USDx Unveiled: A Stablecoin and Collateral Instrument for Synthetix on Arbitrum

Synthetix recently unveiled USDx, a stablecoin and collateral instrument for Synthetix on the Layer-2 Ethereum scaling solution called Arbitrum.

Layer-2 scaling solution Arbitrum recently announced the launch of USDx, a stablecoin and a key instrument for the decentralized finance (DeFi) derivatives protocol Kwenta.

This stablecoin is set to play a crucial role in the Arbitrum ecosystem, offering better liquidity and serving as a primary collateral option for the platform. USDx is also expected to be a key instrument in the Synthetix ecosystem.

As per the announcement, liquidity providers (LPs) to Synthetix can mint USDx against their deposits in zero-interest loans via Arbitrum pools. This setup will allow LPs to participate in more DeFi opportunities on Arbitrum.

Moreover, USDx is over-collateralized by staking the deposited funds to Synthetix liquidity pools to ensure price stability. When the collateral for a position reaches the minimum required ratio, that position is closed out. This ensures that USDx is always safely collateralized, preventing its value from being affected by shifting market conditions.

USDx has also been assigned as the quote currency for Synthetix perpetual futures (Perps) on Kwenta, which is touted as one of the most widely used decentralized derivatives. PnL for traders is denominated in USDx to help make trading more seamless on Arbitrum.

The 1inch aggregator allows users to trade USDx for any other asset on the Arbitrum blockchain. LPs providing liquidity to the USDx/USDe pool on Curve Finance earn 1inch trade routing fees, with the variable annual percentage rate (vAPR) for the USDe+USDx pool on Convex Finance exceeding 16%.

This rollout not only introduces USDx but also 81 new Perp markets and four collateral options to enhance trading on Kwenta. Apart from USDx, the available collaterals include wrapped Bitcoin (tBTC), Ethereum (ETH), and Ethena USD (USDe), which will ensure greater convenience and choice for users.

By working on these new assets, the derivatives liquidity protocol expands its audience and helps improve the overall depth of Arbitrum’s DeFi market. The public can try these offerings on Kwenta via the App and see the future of USDx in the Synthetix Arbitrum ecosystem.

This development marks a significant step for the derivatives liquidity protocol in the decentralized finance (DeFi) landscape on Layer-2 solutions.