) changes, the program automatically adjusts the hedging positions to maintain the stable value of *USDX*. This strategy is designed to ensure that, no matter how market conditions change, the value of *USDX* remains relatively stable, offering an attractive medium for value storage and exchange for users who wish to avoid the volatility of the cryptocurrency market. ### **Key Information** 1. *USDX* can be acquired by users in permissionless external liquidity pools. 2. Only approved entities from eligible jurisdictions that have successfully passed KYC/KYB screenings and got white-listed can directly mint and redeem *USDX* on-demand using usdx.money contracts. This mechanism intend to mitigate the risks associated with the comingling of institutional funds with those of non-KYCed individuals or entities. 3. The system operates independently of traditional banking infrastructure, with trustless collateral securely held within the cryptocurrency ecosystem. This ensures *USDX* is fully backed by user deposits at all times. 4. Users have the opportunity to exploit cross-market arbitrage opportunity by buying low and sell high, or (subject to white-listing) by minting / redeeming and trading across different markets, such as Pancake or Curve swap pools, in order to take advantage of price discrepancies. ### **Mechanic Example** 1. A user deposits \~$100 of *USDT, USDC* or *USDe* and receives \~100 *USDX* in return less any execution costs to execute the hedge. Slippage and execution fees are included in the price when minting & redeeming. usdx.money earns no profit from minting or redeeming *USDX* from users accessing the product. 2. The assets received are transferred to an "Off Exchange Settlement" provider. Backing assets remain on-chain and off-exchange servers to minimize counterparty risk. 3. Assets in the Off Exchange Settlement provider will be mirrored onto major exchanges to execute delta-neutral multicoin arbitrage strategies. 4. usdx.money delegates, but never transfers custody of, backing assets to derivatives exchanges to margin the short perpetual hedging position ## Generated Yield usdx.money generates yield via the funding and basis spread from the delta hedging derivatives positions. The funding and basis spread yield can be floating or fixed depending upon if the protocol uses non-deliverable or deliverable derivatives positions to hedge the collateral's delta. The funding and basis spread has historically generated a positive yield given the mismatch in demand and supply for leverage in crypto as well as the existence of positive baseline funding. If funding rates are deeply negative for a sustained period of time, the usdx.money insurance fund will bear the cost. ## Risks The protocol is exposed to various risks including but not limited to: 1. Smart Contract Risk 2. External Platform Risk 3. Liquidity Risk 4. Custodial Operational Risk 5. Exchange Counterparty Risk 6. Market Risk Every element of the usdx.money design has been formulated with risk mitigation in mind, including the use of custodians, absence of underlying leverage, and diversification constraints on hedging positions usdx.money recognizes these risks and actively attempts to ameliorate & diversify these risks as much as possible. In practice, this means we use multiple providers for each step of the workflow and actively monitor all partners and market conditions. usdx.money will also be as transparent as possible by providing proof of backing assets.
## Eligibility for Minting Institutions, DAOs, and other qualified entities can reach out to the USDX protocol team to inquire and secure minting permissions. This process will involve a thorough evaluation to ensure alignment with protocol objectives and risk parameters, fostering a controlled and trustworthy environment for minting operations. # Delta-Neutral Stability ## What does "delta" mean? "**Delta**" denotes the rate at which the price of a derivative reacts to fluctuations in the price of its underlying asset. ## Understanding Delta-Neutral Stability A **delta-neutral** position (or portfolio) is one where the exposure to price movements of an underlying asset is effectively zero, because any gain from a price increase is offset by an equivalent loss from a price decrease—and vice versa. For example, suppose a stablecoin is backed by *BTC*. Its value will normally rise or fall alongside the price of BTC. However, if we hedge this by **shorting** the same amount of *BTC/USDT* perpetual contracts, gains or losses in the *BTC* backing are balanced by opposite gains or losses in the short position. As a result, the stablecoin’s overall value remains stable regardless of *BTC* price movements. Building on the earlier example, when a user buys *USDX* with stablecoins (like *USDC* or *USDT*), usdx.money automatically creates a delta-neutral position. This is achieved by taking a corresponding long position in *BTC* spot while simultaneously short-selling a *BTC/USDT* perpetual contract in the same amount. As a result, any gains or losses in the spot position are offset by the opposite gains or losses in the short position, ensuring that usdx.money’s overall exposure (or delta) remains effectively zero. In simpler terms, being delta-neutral ensures the portfolio's USD value is impervious to market volatility (i.e., irrespective of any underlying cryptocurrency spot price movements). Even if the prices were to soar and then plummet dramatically within seconds, the portfolio's USD valuation would stay stable, save for brief discrepancies between spot prices and derivative markets. This strategy is not limited to *BTC*; usdx.money applies the same approach to a variety of cryptocurrencies, capturing delta-neutral returns across multiple assets. usdx.money conducts trades across various exchanges without utilizing leverage, maintaining delta neutrality by ensuring that short positions in perpetual contracts match the size of the underlying assets. It's worth mentioning that maintaining a delta-neutral position is a common strategy among institutional market makers to circumvent the risks associated with price volatility, a practice well-entrenched in both the realms of traditional finance and cryptocurrency markets. # Delta-Neutral Examples Based on Arthur Hayes' example in his article: [Dust on Crust](https://blog.bitmex.com/dust-on-crust/#the-satoshi-nakamoto-dollar-nakadollar-nusd). > A Bitcoin inverse perpetual swap (e.g., Ticker: [XBTUSD on ](https://www.bitmex.com/app/trade/XBTUSD)[BitMEX](https://bitmex.com)) which is worth $1 of Bitcoin paid out in Bitcoin has the following payoff function: > > $1 / Bitcoin Price in USD > > If Bitcoin is worth $1, then the Bitcoin value of the perpetual swap is 1 BTC, $1 / $1. > > If Bitcoin is worth $0.5, then the Bitcoin value of the perpetual swap is 2 BTC, $1 / $0.5. > > If Bitcoin is worth $2, then the Bitcoin value of the perpetual swap is 0.5 BTC, $1 / $2. Here, Arthur used an inverse perpetual to explain the different payoff scenarios of a delta-neutral strategy. usdx.money intends to utilize both inverse and linear perpetuals. Due to the complex nature of payoff results from inverse perpetuals, our explanation is centered on those scenarios previously detailed. ## Worked Example ``` 1 USDX = $1 of Bitcoin + Short 1 Bitcoin / USD Inverse Perpetual Swap ``` To create 1 *USDX*, we need to delegate 1 *BTC* as margin with a derivatives exchange (via our "Off-Exchange Settlement" provider) and short 1 BTCUSD perpetual. **Suppose Bitcoin price drops significantly** * Now the BTC price falls from $1 to $0.1. * The value of BTCUSD in BTC = $1 / $0.1 = 10 BTC * The PNL of BTCUSD Position = 10 BTC (current value) – 1 BTC (initial value) = +9 BTC * We have 1 BTC delegated as margin with the exchange. * The total equity balance with the exchange is 1 BTC (our initial margin) + 9 BTC (our profit from our BTCUSD position), and our total balance is now 10 BTC. * The BTC price is now $0.1, but we have 10 BTC, and therefore the USD value of our total portfolio is **unchanged** at $1, $0.1 \* 10 BTC. **Suppose Bitcoin price rises significantly** * Now the BTC price rises from $1 to $100. * The value of BTCUSD in BTC = $1 / $100 = 0.01 BTC * The PNL of BTCUSD Position = 0.01 BTC (current value) – 1 BTC (initial value) = -0.99 BTC * The total equity balance with the exchange is 1 BTC (our initial margin) – 0.99 BTC (our loss from our BTCUSD position), and our total balance is now 0.01 BTC. * The BTC price is now $100, but we have 0.01 BTC, and therefore the USD value of our total portfolio is **unchanged** at $1, $100 \* 0.01 BTC. Delta-neutral strategies aim to ensure the portfolio value in synthetic USD terms is **unchanged** despite changes in value of the underlying collateral. # 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.
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. # Security Updates ## **Security Updates** As part of the **Smart Stables System Improvement Proposal 1 (SSSIP-1)**, usdx.money implemented additional safeguards at the smart contract level to mitigate risks associated with minting activities.
### Maximum Mint per Block The **max mint per block** parameter serves as a critical control mechanism, capping the amount of *USDX* that can be minted within a single block. Currently the max mint per block is set at $5m. This limitation ensures that no single transaction or series of transactions within a block can exert undue pressure on the *USDX* markets, preserving the peg and protecting against destabilizing activities. By restricting the scale of minting, the protocol proactively addresses the potential risks of market manipulation or exploitation that could threaten its stability.
### Timelock The introduction of a **timelock feature** adds another layer of temporal security to the minting process. By enforcing a time delay between minting requests, this mechanism prevents the possibility of automated exploitation of the minting function on a block-by-block basis. This deliberate delay allows the protocol team and the broader community sufficient reaction time to identify and respond to any irregularities or malicious attempts to exploit the minting process. # Staking USDX *USDX* holders can earn rewards by staking *USDX* for *sUSDX.* > Users will always receive the principal amount of *USDX* staked as well as their proportionate share of the deposited protocol yield upon **unstaking**. Staking is controlled by the StakedUSDX smart contract. Stakers can interact with it directly or through . * When **staking**, a user transfers *USDX* into the contract and receives *sUSDX* (staked *USDX*), another ERC20 token that represents a fractional interest in the *USDX* in the contract. * Over time, a portion of protocol revenue accumulates in the staking contract as additional *USDX* is transferred in. * When **unstaking**, *sUSDX* is burned in exchange for a proportionate *USDX* amount. For faster conversion into aforementioned stablecoins, users can swap *sUSDX* into *USDX* through liquidity pools (LPs). ## Introduction The StakedUSDX smart contract implements the [ERC4626 Token Vault standard](https://ethereum.org/en/developers/docs/standards/tokens/erc-4626/) for composability. This popular standard is widely used for onchain savings vehicles; thus, it is expected that other user interfaces beyond the usdx.money dApp may likely support *USDX* staking in the future. Various deposit and redeem functions are exposed, enabling staking with or without a slippage threshold, and with or without an ERC2612 Permit signature authorizing the transfer of *USDX*. There is no minimum staking period. If a user **stakes** and **unstakes** in consecutive blocks, they are entitled to their share of any increase in vested *USDX* value in the contract that has occurred in that \~12-second period. Because reward payments into the contract occur every 8 hours and linearly vest over 8 hours, there are never any sudden spikes in the vested *USDX* value, which prevents sandwich attacks where an informed staker stakes before and unstakes after payment at the expense of all other stakers. > Stakers cannot lose *USDX* by **staking**. *USDX* transfers of rewards can only be positive into the StakedUSDX contract. As such, the *USDX* value of *sUSDX* can only increase or stay flat over time. Staking rewards accrual is a function of the protocol's generated yield from earning the funding and basis spread from the delta hedging derivatives position. While protocol generated yield should remain fairly stable unless there is a slashing event, the funding and basis spread yield from delta hedging derivatives will vary considerably (even day to day). In some periods, no yield may be paid to staking users if the funding + basis spread yield is negative. In this situation, when no protocol yield is transferred to the StakedUSDX smart contract, the usdx.money insurance fund will ensure the underlying protocol collateral remains untouched. # Yield Explanation Exploring How sUSDX Distributes the Protocol's Yield to Users By staking *USDX* and in exchange receiving *sUSDX*, users can partake in the yield generated by the protocol. This process is designed to be seamless, requiring no additional actions or incurring costs post-stake. ## **Overview** The quantity of *sUSDX* allocated to a user is influenced by the volume of *USDX* staked and the timing of such staking. Employing a "Token Vault" strategy, akin to that used by Binance for [*WBETH*](https://www.binance.com/en/wbeth)*.* usdx.money's system ensures that staked *USDX* is not rehypothecated, lent, or employed in any capacity beyond its intended purpose. This is because the protocol yield is intrinsically generated by the *USDX* backing mechanism, allowing usdx.money to distribute yields effortlessly to its users. As such, the *USDX* value encapsulated within *sUSDX* naturally appreciates over time. Upon unstaking, users are awarded their original *USDX* amount plus a proportional share of the protocol yield that has accrued in the staking contract during the period of staking, as evidenced by the increased value of sUSDX. ## **Important Notes** * When staking *USDX* for *sUSDX*, the amount of *sUSDX* received may appear smaller in quantity but will be equivalent in *USDX* value. This effect stems from the "Token Vault" approach and the specific ratio used in the mechanism, as illustrated in the example provided. * The *USDX* value is engineered to consistently equate to approximately one synthetic USD, whereas the *USDX* value of *sUSDX* is set to incrementally rise due to the protocol's daily yield contributions to the staking contract. * In the event of a loss resulting from funding issues or other factors, the usdx.money insurance fund is designated to cover such losses, ensuring that the staking contract is shielded from these impacts. Staking users are guaranteed either a positive or neutral yield when staking *USDX* for *sUSDX*. Should negative funding lead to a decrease in protocol yield, the usdx.money insurance fund is committed to absorbing the loss, safeguarding the interests of the stakers.
# User Security Measures ## Overview A number of measures have been taken to ensure the integrity and resilience of the deployed smart contracts. These measures are designed principally to ensure the safety of protocol assets, but also to ensure reasonable governance occurs. Below is a list of some, but not all, of the user security measures usdx.money has implemented across the deployed smart contracts. ### Measures 1. Inherited from the OpenZeppelin implementation of the battle-tested [ERC4626 Token Vault standard](https://ethereum.org/en/developers/docs/standards/tokens/erc-4626/). This enables users to have comfort that the protocol is inheriting audited & thoroughly used code throughout space. 2. An unstake cooldown period where *sUSDX* tokens are immediately settled for *USDX*, but the staking user cannot withdraw the *USDX* until the cooldown period has elapsed to prevent attacks in a single block. 3. Linear vesting of reward payments over 8 hours to prevent sandwich attacks where a user stakes immediately before and unstakes immediately after a reward payment at the expense of other staking users. 4. A minimum non-zero total *sUSDX* supply of 1 ether ($1 to start) to further prevent donation attacks beyond the protections the OpenZeppelin implementation provides. # How to Buy USDX? {% hint style="info" %} All on-chain interactions with usdx.money are integrated into the official dApp. Please visit . {% endhint %} ### Interaction Guideline 1. Go to the official usdx.money dApp. 2. Navigate to the "Buy" page.
3. Click on "Connect Wallet" in the top right corner and connect your wallet.
4. After completing the address signature, enter the amount of USDX you want to mint.
5. In addition to the basic "Buy" option, "Redeem" and "Claim" options are also available on the "Buy" page. # How to Redeem? {% hint style="info" %} All on-chain interactions with usdx.money are integrated into the official dApp. Please visit . {% endhint %} ### Interaction Guideline 1. Navigate to the "Stake" page on the official usdx.money dApp to access and participate in the staking feature ().
2. You can easily manage staking with options like "Unstake" and "Claim", just like other leading protocols. 3. Switch to "Unstake" tab. Enter the amount of sUSDX you wish to unstake and click "Approve" to complete the unstaking process (USDX will be available to claim 1 day after unstaking).
4. One day later, the user switches to the "Claim" tab to claim the unstaked USDX. Enter the amount of USDX you wish to claim and click "Approve" to complete the process.
5. After completing the claim, you can return to the “Buy” page to swap USDX for USDT, completing the redeem process ().
# How to Participate in Staking? {% hint style="info" %} All on-chain interactions with usdx.money are integrated into the official dApp. Please visit . {% endhint %} ### **Participate in Staking** 1. Navigate to the "Stake" page on the official usdx.money dApp to access and participate in the staking feature.
2. You can easily manage staking with options like "Unstake" and "Claim," just like other leading protocols. 3. Enter the amount of USDX you wish to stake and click "Approve" to complete the staking process.
# Contracts USDX Token Contract: 0xf3527ef8dE265eAa3716FB312c12847bFBA66Cef sUSDX Token & Stake USDX Contract: 0x7788A3538C5fc7F9c7C8A74EAC4c898fC8d87d92 USDX Sales Contract: 0xb45c42Fbf8AF8Df5A1fa080A351E9B2F8e0a56D1 USDX Redeem Contract: 0x0eaF6FE1aeD8631114d1dE78317982CE73d82f7b # Audit ### BlockSec Security {% file src="/files/UrefSift0rYT1metmKLn" %} ### SlowMist {% file src="/files/1QcPY3HdyNh5Bq3HTQcj" %} ### Salus Security {% file src="/files/KMnFk39wNvFwbPuDNMHC" %} # Oracles USDX protocol has integrated [RedStone](https://redstone.finance/) Price Feeds to ensure the stability of USDX peg to the US Dollar. RedStone stablecoin feeds are used as a cross-check during the minting /redemption process of USDX. This integration helps maintain the accuracy and security of our token's value relative to the US dollar.