f(x) Protocol fxUSD

fxUSD is the stablecoin of f(x) Protocol, developed within the AladdinDAO ecosystem, and is designed to be pegged to the US dollar. It is issued on Ethereum and also has a contract on the Base network. On the collateral side, it uses wstETH, Lido's staked ETH token, and WBTC.

In f(x) Protocol's design, the collateral risk is split between two sides: users seeking leveraged ETH or BTC exposure open positions called xPosition, and the debt side of these positions enters circulation as fxUSD. When positions approach risky levels, rebalancing and liquidation mechanisms kick in; this process uses fxUSD and USDC deposited in the stability pool, and pool participants earn a yield in return. This structure aims to shield fxUSD holders from fluctuations in the price of the collateral.

fxUSD's dollar peg is tied to sudden drops in the collateral assets, how the liquidation mechanism for leveraged positions performs in stressed market conditions, the depth of the stability pool, and oracle and smart contract risks. Lzzo.com publishes DefiLlama's US dollar reference price for this stablecoin, and the chart also uses DefiLlama's historical data.