Peg Arbitrage Mechanism
Currently, there is a trading strategy that users can employ to capitalize on the discrepancy between the market price of EUSDX and its true value:
Cross Market Arbitrage: engaging in buy or sell transactions of EUSDX with the protocol’s mint & redeem contract whenever the price of EUSDX deviates from its pegged value of $1.
Trading Strategies
Key considerations include:
EUSDX is entirely backed by the protocol’s reserve assets.
EUSDX can be minted and redeemed on demand, allowing approved participants to seamlessly transition between EUSDX and their digital asset of choice.
The valuation and quantity of the collateral backing EUSDX remain stable, unaffected by price volatilities or dislocations across any Centralized/Decentralized Spot Market, Automated Market Maker (AMM) Protocols, and beyond.
Even in turbulent markets leading to liquidity crunches, the collateral value supporting EUSDX remains stable.
Cross Market Arbitrage
This approach permits any authorized individual to mint or redeem, benefiting from the price/quantity discrepancy between the minting/redeeming rate of EUSDX with usdx.money and its trading price in external markets. External markets encompass both centralized and decentralized spot markets like "EUSDX/USDC" and AMM platforms such as Uniswap or Curve.
Should EUSDX be undervalued in an external market compared to usdx.money, a user could:
Buy 1x EUSDX at $0.95 using USDT or USDC.
Redeem 1x EUSDX at $1.00 through usdx.money, receiving USDT or USDC in return.
Realize a profit.
Conversely, if EUSDX is overvalued in the external market compared to usdx.money, a user could:
Mint EUSDX by depositing USDT or USDC with usdx.money.
Sell newly minted EUSDX for more than $1.00 in USDC.
Realize a profit.
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