Stablecoins are very popular right now. These digital currencies are usually pegged to fiat currencies or natural resources, which makes them less prone to volatility. USDX is one of the newer projects in this regard, and it may actually replace central banks in the future. We will have to wait and see how this new venture plays out, but it has a lot of merit on paper.
Does USDX have a purpose?
Ever since stablecoins started gaining traction in the world of finance and cryptocurrency, things have been trucking along nicely. As of right now, most people know about Tether’s USDT, which is pegged to the US dollar at a 1:1 ratio. This currency has been rather controversial, but it is still around and in high demand as of right now.
It was only a matter of time until we saw more of these stablecoins. Not long ago, we saw TrueUSD make its way onto the Bittrex exchange. TrueUSD is another stablecoin pegged to the US dollar, although it remains to be seen if and how it can compete with Tether in this regard. Rest assured there will be some interesting competition between these two assets.
Things will only get more interesting from here on out, as we now have another project trying to achieve a similar goal. Known as USDX, this new protocol uses an algorithm to apply monetary policy combined with established crypto frameworks to maintain a stable price. As such, it is an effective stablecoin to compete with USDT and TrueUSD, although it remains to be seen if this new currency will make a big impact on the cryptocurrency industry.
USDX was created to combine the Quantitative Theory of Money with proof-of-stake “mining”. All of this algorithm’s data is gathered from a Delegated Decentralized Data Source – also known as an oracle – and the Schelling Point Mechanism, which has been referenced by Vitalik Buterin in the past. It is an interesting mix of information sources which will certainly have an effect on the perceived stability of USDX moving forward.
Assuming all goes according to plan, the USDX protocol should be able to introduce variable block rewards, variable transaction fees, and lock-in mining. This should help to create a negative feedback loop on the USDX blockchain and increase or decrease the supply of tokens automatically. It could certainly be a viable competitor to central banks.
For now, the USDX team is working on their first token, which is known as USDY. It will be pegged to the US dollar, and the supply of these tokens will be controlled by the underlying algorithm automatically. For now, it is unclear when this token will be issued exactly or how users can obtain it directly. This is an interesting development in the world of stablecoins to keep an eye on, though, as more competition in this area can only be considered a good thing.