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  • OVERVIEW
    • 📖Abstract
    • ⭐Core Products of f(x) Protocol 2.0
  • f(x) Protocol Mechanisms
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    • ⚙️Key Functions of f(x) 2.0
    • 🚀Creating a Leveraged Position (xPOSITION)
    • 🪂Rebalancing the Position (Liquidation Brake)
      • Understanding the band system
      • Liquidation process
    • 💰Stability Pool
    • 💵Fees
  • RISK MANAGEMENT
    • 🧘‍♂️Risk framework
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      • Understanding the redemption mechanism
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  • FAQ
    • 🟦Is fxUSD an algorithmic stablecoin?
    • 🟦How do f(x) Protocol stablecoins maintain stability?
    • 🟦Is there any LUNA-like risk?
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  • GUIDES
    • 📈How to open a leverage position (xPOSITION)
    • 📉How to close a leverage position (xPOSITION)
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    • ➕How to add/reduce a leverage position?
    • 💰How to stake into the stability pool?
    • 🚶‍♂️How to unstake from the stability pool?
  • MORE
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  1. f(x) Protocol Mechanisms

Stability Pool

PreviousLiquidation processNextFees

Last updated 18 days ago

Stability Pool is a cornerstone of the protocol, designed to maintain system stability and provide rewards for participants.

1. Purpose and Rewards

Users can deposit fxUSD or USDC into the Stability Pool to earn token rewards and trading fees during normal market conditions. This incentivizes participation and strengthens the protocol’s resilience.

2. Peg Stabilization

The Stability Pool ensures that fxUSD maintains its peg to USD through automatic swaps between fxUSD and USDC based on exchange conditions:

  • If fxUSD is undervalued: The pool swaps USDC for fxUSD to restore the peg.

  • If fxUSD is overvalued: The pool swaps fxUSD for USDC to stabilize its price.

These adjustments are executed using Chainlink oracle prices to ensure accurate valuations, offering price stability while optimizing returns for users.

3. Depeg Protection

In the rare event of a USDC depeg, the protocol halts peg maintenance and temporarily disables deposits to safeguard users and uphold system integrity.

4. Rebalance and Liquidation Procedures

When necessary, the protocol redeems fxUSD from the Stability Pool. If the pool lacks sufficient fxUSD, the USDC obtained is used to repurchase fxUSD at a ratio not exceeding 1:1, thereby stabilizing the peg.

5. Asynchronous or Synchronous Execution

Depending on market conditions, these operations can be carried out synchronously or asynchronously. This flexibility ensures sufficient liquidity while maintaining the fxUSD peg and supporting the overall stability of the system.

Learn how to deposit into the Stability Pool and earn Stable yield 👇

💰How to stake into the stability pool?
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