xBacked built an over-collateralized stablecoin on Algorand – xUSD to be used as store of value in a volatile market that is pegged to $1 USD worth of the collateral in the basket. Fully backed by decentralized collateral, our mission is to be the most capital-efficient stablecoin on Algorand and beyond.
xUSD is a stablecoin built on Algorand that aims to maintain a stable 1:1 value against 1 US Dollar worth of the collateral in the basket.
A stablecoin is a class of cryptocurrencies that aim to provide users with price stability. This stability is achieved through protocol incentive design, and by making sure each stablecoin token has more than $1 of collateral backing it. Unlike traditional cryptocurrencies, stablecoins can be pegged to fiat currencies, such as the U.S. dollar or Euro, precious metals or other cryptocurrencies.
Collateral is any crypto assets that you can deposit to back a stablecoin. This could be Algorand (ALGO), BTC, or ETH. A user of the protocol would be able to deposit in $100 worth of a supported collateral type, and mint up to 90 stablecoin tokens.
In this case, underlying collateral is required to make sure each stablecoin token has more than $1 of asset value backing it. This helps keep xUSD stable. Algorand (ALGO) and a number of other Algorand-based cryptocurrencies (goEth, goBTC) are used as collateral.
Using the mechanism above, xUSD tokens are always redeemable for $1 of underlying collateral, at a minimum.
Sure, you might be thinking – why borrow a lower amount by locking in a higher amount? After all, you don’t borrow USD $100 from the bank by locking in USD $110 as collateral, right?
But if you believe in a more accessible future of finance, the main reason users want to borrow xUSD with their cryptocurrency is because they want to have liquidity and money available without having to actually sell their cryptocurrency. They merely ‘park’ their cryptocurrency in the protocol, and eventually repay the xUSD debt so they get their cryptocurrency back.
xUSD makes it possible for users like yourself to speculate in new cryptocurrencies without having to sell the cryptocurrencies you are currently holding.
A group of doxxed (not anonymous!) core contributors formed the xBacked protocol in 2021 with a vision to improve capital efficiency on Algorand and across all of DeFi. They believe that the future of finance, blockchain and digital assets will create a safer, more accessible and transparent system compared to the current traditional finance.
Yes, fully audited by our auditing partners Ulam Labs and Runtime Verification.
All xUSDs are generated from a tool called xBacked Vault:
The user can give the same amount of xUSD back and pay a small fee and get back their collateral above.
To put this simply, picture yourself getting a loan from the bank, and you use your own home as security (collateral) for the loan, proving you can pay the loan back. And if you fail to pay, you lose your house, and get liquidated (losing your original collateral).
When you borrow xUSD, you must provide at least 110% of the loan value as security. You then unlock more money in security than the value of the loan. If the security falls below 110%, the security you deposited is forcibly sold (liquidated) and the borrower (you) will be deducted a small fee.
If you want 100 xUSD, which is equivalent to the value of 100 US dollars, you must deposit Algorand (ALGO) worth at least 110 US dollars in xBacked’s protocol. Should the $120 in ALGO fall in value to, for example, $118 in ALGO, the smart contracts in xBacked Protocol will automatically sell the Algorand you used as collateral. This is to ensure that the value you deposit as collateral will never be lower than the amount you borrow, keeping the market stable and therefore, the stablecoin will always keep its peg and be stable. And if you fail to pay xUSD back, you get liquidated and lose your ALGO that you put in.
Follow these 4 easy steps: