USD+, think of it as USDC but with additional Yields
USD+ is a yield-bearing stablecoin ushering in the new and via its low-risk yield-farming strategies generates additional passive income for its holders. It is collateralized by stablecoins: USDC, USDT & DAI. Think of it as USDC but with additional yields. It’s simple, liquid with profits paid out daily via rebase.
Liquidity Pools with USD+ are superior to that of USDC because, in addition to fees and rewards, they give APY from USD+. It increases capital efficiency by generating increased returns for Yield-Farmers and puts your crypto to work — regardless of it being in Yield Farms, you continue to earn APY from USD+.
Mechanics for USD+ in Liquidity Pools
Since the Liquidity Pools for USD+ also receive APYs from it, the mechanics of how Yields are passed to Liquidity Providers might be unclear to some users and hence for the purpose of this article, we will be elaborating more on this mechanism in detail.
Positive rebases occur daily for USD+ and the result is that your liquidity pools will have more of BOTH tokens. A hypothetical pool with $100 in USDC & USD+ (50/50 ratio) would rebalance to $55 in USDC & USD+ respectively assuming 10% APY (a $10 appreciation from the former $100). The pool is constantly kept at a ratio whereby 1 USD+ = 1 USDC owing to the arbitrage. This is the magic of USD+, a stringent peg/ratio is vigorously enforced & maintained.
Our arbitrage bots are specifically designed for this purpose and manage to keep a sustained peg in the open market. Arbitrages only take place when the pools are unbalanced (in the event that 1 USD+ is not equal to 1 USDC). Moreover, additional deposits/withdrawals would have no effect on the pool’s ratio as the arbitrages take place constantly to maintain a strong peg. You can rest assured that your USD+ in Liquidity Pools would always have a peg at a 1:1 ratio relative to USDC.
Let’s look at some examples where the magic of USD+’s arbitrages have rebalanced pools.
Example 1: The above outlines the effect of arbitrages sustaining the peg and at any point in time, keeping the pool balanced as per the peg of 1 USD+ equalling 1 USDC. Note that the first image represents an unbalanced pool (more USDC than USD+ in the pool) and that the second image is the effect of arbitrage bots coming in and rebalancing the pool (USD+ being equal to the amount of USDC in the pool).
Example 2: The magic of USD+: Arbitrages constantly rebalance the pool as in the case above. From a distorted ratio of 46: 55 for USD+/USDC to eventually achieving equilibrium at a 1:1 ratio (the end result being 50.1:50.1)
Therefore, as explained above, any appreciation via USD+’s rebase would have arbitrages coming in to equally balance the pool.
The Magic of USD+: How do Arbitrages take place for USD+ in Liquidity Pools?
Since arbitrages are a key mechanism for maintaining a strong peg USD+, they are of the utmost essence for our Liquidity Pools. Arbitrages only happen once the pool is unbalanced and the said arbitrage is profitable. In the event that the pool in question has more USDC than USD+ (USD+ being above peg), our arbitrage bots mint USD+ via USDC and sells USD+ in the open market to keep the pool rebalanced. This also applies vice versa when USD+ is below its peg.
USD+, a yield-bearing stablecoin
USD+ is a yield-bearing stablecoin whereby its rewards are financed by its investments in Yield-Farming strategies. Our strategies involve low-risk protocols and the goal is to minimize risk over maximising returns.
The yield comes from the collateral, and it is deployed across a set of yield-generating strategies, including collateralized lending, e.g. AAVE and stable-to-stable liquidity pools. The logic is to choose immediate liquid assets (convertible into USDC on demand), minimum risk, and then optimize for returns. All strategies undergo a vetting process by our due diligence team. We specifically invest in other reward yielding stablecoins and pool daily profits back into USD+ thus back into your wallet via a rebase mechanism
If you so choose to invest in liquidity pools with USD+, these yields are passed on to Liquidity Providers as well which means you earn more APYs than you would do so with USDC.
