What is xUSD (xUSD)?

TLDR
xUSD is a cross-chain stablecoin pegged 1:1 to USDC, offering daily yield via a rebase mechanism while maintaining price stability through diversified DeFi strategies.

1. Yield generation – Earns 8-12% APY via low-risk DeFi strategies, distributed as rebase rewards.
2. Collateralization – Fully backed by secure assets with daily reserve attestations.
3. Multi-chain utility – Operates on Ethereum, BNB Chain, Avalanche, and others.

Deep Dive

1. Purpose & value proposition

xUSD targets DeFi users seeking stability and passive income. Unlike traditional stablecoins, it automatically distributes yield by increasing token balances in wallets (rebasing) while keeping the price pegged to $1.

• Yield source: Strategies include lending, liquidity provisioning, and arbitrage in conservative DeFi protocols.
• Risk management: Diversified asset allocation aims to minimize exposure to single-platform failures (Overnight Finance Docs).

2. Technology & architecture

The rebase mechanism adjusts token supply daily based on yield earned:
1. Yield from strategies is converted to USDC.
2. New xUSD tokens are minted proportionally.
3. User balances increase without affecting the $1 peg.

• Peg stability: Uses a Net Asset Value (NAV) model, ensuring collateral value matches circulating supply.
• Cross-chain: Deployed on Ethereum, BNB Chain, and Avalanche, enabling seamless transfers.

3. Tokenomics & governance

• Supply: 48.1M total supply, fully collateralized by USDC and yield-generating assets.
• Holder distribution: 86.93% held by whale addresses (>1% of supply), suggesting institutional or protocol-controlled reserves.
• Yield sustainability: Relies on DeFi strategy performance; prolonged low yields could pressure the rebase model.

Conclusion

xUSD merges stablecoin reliability with yield generation, but its success hinges on sustained DeFi returns and robust collateral management. How might prolonged low-yield environments impact its rebase mechanism’s viability?