💲LVUSD Stablecoin
Introducing LVUSD (LeverUp USD)
Introducing LVUSD (LeverUp USD)LeverUp is designed to be the purest form of a decentralized perpetuals exchange. To achieve this, the system only requires traders—no liquidity providers are needed—allowing traders to trade freely without dependency on external LP capital.
At the core of this design is LVUSD (LeverUp USD), the synthetic stablecoin that makes this model possible.
VMMV: Virtual Market Making Vault
All trading positions are denominated in LVUSD.
If a trader opens a position using USDC as collateral, the system automatically mints the corresponding amount of LVUSD.
When the position is closed, settlement is made in LVUSD.
This design also allows any token to be used as collateral, with each token managed in its own independent trading pool. LeverUp will initially support USDC and MON as the first collateral option.
Settlement Scenarios
When a trader closes a position, two outcomes are possible:
Trader Wins
The LVUSD received at close > the USDC (or LVUSD) initially deposited.
Result: The Vault’s USDC reserves become less than the circulating supply of LVUSD.
Trader Loses
The LVUSD received at close < the USDC (or LVUSD) initially deposited.
Result: The Vault’s USDC reserves become greater than the circulating supply of LVUSD.
Price Stability and TWAP Anchoring
Scenario 1: Depeg on protocol layer - socialized loss
If LVUSD trades below peg (TWAP < 0.99) and circulating LVUSD is greater than vault USDC, the protocol runs an LV auction.
Protocol will mint and auction new LV to buy back excess LVUSD and burn it.
Newly minted LV from the auction is first absorbed by the LV Staking module, with LV stakers bearing these losses first.
The official USDC/LVUSD redemption will be activated concurrently. Redemptions will be processed at the prevailing circulation exchange rate and will remain available until the system regains equilibrium through the LV auction mechanism
The LV emission operates independently from the auction mechanism and remains unaffected by it
Scenario 2: Depeg on secondary market - protocol fee as liquidity buffer
LVUSD maintains stability through market-based mechanisms and protocol safeguards. Protocol actions are explicitly tied to TWAP(Time-Weighted Average Price) levels:
When 1 LVUSD < 0.9 USDC (Severe Discount)
The Vault enables daily quota-based redemptions, allowing users to redeem LVUSD for USDC at the ratio based on the USDC and LVUSD amount in the vault.
This continues until the secondary market TWAP of LVUSD rises above 0.9 USDC.
When 1 LVUSD > 1 USDC (Premium)
After ensuring 100% redemption backing, excess USDC reserves are deployed into stablecoin yield strategies.
This allows the protocol to generate additional interest income.
When 1 USDC > 1 LVUSD > 0.9 USDC (Normal Band)
The protocol takes no direct action.
Arbitrageurs and traders balance the price naturally in the secondary market.
> 1 ( 1 LVUSD > 1 USDC)
No action expected; A portion of USDC may be allocated for yield generation, providing traders with additional returns
No action expected
0.9 ~ 1 ( 0.9 < LVUSD < 1)
Conduct LV auctions to reduce LVUSD circulation. Open Redemption with daily limits, with the redemption rate determined by available liquidity in vault
No action expected
< 1 ( LVUSD < 1 USDC)
Same as above
Open Redemption with daily limits, with the redemption rate determined by available liquidity in vault
Protocol Fees for protection
Each epoch, we distribute the accumulated protocol fees (to xLV and yLV holders).
To maintain platform stability, the protocol calculates the actual amount of fees to be distributed based on the vault’s balance condition at that time.
In extreme cases such as a depeg, the protocol fees that were originally planned for distribution will instead be redirected to rebalance LVUSD, ensuring trading stability and strengthening the overall system robustness
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