Dear xBackers around the world,

We are excited to announce that today, xBacked mainnet is officially live.

• xBacked is a permissionless over-collateralized stablecoin protocol built on Algorand that allows anyone to use cryptocurrency without the volatility
• Our decentralized stablecoin xUSD is available now to be minted on the platform, and aims to maintain a stable value of $1 USD backed by assets in the basket
• Stability pool, on-chain governance and TGE (token generation event) will be available in the coming months

xBacked, a decentralized autonomous organization (DAO) developing a decentralized stablecoin for Algorand, today launched our over-collateralized stablecoin, xUSD, which is backed by collateral worth more than the value of the coin. Built on Algorand and backed by multiple decentralized crypto assets to withstand volatility, we are on on a mission to unlock capital and empower the digital economy.

“We believe that in the future of finance, blockchain and digital assets will create a safer, more accessible and transparent system compared to the current traditional finance system,” said Austin Wilshire, one of the Lead Contributors “Stablecoins will play an important role in this future, protecting consumers from volatility and providing facilities to unlock their digital assets.”

Stablecoins have been a crucial part of both the blockchain and decentralized finance (DeFi) ecosystems. With a total market cap of over $150 billion, investors and cryptocurrency novices use stablecoins to conduct payments, earn yield, borrow and lend — a more flexible alternative to traditional finance.

‍Key features that differentiate xUSD from other stablecoins

1. Aligned with proposed regulations by being ≥ 100% backed: Over-collateralized portfolio of assets (Algorand, bridged BTC & ETH, LP tokens) on the balance sheet.
2. Highly capital efficient: With a low minimum collateral ratio of 110%, the borrower’s capacity increases, thus making it appealing by allowing for 11x leverage on investments.
3. Stability pool: Allows users to stake their xUSD and in a pool that receives a pro-rata share of all redemption and liquidation fees from the protocol.
4. Isolated Risk Vaults: Isolating each vault from the other, if one asset price tanks, rugs, or otherwise fails to serve as decent collateral, it will only affect a small portion of xUSD in supply.
5. Protected from volatile swings in supply and demand: Always able to redeem 1 xUSD token for $1 of the underlying collateral.
6. Committed governance token backstop (future roadmap):  In times of severe stress in the market, tokens of governance token stakers will be sold to buy xUSD to repay any bad debt or liquidate any vaults via the stability pool.
7. Censorship resistant: xUSD is a decentralized stablecoin and there is no centralised entity in control of the asset.

Read more about xUSD stability here.

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xBacked chose over-collateralized crypto-backed over fiat-backed model

Out of the three common types of stablecoins — fiat-backed, crypto-backed and algorithmic, the first type is the most widely used.

Crypto-backed stablecoins are backed by cryptocurrencies rather than fiat currencies. Using the over-collateralized mechanism, users will take in volatile or mainstream assets such as Ether (ETH), Bitcoin (BTC) or Algorand (ALGO) and put them in a vault. As an owner of this vault, users can now mint xUSD, which is pegged to $1 against the collateral of this vault.

Key reasons xBacked the crypto-backed, over-collateralized mechanism over fiat-backed:

• Censorship resistant to avoid centralized entities of fiat-backed coins freezing the movement of users' coins and wallets
• Deploy smart contracts to use assets as collateral instead of relying on a central issuer such as the government to store the reserve
• xUSD tokens are always redeemable for $1 of underlying collateral, at a minimum

xUSD empowers HODLers

xUSD gives users the opportunity to participate in DeFi applications (dApps) such as decentralized exchanges (DEXs) and Automated Market Makers (AMMs) to earn yield if they are holding positions like ALGO and BTC for the long run and prefer not to sell their assets for dollars. This allows them to borrow against their assets and use xUSD  in DeFi protocols while they wait for the value of their collateral to appreciate over time.

Designed to sidestep the wild volatility of cryptocurrencies like Bitcoin and Ethereum, stablecoins are an innovative way to empower anyone to build decentralized finance applications and allow them to tap into real-world usage.

In May 2022, the world of decentralized finance observed the collapse of algorithmic stablecoin TerraUSD (UST) and its sister coin Luna, highlighting the importance of developing and implementing sustainable stablecoin design.

To achieve stability sustainably, xUSD is backed by exogenous assets (independent of the protocol) to absorb both downside and upside volatility. In contrast to UST, which was backed by endogenous assets (native to the protocol), the over-collateralized model used by xUSD is proven to be more robust when defending the peg.

xBacked is aligned with proposals from regulators

In the bill proposed by United States Senator Cynthia Lummis, it is required for stablecoins to be backed by ≥ 100% of collateral. xUSD will be a regulation-aligned decentralized stablecoin with a collateral ratio of 110%.

Powered by Algorand to accelerate adoption and growth securely

xBacked is built on Algorand – the world's truly scalable, carbon-negative and highly secure public blockchain that can process 6,000 TPS (transactions per second). On top of that, its instant finality (the time it takes to confirm a transaction as immutable) is critical for our protocol that will be handling millions of transactions and thousands of assets, preventing counterparty risks. Without network congestion or gas wars, it allows us to make the assumption liquidations happen on time, enabling a low collateral ratio of 110%.

Besides an engaged community, we have an assigned team with a dedicated group of developers and advisors committed to backing the ecosystem and paving the infrastructure for the protocol.

We believe in robust and trustless protocols and is excited to unlock opportunities for everyone through decentralized finance, and we welcome all users to assist us and maintain the protocol.

We sincerely thank all the xBacked users for your continuous attention, patience and support.

LFG!

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