Solana’s UXD protocol raises $3 million
The weeks follow one another and are similar for Solana (SOL). After having reached the 100 dollars mark, which has since been largely exceeded, some of the associated projects are starting to make news. This is the case of the UXD protocol, which was previously called Soteria, and which is exclusively designed on the Solana blockchain. The founders have just announced that they have raised 3 million dollars.
1/ We are excited to announce that we have raised a seed round led by @multicoincap with participation from @AlamedaResearch, @DeFianceCapital, @cmsholdings, @Solana Foundation, @MercurialFi, @aeyakovenko, @rajgokal, and @Saber_HQ founder @DylanMacalinao!https://t.co/BIwOfaWHx9
– UXD Protocol (@UXDProtocol) September 2, 2021
The round was led by Multicoin Capital, an investment fund specializing in projects involving digital assets. Other venture capitalists, such as Alameda Research, CMS Holdings or Defiance Capital, participated in the fundraising of the UXD Protocol.
The founder of the project has assured that the funds will be used to recruit developers and more generally to strengthen the team. They will also be used to launch the protocol’s testnet in September and the mainnet in October.
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UXD stablecoin’s lack of volatility guaranteed by an algorithm
Unlike other known stablecoins such as USDT or USDC, UXD is not backed by US dollars alone but not an algorithm. This means that the protocol uses multiple crypto-currencies as collateral and the algorithm takes care of the allocation between each crypto-asset to maintain stability.
Initially, the protocol will only use Bitcoin (BTC), Ether (ETH) and SOL as collateral. For those in the know, UXD is equivalent in operation to MakerDAO’s DAI, which also uses an algorithm to maintain stability.
This algorithmic approach is more risky than using fiat currency as collateral, as the The value of the cryptocurrencies used can plunge overnight. The FEI protocol, for example, saw the value of its algorithmically-backed stablecoin plummet in April.
FEI dropped down to $0.136. In the process, it should have taught everyone a few lessons about stablecoin design and, perhaps, crypto investing.
A thread. pic.twitter.com/z6d2MPbZH2
– Emin Gün Sirer (@el33th4xor) April 7, 2021
The founder of the UXD protocol does not deny the difficulties that stablecoins guaranteed by algorithms can cause. However, he believes that it is the lack of a 100% guarantee that has not allowed for this stability to be maintained. And he believes that UXD has found the right solution: the neutral Delta position.
Read – What is MakerDAO, Dai and where to buy it?
UXD, the first true decentralized stablecoin?
The UXD protocol could also be the first true decentralized stablecoin. Indeed, despite growing popularity and a perennial presence in the top 10 largest capitalizations, both Tether and USD Coin are centralized protocols.
Beyond the lack of trust in both entities controlling USDT and USDC, it is rather the regulatory side that may be of concern. For example, Tether has recently had some problems with the American justice system and Circle, the entity behind the USDC, has preferred to play the absolute transparency to prove the solidity of its stablecoin.
Despite its algorithmic nature, DAI is heavily reliant on USDC, which accounts for more than half of the collateral according to Dai Stats. Yet, it is known that centralized stablecoins are used a lot in decentralized finance (DeFi), which is a bit of a contradiction.
Can a fully decentralized stablecoin overshadow the giants USDT and USDC in DeFi? That remains to be seen.
Going further – Euro stablecoins make their way into the DeFi ecosystem
Fundraising as SOL continues to break records
While the two pieces of information are not related, this fundraise is more positive news for Solana. The price of SOL has exploded since July, rising from around $20 to over $140, and hitting a new record almost every day.
All signals are green for Solana and barring a stock market or cryptocurrency price crash, it’s hard to see the exponential price growth stopping overnight.
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About the author: Benjamin Allouch
Formerly a lawyer specialized in personal data and digital law, I quickly became interested in Bitcoin, blockchain technology and their legal implications. I am now a freelance consultant and writer in the field of cryptocurrencies and blockchain.
All articles by Benjamin Allouch.