xBacked: A decentralized stablecoin for Algorand

Published in
5 min readNov 2, 2021


Traditional financial activity takes place within Sovereign opaque currencies with significant costs, high barriers to entry, and limited accessibility. Transparent, collateralized assets are needed to unlock equity and empower the digital economy which is something that traditional finance has been unable to facilitate. xBacked is a DAO building a suite of decentralized stablecoins on Algorand, beginning with xUSD.

How does it work?

xBacked is a completely decentralized, permissionless protocol that allows anyone with ALGO to mint xUSD. There are no servers, authentication is done via a wallet, and the protocol is governed by users.

To mint xUSD, users must open a vault on the xBacked protocol. Vaults are created by a user of xBacked when they deposit collateral (e.g ALGO). A user can have multiple vaults, but they will be limited by the global maximum for applications on Algorand (currently 50).

After a vault is created, a user will be able to deposit more collateral and mint more xUSD as long as their vault has a healthy collateral ratio. For the xBacked protocol, a Vault is liquidated once the collateral ratio is under 110%.

Once a user’s xUSD is repaid, the vault is closed and any collateral still in the vault is transferred back to them. xBacked vaults will offer a range of advantages for users including full transparency, over collateralized stablecoins, and beginning with 0% interest on minted stablecoins.

Over time xBacked will support a large range of collateral types. This provides major benefits to the ecosystem, allowing projects to retain more tokens, unlocking dormant capital and extending project runways.

You can read more about the specifics of the protocol at https://docs.xbacked.io or read about it in our Litepaper which is available as a part of our documentation.

Why Algorand?

Building a decentralized stablecoin on Algorand makes a lot of sense. It is a Pure Proof of Stake Layer-1 protocol with instant finality, 4.5s block times, and has a decentralized governance model to empower the community to govern the direction of the ecosystem.

The Algorand ecosystem is set for explosive growth.

The Algorand ecosystem is set for explosive growth over the next 12 months with many core DeFi primitives coming to market. Multiple DEXES in testnet, Bridges in testnet, and a lending platform in testnet ensure the next 12 months of DeFi on Algorand will be huge. Billions of dollars are being poured into the ecosystem, and with xBacked being the only decentralized stablecoin set for launch it will cement itself at a foundational level of what is set to be the leading blockchain of the future.

Cultural Synergy

xBacked and Algorand also have cultural synergies. Both are heavy proponents of decentralization, and both also take a long term view. The team behind xBacked are taking the view of DeFi and Algorand being a large paradigm shift over the next 10 or 20 years.

Those who created the technology built it to last — solving the blockchain trilemma of decentralization, scalability and security cemented it as a core blockchain in the future.

The original Algorand team also knew it was important to welcome traditional finance in the long term; and their talks with over 15 central banks about using their technology shows their commitment to this strategy.


Not only is the team behind Algorand well aligned with xBacked, but so is the community. Everyone building in the ecosystem is looking at how they can work together to ensure the whole ecosystem wins.

Not just the builders think in the long term; so do users of the blockchain. The community discord channels are full of people discussing what Algorand will become years into the future and modeling different scenarios — something rare in other ecosystems.

Developer Friendly

xBacked is excited about builders. Those who are building DeFi protocols, NFT projects, communities are all that makes an ecosystem great. At the core of this are developers. xBacked will have an SDK for the protocol for developers to build on top of.

There will also be functionality that only developers are able to do on the protocol. We want to encourage more people to get involved and develop on Algorand, and one way to do this is to make a fun way for developers to interact with DeFi on Algorand. Keep your eyes peeled for the documentation.

Check out the open-source work we have on our Github: https://github.com/xBacked-DAO

xBacked Governance

The X governance token will facilitate community governance for the for xBacked ecosystem as well as entitling holders who stake governance tokens to 80% of the platform’s earnings. 80% of earnings will go to staked governance token holders, 10% to the DAO treasury, and 10% to liquidators who stake xUSD. Learn more about staking xUSD in our documentation.

There will be a strong focus on community. It is vital that the xBacked protocol has engaged governors and users, and special care will be taken when the governance token is distributed to ensure it is held by strong hands, not those looking to flip it.‍

Product Launch

xBacked is currently on schedule to launch on testnet in early 2022 with a main net launch to come between the end of Q1 and the start of Q2, pending a security audit. As the team continues to enhance the technology over the coming months, xBacked will begin building the community through activity across various channels. To keep track of all the latest developments about this hugely exciting project be sure to join xBacked on Twitter, LinkedIn, Reddit, Medium, Discord, and Telegram.