UXD Protocol is expanding into the Ethereum ecosystem! This article outlines the mechanism of UXD on Ethereum including rollups and how we will distribute the new governance token to UXP token holders on Solana.
Mechanism of UXD on Ethereum(Rollups)
UXD is currently a stablecoin built natively on Solana backed by the Asset Liability Management Module.
UXD Protocol will expand to Ethereum and rollups with the same underlying mechanism, which you can see below.
Leveraging various strategies across Ethereum’s rollups by utilizing an interoperability solution, UXD(Ethereum, rollups) will be able to reach more potential users and capture more liquidity.
The only difference between UXD(Solana) and UXD(Ethereum, rollups) is that UXD(Ethereum, rollups) will be backed by various strategies across Ethereum and rollups by utilizing a interoperability solution, whereas UXD(Solana) is limited to being backed by strategies on Solana exclusively.
The team behind UXD Protocol is currently working on 3 strategies on Ethereum.
The first strategy is the delta-neutral position on Optimism. Similar to what was done on Solana with Mango Markets, it will be hosted on Perpetual Protocols.
The second strategy is the delta-neutral position on Arbitrum, using Rage Trade’s delta-neutral vault.
The third strategy will utilize the yield aggregator, Beefy Finance on Ethereum, Arbitrum, and Optimism.
All three of these strategies have low volatility and generate yield, which will stabilize the price of UXD to USD and generate cash flow distributed solely to UXP token holders through buybacks.
UXD will be fully fungible between Ethereum and rollups. Users will be able to mint/redeem UXD on Ethereum and rollups, and bridge between these chains. For example, users will be able to mint UXD with USDC on Arbitrum, bridge to Optimism and then redeem for USDC there.
We will be using LayerZero as the interoperability solution, so that users can bridge between rollups and Ethereum.
UXD Protocol will continue to add strategies on Ethereum and rollups that ensure low volatility for UXD and generates yield.
The governance token on Ethereum
UXD Protocol will create a new governance token, which will be issued natively on Ethereum. Users will be able to bridge the governance token to rollups, enabling cross chain functionality. The governance token will have the same token supply, distribution and function as UXP(Solana), which is outlined here.
The revenues generated by UXD Protocol on Ethereum and rollups will be used to buyback the governance token.
The governance token will be distributed to UXP(Solana) token holders on a 1 to 1 basis, so that UXP(Solana) token holders will not be diluted through the issuance of the new governance token on Ethereum. Details and instructions will be announced once we are closer to releasing the token.
Moving the insurance fund to Ethereum
UXD on Ethereum and rollups require an insurance fund to pay out potential losses from various strategies. We propose to move $35m USDC from Solana to Ethereum to support UXD on Ethereum and various rollups.
UXP(Solana) token holders can vote for this proposal here.
We are excited to expand into the Ethereum ecosystem and to increase adoption of UXD!
Hop into our discord and give us your thoughts on our expansion into the Ethereum ecosystem!