Strengthening the UXD Stablecoin with Real World Assets
UXD Protocol Integrates Credix Liquidity Pool as Stablecoin Collateral with $2 Million Initial Backing
TL;DR
UXD Stablecoin is now ~50% collateralized by Real World Asset investments via the Credix Liquidity Pool with a targeted 12.0% APY which will be passed on to UXP holders and the protocol insurance fund. The initial $2 million investment was completed on January 3, 2023.
UXD Protocol has established an exciting partnership with Credix Finance to deploy $2.0 million, approximately 50%, of the collateral securing UXD stablecoin into Real World Asset (“RWA”) backed loans through Credix’s Liquidity Pool. UXD Protocol, the issuer of UXD which is a fully-collateralized decentralized stablecoin backed by a derivative-driven delta-neutral position, has been working closely with the Credix team to form this partnership for many months. Credix is a decentralized credit marketplace connecting institutional investors with FinTechs in emerging markets, primarily Latin America, by bringing over-collateralized structured debt facilities on chain. This next phase of the Asset Liability Management module (“ALM”) enables UXD Protocol to access real world credit opportunities with targeted superior risk-adjusted yields and diversification against crypto-specific risk factors.
The ALM seeks to back UXD with multiple lower-risk, yield-generating investment strategies that collectively build a diversified collateralization mechanism. Yield generated by these strategies accrues to the UXP governance token and the UXD Protocol insurance fund. The former rewards the UXD community members and incentivizes governance participation, while the latter strengthens UXD’s “buffer of last resort”. The ALM’s Initial Phase was completed in Q4 2022 as UXD integrated with Mercurial Vault (now Meteroa), a yield aggregator that distributes investments across various Solana lending pools. A portion of UXD’s collateral backing was deployed into Mercurial with realized yield being used to buy back UXP, seeking to increase its market price, and bolster the insurance fund, further securing the protocol.
This integration with Credix represents Phase II of the ALM implementation: backing UXD with Real World Assets. Credix facilitates the creation of structured debt facilities for non-bank FinTech loan originators via its Solana-powered platform. These FinTech lenders then issue loans to their end borrowers which are traditional SMEs (revenue-based financing, equipment finance, asset-backed loans, etc.) and consumers (auto, credit cards, BNPL, etc.). Credix’s debt facilities are typically divided into a Senior/Mezzanine/Junior tranche structure with the Senior portion bearing the lowest relative risk as it is repaid first in the cash flow waterfall and the Junior, conversely, bearing the highest risk. Incentives are aligned in this facility type as the Junior position is taken by the FinTech lender and the Mezzanine is secured by the “Underwriter”, an experienced credit investor that conducts additional due diligence on behalf of other capital providers. These other entities would absorb any losses before the Senior position may. Via the ALM, UXD Protocol will invest into Credix’s Liquidity Pool which comprises the Senior, most protected portion of all deals live on the Credix platform at a targeted 12% base APY on USDC. This was the execution for the initial Credix $2 million deployment. Summarizing, UXD’s Credix collateral will be in the most protected tranche position, diversified across multiple individual investments, and earning double-digit cash-on-cash return. All of Credix’s active deals can be viewed on its app.
UXD is now one of just two decentralized stablecoins significantly backed by and generating substantial revenue from real world loans, the other being Maker’s DAI, and the only Solana-native one. This is a mutually beneficial initiative on the cutting edge of innovation that is bringing real, tangible lending opportunities to decentralized finance. By partnering with Credix, UXD will be providing fair capital to underserved markets in Latin America while collectively strengthening the Solana ecosystem. UXD holders will appreciate the lower-risk investment and added diversification while UXP holders will reap direct benefits from the targeted 12% APY on Credix’s Liquidity Pool.
About UXD Protocol
UXD Protocol is the issuer of UXD, a fully-collateralized decentralized stablecoin backed by various assets deemed by the Protocol to be relatively low risk. These assets may include overcollateralized lending positions, real-world assets, and delta-neutral positions, among others. UXD Protocol is governed by the UXP DAO with voting based upon the governance token UXP. Visit UXD’s website or follow along Twitter to learn more.
About Credix
Credix is a global platform that provides liquidity against novel, tech-enabled, tokenized assets. Credix provides on-chain asset-based financing to innovative non-bank lenders in Emerging Markets, focusing on Latin America.
