Pool

Over Collateralization

Users can borrow (mint) USX by depositing other supported assets to lending protocols (such as Unitus Finance) as collateral.

The value of the collateral assets must be higher than the value of USX borrowed. If the value of the collateral drops below a certain threshold (borrowers must maintain an adequacy ratio greater than 1 on Unitus Finance to keep their positions safe from liquidation), the collateral is automatically sold to maintain the stability of USX.

Range-Bound Rates

Pool-based minting is facilitated by the PDLP (Protocol-Direct-Liquidity-Provision) module, enabling supported lending protocols to utilize USX's yield tokens (i.e., iUSX) as collateral to mint USX.

The PDLP mechanism algorithmically allocates USX liquidity to supported lending protocols by accepting USX's yield tokens as collateral. USX will always remain over-collateralized, as the value of yield tokens accrues over time.

The borrow interest rate for USX will be anchored within a capped range and determined by USX's utilization rate. For instance, if the target borrow interest rate for USX is set at 3%, and market demand drives the borrow interest rate above 3%, additional USX liquidity will be provided to lending protocols via PDLP to lower the utilization rate. This ensures that the borrow interest rate remains within the specified range (equal to or less than 3%). Conversely, when market demand decreases, USX liquidity will be withdrawn from lending protocols, leading to an increase in utilization and interest rates.

Benefits

The pool-based model carries the following competitive advantages:

• It greatly improves capital efficiency by providing USX liquidity to lending protocols directly, which doesn't require users to mint USX and supply in the secondary market.

• Market-driven interest rate is more adaptive and flexible, serving as a great supplement to the Vault-based fixed interest rate model.

• It further extends collateral support for USX to a wider range of assets.

Whitelisted Lending Protocols

USX is a standard ERC-20 token that can be easily integrated with DeFi lending protocols, seamlessly and permissionlessly. However, the decision to add a lending protocol supporting USX to the whitelist, and activate the PDLP module, will be determined by a vote by the dForce DAO.