Additional Use Case for USDx

One of the biggest attractions of algo stablecoins is that they are 0% backed and not under the control of any central entity, sovereign or not.

It is clear that building utility is a chicken and the egg scenario - more utility means more stability which means more utility.

While the current mechanism of USDx is great for speculation, it is interesting to consider other more substantive methods of providing utility for USDx and the other pure algos and synthetics in the DP ecosystem.

One idea that is interesting is launching a fractional reserve stablecoin that uses DP stablecoins and synthetic assets as collateral in addition to a centralized stablecoin or asset. Think about it like a mix between maker dao and frax.

One would be able to deposit 99% in usdc/usdt etc and 1.5x in USDx.

The 50% extra would be in case USDx drops too much in price.

The USDx and YUANx would obviously be whitelisted from debase and provide overcollateralization to prevent margin calls.

This new coin, perhaps we call USDx_FRAC will be a derivative that provides a unique value add to the DP ecosystem:

1: it can be used to mint a 2nd layer stablecoin that is 100% - 150% backed.
2: it helps provide real utility to the algos while reducing float during contractions
3: it is a compromise to users who want real stability while USDx is building traction

This new derivative asset would have a separate governance token similar to frax shares or LUNA that can be mined and provide supply stability when USDx_FRAC is being redeemed 1-1 for collateral.

This new share token would have governance rights to this secondary system


Brilliant Robert. The need is clear. The opportunity is immense.