vUSD is our new kind of stablecoin introduced by MonoX, it is the glue that holds the protocol together. Our protocol solves the capital inefficiencies of liquidity pool pairs by grouping deposited tokens into a virtual pair with the vUSD stablecoin. This allows us to offer single token pools whereby the user only needs to deposit one token to the pool instead of two. vUSD is backed by all the assets in MonoX pools that have a positive vUSD balance.
When a user first deposits liquidity to create a new pool, they set a starting price for the asset. This means that every asset in MonoX pools expresses their value in vUSD. Therefore trading works by forming a similar pricing curve to Uniswap except while they use the ratio between two tokens, we have a starting price and a would be price.
If a user sells from the starting price the asset depreciates in value, if someone buys from the starting price the asset appreciates in value. As such, we use starting price and would be price instead of the ratio between Token A and Token B in the xy=k constant product formula. Our pricing algorithm is based on Uniswap’s model found here. However in this calculation vUSD supply is equal to infinity which programs it to have no slippage and always peg to USD 1:1.
The equations for vUSD and Monoswap are as follows:
Users can swap any ERC token directly to vUSD.
When users withdraw liquidity, they will receive vUSD if the stablecoin virtual balance is positive in an official pool.
The pair is virtual. vUSD is a real stablecoin. vUSD is technically backed by all the assets in the pool. However, it’s more accurate to say that it is backed by the sell function because when a user sells into vUSD it mints the physical stablecoin. In essence, vUSD is backed by the liquidity itself, not the assets. vUSD is only backed when there is a positive vUSD balance in the pool. Trustless listing pools cannot go below 0 for vUSD balance.
All the assets in the pools express their value in terms of vUSD. The supply of vUSD is fixed at infinity which pegs 1:1 with USD.
If several different assets were artificially held at a price different to the market price, it would cause the vUSD to lose its peg. However, vUSD would retain its peg as arbitrageurs would step in to trade the differences if the assets are not priced similarly to what’s on the market.
Yes, you can mint vUSD by trading directly into it.