UXD Protocol

UXD Protocol operates within the decentralized finance (DeFi) sector, offering a decentralized stablecoin, UXD, primarily on the Solana blockchain. Founded in 2020 by Kento Inami, the protocol was initially named Soteria before rebranding. Inami's background includes corporate strategy at bitFlyer, a Japanese cryptocurrency exchange, and experience as a derivatives administrator at a Japanese bank, which informed the protocol's core mechanism.

The protocol’s business model centers on the creation of a stablecoin that aims to solve the 'stablecoin trilemma' by being simultaneously decentralized, stable, and capital-efficient. UXD is an algorithmic stablecoin fully backed by a delta-neutral position. This is achieved by taking a user's deposited crypto asset (like SOL or BTC) and simultaneously opening a corresponding short position for the same asset on a derivatives exchange, such as Mango Markets. This hedging strategy ensures that for every $1 of crypto assets deposited, 1 UXD is minted, making it capital-efficient as it does not require over-collateralization. The value of the position remains stable in dollar terms, irrespective of the underlying asset's price fluctuations, ensuring the UXD stablecoin is 100% backed.

Revenue generation is linked to the funding rates from the perpetual swap positions used to create the delta-neutral hedge. When funding rates are positive, the protocol earns a yield, which can be distributed to holders of the protocol's governance token, UXP. Conversely, when rates are negative, payments are made from an insurance fund, which is backed by UXP tokens as a last resort. The primary clients are DeFi users, traders, and individuals seeking a censorship-resistant and stable digital currency, including those excluded from traditional banking systems. Users can mint and redeem UXD permissionlessly on decentralized exchanges. Governance is managed by the UXP token holders through a DAO, allowing community participation in the protocol's evolution.

Keywords: decentralized stablecoin, algorithmic stablecoin, UXD Protocol, UXP token, Kento Inami, Solana blockchain, delta-neutral position, perpetual swaps, DeFi, capital efficiency, censorship-resistant, crypto-backed stablecoin, decentralized finance, stablecoin trilemma, Mango Markets, yield generation, governance token, digital currency, asset liability management, blockchain finance