MarginFi Unveils XBY Stablecoin to Reduce Solana's Reliance on USDC

MarginFi, a leading DeFi protocol on Solana, announces plans to launch XBY, a yield-bearing decentralized stablecoin, later this month. XBY aims to reduce Solana's reliance on centralized stablecoins like USDC by being fully collateralized by SOL-based liquid staking protocols (LSTs). Despite the recent departure of CEO Edgar Pavlovsky, MarginFi remains committed to launching XBY and introducing a governance token in the future. The stablecoin is expected to offer substantial yield earning opportunities, as it will initially source yields from staking rewards and later incorporate MarginFi lending yields. MarginFi also plans to launch a "built-in stableswap" feature that allows users to trade between stablecoins while earning lending yields and swap fees.

MarginFi Unveils Plans for XBY Launch, Aims to Cushion Solana's Reliance on USDC

MarginFi, the prominent decentralized finance (DeFi) protocol on Solana, has announced its intention to introduce XBY, its eagerly anticipated yield-bearing decentralized stablecoin, within the current month. This revelation was made during the Solana Crossroads 2024 conference by MarginFi's co-founder, MacBrennan Peet.

Peet conveyed that his team is poised to conclude the second audit for XBY and intends to deploy the stablecoin by June. He emphasized that XBY will be fully collateralized by Solana-based liquid staking protocols (LSTs), providing Solana with a decentralized stablecoin capable of reducing the ecosystem's heavy dependence on USDC, the leading centralized stablecoin.

"Presently, Solana DeFi relies heavily on USDC," Peet stated. "If USDC were to depeg as it did a year ago and remain unpegged, Solana DeFi would face significant challenges, as USDC forms the foundation of all major trading pairs."

Peet disclosed that the project has already secured approximately $12 million in initially pledged liquidity and anticipates attracting over $100 million before launch.

The announcement of XBY's impending arrival comes after Edgar Pavlovsky, MarginFi's co-founder and CEO, abruptly resigned from the project last month. This move reportedly stemmed from an apparent disagreement over whether the project should release a governance token, even though early users had already accrued points that would typically qualify them for future airdrops.

Following Pavlovsky's departure, numerous MarginFi users hastily withdrew their assets from the protocol, resulting in the outflow of over $300 million, or nearly half of MarginFi's TVL, within a matter of days.

However, Peet asserted that Pavlovsky's departure was not driven by differences over the issuance of a token but rather attributed it to the demanding responsibilities that Pavlovsky faced as CEO.

"There were no major disagreements over a token," Peet clarified. "It's incredibly taxing—building an on-chain finance protocol is a 24/7 endeavor, without weekends."

Peet further confirmed that MarginFi would launch a governance token in the future and is diligently working on its development.

"MarginFi is designed to be decentralized, which necessitates a token," Peet stated. "The Margin Foundation is not enthusiastic about releasing a token merely for the sake of it. We believe in creating a token that carries meaningful value and genuine governance weight."

Peet added that the significant withdrawals served as a rigorous "stress test" for MarginFi, demonstrating the protocol's ability to operate smoothly despite the substantial outflows.

XBY Stablecoin: A Comprehensive Overview

The XBY stablecoin will adopt a rebasing mechanism, meaning users' balances will expand as yield is accrued to the token. Initially, XBY yields will be derived from staking rewards generated from the token's LST collateral, with holders also slated to earn MarginFi lending yields in the future.

Peet highlighted that MarginFi users have already deposited "hundreds of millions of dollars in LSTs" into the protocol, which can be utilized as collateral for minting XBY upon the protocol's activation.

Peet stated that "major protocols and DEXes" within Solana's DeFi ecosystem intend to support XBY, providing users with additional avenues for yield generation.

Peet acknowledged that XBY's market capitalization may be constrained by the capitalization of SOL-based LSTs, adding that MarginFi plans to expand its supported collateral in the future.

"We are primarily focused on commencing with LSTs, but that does not preclude us from expanding beyond that," Peet said. "There are numerous other alternatives to USDT or USDC, for instance, in terms of collateral types."

Peet also revealed that MarginFi intends to unveil the first "built-in stableswap" feature following XBY's deployment. This product will enable users to trade between stablecoins using the existing liquidity deposited in MarginFi, allowing users to simultaneously earn lending yields and swap fees.