You first need to choose a web interface (aka frontend operator) to access the system. The core team building the platform will not operate a frontend. xDollar is instead accessed by third-party frontend applications and integration services.
$MATIC or $AVAX or $ETH is used below for mechanism elaboration as xDollar platform has deployed in Polygon, Avalanche and Arbitrum.
What are the main use cases of xDollar?
Borrow xUSD against $MATIC (or $AVAX or $ETH) by opening a Trove
Secure xDollar by providing xUSD to the Stability Pool in exchange for XDO rewards
Stake XDO to earn the fee revenue paid for borrowing and redeeming xUSD.
Redeem 1 xUSD for 1 USD worth of $MATIC when the xUSD peg falls below $1
What are xUSD and XDO?
xUSD is the USD-pegged stablecoin used to pay out loans on the xDollar platform. At any time, it can be redeemed against the underlying collateral at face value. Learn more about the stability mechanism.
XDO is the secondary token issued by xDollar. It captures the fee revenue that is generated by the system and incentivizes early adopters and frontends. In future, XDO will serve as governance token in which XDO holders can vote and decide how xDollar can move forward. The total XDO supply is capped at 100,000,000 tokens.
Does xDollar charge any fees?
There is a one-off fee whenever xUSD is borrowed, and when xUSD is redeemed:
For borrowers, there is a borrowing fee on loans as a percentage of the drawn amount (in xUSD).
For redeemers, there is a redeem fee on the amount paid to users by the system (in $MATIC or $AVAX or $ETH) when exchanging xUSD for $MATIC or $AVAX or $ETH. Note that redemption is separate from repaying your loan as a borrower, which is free of charge.
Both fees depend on the redemption volumes, i.e. they increase upon every redemption in function of the redeemed amount, and decay over time as long as no redemptions take place. The intent is to throttle large redemptions with higher fees, and to throttle borrowing directly after large redemption volumes. The fee decay over time ensures that the fee for both borrowers and redeemers will “cool down”, while redemptions volumes are low.
The fees cannot become smaller than 0.5% (except in Recovery Mode), which protects the redemption facility from being misused by arbitrageurs front-running the price feed. The borrowing fee is capped at 5%, keeping the system (somewhat) attractive for borrowers even in phases where the monetary is contracting due to redemptions. Other than that, the two fees are identical and are depicted as "Fee" in the following exemplary chart:
How can I earn money using xDollar?
There are two different ways to generate revenue using xDollar:
Deposit xUSD to the Stability Pool and earn liquidation gains (in $MATIC) and XDO rewards.
Stake XDO and earn xUSD and $MATIC or $AVAX or $ETH revenue from borrowing fees and redemption fees.
Can I lose my funds?
As a non-custodial system, all the tokens sent to the platform will be held and managed algorithmically without the interference of any person or legal entity. That means your funds will only be subject to the rules set forth in the smart contract code.
There are two scenarios under which you may lose a part of your funds:
You are a borrower (Trove/Account owner) and your collateral in $MATIC or $AVAX or $ETH is liquidated. You will still keep your borrowed xUSD, but your Trove will be closed and your collateral will be used to compensate Stability Pool depositors.
You are a Stability Pool depositor and your deposited xUSD is used to repay debt from liquidated borrowers. Since liquidations are triggered any time borrowers’ collateral drops below 110%, you will receive more $MATIC or $AVAX or $ETH in return with a very high probability. However, if $MATIC decreases in price and you maintain exposure, you may lose value in your total pool deposits.
Please note that a hack or a bug that results in losses for the users can never be fully excluded.