USDX wants to become the “ultimate stablecoin” for the cryptocurrency community. Find out how it plans to accomplish that today in our review.
What Is USDX?
USDX, found online at USDX.money, is a stable cryptocurrency – also known as a stablecoin. Like other stablecoins, USDX is designed to retain a stable price when crypto prices drop. It’s seen as a way to hedge against the cryptocurrency market’s infamous instability.
Traditionally, stablecoins will collect fiat currency as collateral, then peg their stablecoin to the value of that fiat currency.
However, these stablecoin projects have serious problems. Tether, for example, refuses to complete audits and publishes little proof that it has the USD reserves to back its USDT market cap. Tether has a centralized system and purportedly releases USDT without any collateral. It appears to be a stablecoin – but it’s only stable until people try to claim its value.
These stablecoins also have another problem: banks can seize their fiat currency assets at any time, then create a crisis. Some stablecoins have tried to avoid this problem by using cryptocurrencies as collateral instead of fiat currencies – but cryptocurrencies have highly volatile prices that weaken the foundation of the stablecoin.
USDX wants to solve these problems – and other issues – by creating a better stablecoin.
How Does USDX Work?
USDX envisions a new era of stablecoins offering innovation, stability, and easy access to liquidity. The project will roll out in two phases. USDX will develop their public blockchain over the course of 2018 before launching their blockchain on a testnet by Q2 2019. The two phases include:
Phase 1) Tokens will be produced as Ethereum ERC20 tokens called USDX. Anyone can join USDX’s ecosystem to contribute to the stablecoin revolution.
Phase 2) An independent public chain will ensure the revolution. This public chain will be called USDY. Previous USDX token holders will be awarded USDY equal to their USDX, then enjoy “the ultimate stabilization reached by its self-balancing mechanism.”
After phase 2, USDX will implement intelligent algorithmic monetary control. The algorithm will adjust the total quantity of money in the economy (M). It will also adjust the velocity of money (V). Diversified mechanisms will adjust M and V. Those diversified mechanisms include a variable block reward, a mining lock, and a variable transaction fee.
The goal of these mechanisms is to ensure E stays as close to “1” as possible, with E being the exchange rate. Here’s how the official USDX website explains it:
“With E represents the exchange rate of USDY to USD, if E is greater than 1, we need to increase M or increase V, so that E goes down to 1; if E is less than 1, we need to decrease M or decrease V, so that E goes up to 1.”
Another important goal of the USDX project is to kill the centralization of stablecoins. USDX specifically mentions Tether as a problematic centralized stablecoin. Tether is run by a centralized authority. That centralized authority can release USD Tethers (USDT) without any collateral. That’s a problem, and it weakens security in the overall USDX ecosystem.
With USDX’s absolute decentralized system, the company aims to build “a healthy and organic” e-commerce ecosystem.
USDX will also remove the need for collateral. They see collateral currencies as an enormous problem. Fiat currency collateral, for example, needs to be placed in one bank account, and that bank account can be frozen at any time for fraud. Cryptocurrency collateral, on the other hand, is subject to enormous volatility swings that can destroy the value of the stablecoin.
What Problems Does USDX Seek to Solve?
USDX understands the value of a good stablecoin. A good stablecoin brings stability to a cryptocurrency industry that sorely needs it. However, the stablecoins that have been released to date have been problematic. USDX’s whitepaper describes their stablecoin as the third generation of stablecoins. Here are the problems with the first two generations:
The first generation of stablecoins is represented by Tether. These stablecoins rely on a centralized and collateral-based model where, in theory, one stablecoin is issued when the centralized authority receives one equivalent unit of fiat currency. In other words, Tether only issues 1 USDT when it has $1 USD in its bank account. However, regulatory risk and insufficient transparency makes first generation stablecoins like this unsustainable.
The second generation of cryptocurrencies, like Havven, use a collateral-based model where virtual currency is used as collateral instead of fiat. Virtual currency is mortgaged on a decentralized blockchain network for the issuance of the stablecoin. This solves the regulatory and transparency issues, but it creates new problems with the fluctuating price of volatile cryptocurrencies.
USDX sees itself as a third generation stablecoin because it uses an “algorithm central bank” to automatically adjust the total quantity and velocity of the stablecoin to achieve a stable exchange rate. It’s similar to how central banks employ monetary policy to manage exchange rates – but using decentralized algorithms instead of centralized authorities.
Features of USDX
USDX sees itself as one of several third generation stablecoins on the market today. It’s a third generation stablecoin because it uses an algorithm central bank to control the exchange rate. However, certain features differentiate USDX from other stablecoins. Those features include:
- “Cutting edge technology and robust algorithmic logics derived from economic principles”
- A public blockchain based on proof of stake with high transaction speeds
- Compatible with existing blockchain platforms, including cryptocurrency exchanges, wallets, and miners
- A sophisticated and systematic adjustment mechanism that can efficiently regulate price fluctuations
- Infrastructure built to serve as the center of the next generation blockchain-based financial system
Who’s Behind USDX?
USDX is led by Richard Tiutiun (Chief Technology Officer), a former UC Berkeley student who previously worked on the XOR and Stablecoin projects. Other listed members of the team include Dennis S. Lee (Chief Strategy Officer), Nina Ni (Chief Public Relations Officer), and Simon Nie (Lead Engineer).
USDX has partnered with Future Money, QTUM, Token Funder, and OTCPlus to bring their project to life. The company was established in Singapore in Q1 2018.
USDX ICO Conclusion
USDX aims to set up its USDX fund by Q2 2018, with development of an independent public blockchain scheduled to take place around that same time. The public chain and test network is scheduled to take place in Q2 2019.
To learn more about USDX and its ongoing development of a stablecoin, visit online today at USDX.money. If successful, USDX could become the cryptocurrency community’s most popular stablecoin.