Solving the stablecoin trilemma — UXD Protocol Building a New Marketplace of Decentralization, Stable, and Capital Efficient
Today, stablecoins are primarily used as the base token pair for most cryptocurrency exchange markets. As cryptocurrency adoption and increased liquidity of stablecoin pairs has led to the proliferation of exchanges, making stablecoins easily accessible to people in most international markets.
Jump Capital believes that with the increased availability of, and interaction with, stablecoins on a global scale, the floodgates have opened for a variety of use cases that will drive the stablecoin market all the way to trillions of dollars in market capitalization. This belief is based in part on benchmarking with the Eurodollar market, which represents the value of dollar deposits held outside the U.S. banking system and is currently estimated to be around $20 trillion in size.
In some cases, a burgeoning stablecoin would displace the traditional Eurodollar market, but would also significantly increase the availability of assets tied to the value of the U.S. dollar outside the U.S. banking system, thereby expanding the size of the overall market.
The UXD Protocol is an algorithmic stablecoin protocol that uses perpetual contracts and the spot market to implement a delta-neutral portfolio to stabilize exchange rates. In addition, the UXD Protocol will pay interest to users on delta-neutral portfolio positions, with a portion of the proceeds used to keep the position fully hedged if the derivative is traded at a lower price than the spot price.
To get a deeper understanding of the current state of the stablecoin market, on November 9, 2021, CryptoJ invited Kento Inami, Founder of UXD Protocol, to be a guest on this episode of AMA’s “Solving the “Impossible Triangle” of Stablecoin — UXD Protocol”. We will discuss the topic of stable coins in depth.
CryptoJ is a professional investment institution that provides one-stop service solutions. It has built deep partnerships with head media, developer communities, business elites and financial institutions in the crypto world.
The AMA will be separated into two parts:
1. Guests answer questions
2. Our guests will answer the questions asked by our community members
Please stay quiet during the first section and ask your questions during the second section.
Now, let’s start!
Question1:First of all, let’s welcome Kento Inami to join CryptoJ’s community for the first time. can you tell us a little bit about UXD Protocol its background and vision? Can you summarize the main features of the UXD Protocol ?
Answer：UXD Protocol is an algorithmic stablecoin backed 100% by a delta-neutral position using perpetual swaps. The stablecoin will be issued natively on Solana and we will integrate with perpetual swap protocols to create the delta-neutral position. Users will be able to trustlessly mint/redeem UXD in exchange for a wide range of cryptocurrencies. The funding rate generated from the delta neutral position will be paid out to holders of UXD, a yield that is native to the protocol.
We plan on making UXD the dominant algo stablecoin on Solana first and then on other chains.
Question2: When there’s a new project, many people would want to know more about the team members. Now let’s invite Kento Inami to do a brief introduction to your team members, including some interesting stories behind the project.
Answer：Currently there are 9 people working on UXD. Some of them are anon, some are doxxed. I recruited them mainly from Twitter and Discord, also from introductions. Half are devs and the rest is marketing/community management. We are currently looking for a Chinese marketer/community manager, so if you are interested join our discord and dm me!
Question3: UXD Protocol has always been attracting extensive market attention. Could you share with us the funding process and partnership at present?What milestones have been achieved so far?
Answer：We raised a 3 million seed round led by Multicoin Capital, with participation from Alameda Research and Defiance Capital in September. We will do an IDO in less than 3 days. Devnet has been released for about a month and we will release mainnet end of November.
The IDO page is below, there is a countdown!
Question4: Recently, the concept of algorithmic stablecoin has become one of the hot topics in crypto world, so why did UXD Protocol also choose to join the algorithmic stablecoin track? How do you see the current development status of this track, the possible future development prospects and the potential market size?
Answer：Algo stablecoins are a hot topic because the government is actively trying to regulate crypto, and centralized stablecoins like USDT, USDC are censonrable. A stablecoin that is decentralized, capital efficient, and stable will change the stablecoin industry completely and will take a large portion of the 130 billion stablecoin market. UXD intends on disrupting the stablecoin market.
Question5: When it comes to algorithmic stablecoins, projects such as OlympusDAO and Wonderland (TIME) have attracted a lot of attention recently.Compared with these similar projects, what is the same about UXD Protocol, and what are the differences and advantages?
Answer：OlympusDAO and Wonderland are not stablecoins, they are volatile. UXD is a stablecoin that is pegged to the USD. So they are completely different.
Question6: At present, there are centralized stablesoins like Tether and USDC in the stablesoins market, as well as decentralized stablesoins like UST. What are the advantages and disadvantages of decentralized and centralized stablesoins? How does the UXD Protocol ensure that it is decentralized?
Answer：The advantage of centralized stablecoins is that they are stable and capital efficient. Unfortunately since they are centralized, they are easy to censor.
The advantage of decentralized stablecoins is that they are censorship resistant and capital efficient. But most of them are unstable, which is a huge problem.
UXD integrates with derivative dexes and it is completely trustless, ensuring decentralization and censorship resistance.
Question7: How does the UXD Protocol work ? How to ensure price stable?
Answer：UXD Protocol is an algorithmic stablecoin backed 100% by a delta-neutral position using perpetual swaps.We create the delta neutral position on Mango Markets,which is a derivative dex on Solana. Since users can always mint/redeem UXD for an equivalent amount of crypto assets, UXD will be pegged to USD.
Question8:How long does it take to mint and redeem stablecoins for UXD Protocol? How are the fees calculated?
Answer：Mint/redeem will be instant. There will be a fixed fee(5–10bps) and slippage fees.
Question9:What assets does UXD Protocol currently support? How is the pledge rates?
Answer：We will first start with sol. We will add other assets in the future. Rates fluctuate but current rates are 50% APY. So UXD holders can expect to earn 50% APY + liquidity mining rewards.
Question 10: why does UXD Protocol choose to join the Solana ecosystem rather than ETH and other public chains? What position doesUXD Protocol hold in the Solana ecosystem?
Answer：Solana is a very fast and low fee blockchain that enables defi apps to easily integrate with other defi apps. For UXD, we are able to easily integrate with Mango Markets. On Ethereum, since fees are very high and tx slow, the user experience is much worse. We intend on making UXD the dominant algo stablecoin on Solana.
Question11：For value capturing, what is the tokenomics of UXD Protocol , and how do you stimulate the users to hold your tokens in the long run? What are some application scenarios of your token?
Answer：Some of the interest from the delta neutral position can be distributed to UXP token holders. UXP token holders can also vote on proposals. If UXP token holders receive interest, it will create an incentive to hold the token long term. We will also have a staking function for UXP.
Question12：We know that UXD Protocol IDO will be held on November 12th. can you tell us more about the rules and how to participate in this IDO?
Answer：It is an IDO similar to what mango markets did. Anyone can participate and at the end of the IDO, all the USDC deposited will be swapped for 3% of UXP tokens. The IDO will last for 48 hours.
Question13：What are some of the plans UXD Protocol has during the next period?Any new product being launched? Will you cooperate with the projects for greater development?
Answer：Yes, we will work with other defi projects to integrate. We will first start with integration with Saber and Mercurial Finance, which are stablecoin swap protocols. We will also do dual liquidity mining with various projects.
