💲LVUSD Stablecoin

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 as the first collateral option.

The design of LeverUp allows any token to be used as collateral, with each having its own independent pool for trading.

We will first support trading with USDC as collateral

Settlement Scenarios

When a trader closes a position, two outcomes are possible:

1. 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.

2. 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

Layer 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.

Example:

LVUSD TWAP = 0.90

LVUSD circulating = 90,000

Vault USDC = 80,000

Target: Absorb 10,000 LVUSD via a 48‑hour auction. Anyone can bid with LVUSD.

Newly minted LV from the auction is first absorbed by the LV Staking module, with LV stakers bearing these losses first.

The LV emission operates independently from the auction mechanism and remains unaffected by it

Layer 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 1:1.

  • 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.