Backing and Peg
Understanding USDR collateral strategy and stability mechanisms
Collateral Strategy
USDR’s collateral strategy is rooted in RWAX’s commitment to a stringent risk policy, where assets are backed solely by secure, short-duration securities like U.S. Treasury Bills through mechanisms such as overnight repos. The selection of initial collateral has been the result of thorough due diligence on potential market partners, aiming to minimize counterparty and default risks. This careful approach ensures that USDR provides a level of security potentially higher than that of its peers.
Initial Collateral Partnership
Partnership Strategy
The first collaborator in the collateralization of USDR will be a partner chosen for its alignment with RWAX’s objectives. This initial phase aims to set a precedent for future partnerships, with the ultimate goal of decentralizing USDR’s collateral base. This diversification will be guided by community governance, ensuring that new collateral sources are vetted and approved in a transparent manner.
Collateral Asset Characteristics
Safety & Liquidity
The backing asset for USDR is designed to mimic the safety and liquidity of a U.S. Treasury Money Market fund but with the added benefits of blockchain technology.
Risk Management
Minimizes Risk: By investing in overnight repo and U.S. Government securities, it reduces market, duration, and credit risks.
Liquidity Features
| Feature | Description |
|---|---|
| Mint/Redeem Time | Operations can be executed from T+0 to T+1, with options for USDC or other stablecoins. |
| On-Chain Transactions | Instant minting and redemption are available, with minting restricted to “market hours”, while redemptions are unrestricted but limited in size. |