USDX Protocol has announced the anticipated launch of Stablecoin, a USD-pegged third generation cryptocurrency for early 2019. The decentralised dollar-pegged currency is unique in its use of monetary policy mechanisms to regulate currency rates and combat issues of trust and volatility.
The USDX Protocol team has a strong academic background with graduates from the University of Toronto and the University of Columbia, and includes former employees from Google, Bloomberg and UBS.
The USDX Protocol is designed to act as a bridge between traditional financial trading on fiat markets and the blockchain world.
The USDX token will be launched by USDX Protocol as mining proof and in early in 2019. The USDX Protocol will unveil its first Stablecoin, USDY, a Stablecoin pegged to the US Dollar launching on the public blockchain.
USDX token holders will be able to receive the same value equivalent in the new currency when it is released. For example, users with $4 worth of USDX tokens will receive $4 worth of USDY once the Stablecoin is launched. In addition, the USDX Protocol plans to release Stablecoins pegged to other currencies and financial instruments, such as foreign exchanges and commodities.
An elastic algorithm-controlled monetary policy underpins the USDX Protocol system and ensures that USDY will never stray too far from its pegged value, thus safeguard against volatility in price, which is a prominent issue for other cryptocurrencies like Bitcoin, Ethereum and Ripple.
In the past, Stablecoins have attempted to combat such volatility issues, but only under centralised systems, which has then led to issues surrounding transparency.
Three regulation mechanisms are implemented in order to safeguard USDY against straying its dollar peg.
1. Variable block reward – Block reward rates can be changed depending on whether USDY is weak or strong against the dollar.
2. Variable transaction fee – Transaction fees for sending USDY can be adapted to slow down the velocity of USDY.
3. Lock-in mining – Miners can choose to freeze some of the USDY funds, which will not be free to circulate.
Whilst Tether (USDT) employs some regulation on a centralised level, the USDX Protocol’s mechanisms are decentralised. Oracle software will continually evaluate the value of the USDY system and activate the mechanisms according to an algorithm. Peer-to-peer participation in the system, through mining and speculation, is what ensures the monetary policy can be actualised.
Analysis from Dennis Lee, Co-Founder of USDX Protocol
“The establishment of a reliable Stablecoin could revolutionise financial markets. For traders, it will be much easier to speculate on cryptocurrencies with the option to park assets in the USDX system and retain value. A Stablecoin such as USDY can also be used as an alternative to fiat currency in the exchange of goods. Theoretically, it could be used to purchase services, or even physical commodities. This creates a real bridge between the cryptocurrencies and the fiat financial world.”