what it is SXD ?
SXD is Stable XDC token, its the The simplest possible stablecoin which create/redeem token backed by a pool of XDC. You mint n new “SXD” stablecoin units by depositing $n worth of XDC (as of the time of minting) into the pool, and burn m SXD in exchange for $m worth of XDC (as of the time of burning) from the pool.
to counter the volitile nature of XDC, SXD uses the well familiar overcollateralize of the pool giving it a safety buffer, with more XDC than is needed to redeem the outstanding SXD. To do this, the system needs a way for other participants — “funders” — to add XDC to the pool (in exchange for a second token, FXD — “funding XDC”), and an incentive for them to do so. Let’s try two incentives:
- Fees. Charge small fees on mint/burn operations, and share them between the funders.
- Leverage. We have a pool of XDC with market risk (its value rises and dips with the price of XDC), backing a bunch of SXD tokens whose sole purpose in life is to avoid that risk (stay priced at $1). So we’ll dump all that market risk on the funders: stablecoin users deposit risky XDC, get back (market!-)riskless SXD; funders deposit risky XDC, get back even-riskier FXD. This is again a familiar financial technique — “tranching” the risk.
So now, on top of mint (XDC->SXD) and burn (SXD->XDC) operations to create/redeem SXD tokens, we add fund (XDC->FXD) and defund (FXD->XDC) operations to create/redeem FXD.
future work for SXD ?
create oracle solution, and continue to optimize the contracts.
Built With
- hardhat
- solidity
