FAQ

What is LSR?

LSR is short for “Liquid Stability Reserve”. dForce community has approved the implementation of LSR as per DIP027, serving the purpose of further stabilizing the peg of USX, improving capital efficiency.

How does the LSR work?

The LSR facilitates a 1:1 minting and redemption process for USX using USDC, USDT, and DAI.

LSR is a stability module of USX, allowing users to use USDC, USDT, and DAI to 1:1 mint USX and redeem for reserve stablecoins. Reserve stablecoins will be automatically supplied to Unitus Finance, which can be lent out to earn interest - this mechanism ensures that USX minted through the LSR module are always over-collateralized.

Users should treat the LSR as a stable swap, which keeps buying and selling USX exactly the same amount in USDC, USDT, and DAI. Having that said, there is no guarantee you can redeem USX back to the same stablecoin you used to mint USX, because anyone can use the LSR to trade USX against different stablecoins, including those who minted USX from dForce Lending or dForce Vaults.

But all USX outstanding are always over-collateralized.

How much do you charge for using LSR?

We don’t charge any fees for minting USX from other supported stablecoins; however, there will be a 0.1% fee applied for each redemption of USX for other supported stablecoins.

How much USX can I mint using LSR？

The LSR module implements a Debt Ceiling for each reserve stablecoin, representing the maximum amount of USX that can be minted using the selected stablecoin as collateral (please note it may vary on different networks).

Can I redeem USX for the same reserve stablecoin?

Redeeming USX via LSR will be subject to the availability of Reserves (total liquidity supplied to dForce Lending) and Liquidity (total liquidity - some stablecoin supplied might by utilised by the lending protocol).

That being said, there is no guarantee that you can redeem USX for the same stablecoin you used to mint USX. But you can redeem for other stablecoins as long as there is adequate liquidity. Alternatively, you can sell USX on supported DEXes directly (may incur slippage).

This mechanism will make arbitrage super efficient (i.e. sell USX for other stablecoins when the price is higher than $1, and vice versa), which can help USX restore its peg in the shortest possible time.

Why stable reserves don’t match the USX’s circulating supply? Is USX fully collateralized?

Yes, USX is always fully collateralized. There are 3 ways to mint USX on dForce:

• Supply collateral assets with Collateral Ratio > 100% to mint (borrow) USX on dForce Lending;

• Supply collateral assets with Collateral Ratio > 100% to mint (borrow) USX on dForce Vaults;

• Use other stablecoins to 1:1 mint USX via the LSR module.

In many cases, users who mint (borrow) USX from dForce Lending or dForce Vaults, may redeem USX for other stablecoins through the LSR module directly to facilitate different trading/investment strategies, which shall also consume the LSR stablecoin reserves.

But these transactions doesn’t impact the over-collateralization of USX.

How can I redeem my USX when stable reserves in LSR are dried up?

You can always sell USX for other stablecoins on the open market!

We have also partnered with multiple DEXes on different L1/L2 chains to further improve USX’s liquidity.