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USD.m Contract Address

Arbitrum: 0x1E0aa9B3345727979665FcC838d76324cBA22253

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USD.m Vault: Rehypothecated Market Making

The USD.m vault represents a groundbreaking approach to liquidity provision on perp protocols, enabling participants to act as market makers on UniDex while simultaneously tapping into yields from multiple DeFi protocols. This innovative strategy, which we term “multi-protocol rehypothecated yield optimization,” offers USD.m holders diverse streams of income.

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USD.m Vault Mechanics

  • Participants contribute assets to the USD.m vault, receiving USD.m tokens as representation of their share.
  • UniDex strategically allocates these assets across a range of protocols, including GMX, GNS, Ethena, and Aave, managing the positions on behalf of users.
  • The allocated liquidity serves a dual purpose:
    1. It’s utilized for market making on the respective platforms, generating returns through trading fees and price movements.
    2. UniDex leverages this liquidity to facilitate trading on its own platform, creating an additional layer of yield opportunities.
  • The platform aggregates yields from all sources - trading fees, interest from lending protocols, and rewards from liquidity provision - and channels them back to USD.m holders.

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Advantages of providing liquidity to the USD.m vault over other platforms

Engaging with the USD.m vault offers several compelling benefits:

  • Full retention of rewards from integrated protocols (GMX, GNS, Ethena, and Aave)
  • A 50% share of UniDex’s total protocol earnings
  • Exposure to potential gains from market making activities across multiple platforms

This multi-faceted approach to yield generation positions USD.m as a cutting-edge tool for maximizing DeFi returns.

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Minting and Redeeming USD.m

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Minting

To mint USD.m, users need to use any supported stablecoin (such as USDC, DAI, USDT, or sUSDe) and deposit it into the USD.m vault. The USD.m minted is based on the current USD.m price.

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Redeeming

Redeeming USD.m is straightforward. Users enter the amount of USD.m and select a supported stablecoin to redeem for the equivalent value. The USD.m is then burned, and the stablecoin is sent to the user’s wallet.

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Fees and Cooldown

  • Minting & Redeeming fee’s are dynamic based on market conditions, TVL, and other risk factors decided by the team. If we believe there is a high market risk we may increase the fee to mint or redeem USD.m to protect the vault.
  • Cooldown period: 1 day (24h) before minted USD.m can be redeemed

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Additional Features

Users can mint USD.m cross chain using various meta-aggregators like Axelar, Li.fi, and more.

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Why Choose USD.m?

USD.m provides liquidity for traders, allowing them to take positions with leverage. The relationship between USD.m holders and traders is as follows:

  • If traders take a loss, USD.m holders will make a profit
  • If traders take a profit, USD.m holders will make a loss

Rewards for providing liquidity and counterparty risk are based on the Arbitrum chain where the USD.m was minted.

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Risks Associated with USD.m

Although USD.m value is market neutral and not directly affected by crypto market volatility, holding USD.m still carries risks:

  1. Counterparty risk: If traders make a profit, that profit is paid to the trader out of the USD.m pool.
  2. Depegging risk: In the unlikely scenario that any of the supported stablecoins depeg, USD.m could be affected. For example, if USDT depegs, the USD.m price would be affected because USDT backs the vault making its depeg percentage negatively affect the USD.m price.

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USD.m Liquidity Pool Mechanics

The open interest available for the platform is limited by the total stablecoin value available in USD.m. Traders cannot open a new position if the total platform open interest meets or exceeds the total TVL in USD.m.

A portion of all protocol-generated fees, including opening/closing positions, minting USD.m, borrow fees, and excess funding fees, as well as any losses from traders’ realized P&L and liquidations, go towards the USD.m vault, causing its price to increase over time. Any profits from traders’ realized P&L are paid out from the USD.m vault, causing its price to decrease.

The USD.m price is based on the number of USD and USD.m in the vault, at any time, where:

USD.m price = USD in vault / USD.m supply

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Fee Distribution

50% of all platform fees are automatically added to the USD.m vault. There is no need to stake USD.m to receive these fees; simply holding USD.m automatically accures additional value over time. This is similar to LSD tokens like stETH or sUSDe where the value of the token increases over time because the fees are added to the vault directly increasing the value of the token.

However, to receive external rewards from the USD.m vault, users must stake their USD.m in the USD.m staking pool. This pool allows you to earn additional rewards from the USD.m vault such as esMOLTEN or any other rewards that are added for being a USD.m staker. The pool found at UniDex’s USD.m staking page for example, allows you to stake USD.m and earn esMOLTEN.