In a new announcement on social media, algorithmic stablecoin protocol UXD Protocol announced an important governance proposal aimed at redefining the asset composition of the insurance fund. The proposal, voted on by the protocol’s community, would reshape the protocol’s financial safety net. To this end, the protocol announced that it will sell some altcoin assets.
Altcoin project concludes an important vote
The essence of the governance proposal revolves around restructuring the insurance fund to consist of low-risk assets such as USDC (USD Coin), tokenized US Treasury bonds and UXD/USDC LP (Liquidity Provider) tokens. UXD Protocol’s insurance fund currently holds a variety of assets, including higher risk assets such as mSOL, jitoSOL, Credix senior tranche loans, and SOL/UXD LP tokens. These assets are inherently more volatile and subject to price fluctuations, increasing the risk of default.
The proposal has passed!
The team will sell off all crypto assets(excluding stablecoins) to USDC and US Treasury Bonds.https://t.co/iwsVaX5ymD https://t.co/HbSPFZQpV5
— UXD (@UXDProtocol) October 1, 2023
The purpose of the insurance fund in the UXD ecosystem is to serve as the ultimate safety net in case the UXD stablecoin is exploited or the collateral backing it loses significant value. Therefore, the UXD Protocol team believes that the insurance fund should consist primarily of lower risk assets that are less susceptible to market volatility. Additionally, the insurance fund’s potential liabilities are denominated in dollars, making it prudent to have assets compatible with that currency.
Community preferences matter
The recommendation to move to lower risk assets is rooted in the preferences expressed by the community. The UXD Protocol community has consistently expressed a preference for a more conservative approach to the composition of the insurance fund through various channels, including the governance forum and Discord. Given the widespread support for this approach within the UXD community, the protocol team formally proposed this adjustment to align with the community’s preferences.
The proposed asset allocation marks a significant departure from the previous composition. According to the dashboard data provided, the total size of the insurance fund is $51,168,517, while the total size of the fund positions is $45,288,564. The new asset allocation includes:
– Ethereum-based assets:
- Flux Finance USDC LP: $10,000,000 (17.52%)
- Maple Finance US Treasury Bills: $10,000,000 (17.52%)
- OpenEden TBILL Vault: $5,000,000 (8.76%)
- Compound Finance USDC LP: $7,474,604 (13.09%)
- Kuma Protocol US Treasury Bills: $2,000,000 (3.50%)
– Solana based entities:
- Saber UXD-USDC LP: $1,799,005 (3.15%)
- Lifinity SOL-UXD LP: $1,000,000 (1.75%)
- Orca UXD-USDC Whirlpool: $1,000,000 (1.75%)
- Orca UXP-USDC Whirlpool: $3,000,000 (5.26%)
- Orca SOL-UXD Whirlpool: $500,000 (0.88%)
- Lifinity STSOL-UXD LP: $200,000 (0.35%)
- Lifinity MSOL-UXD LP: $200,000 (0.35%)
– Management Accounts:
- Realms USDC Treasury: $4,675,240 (8.19%)
- Realms UXD ATA: $1,150,171 (2.01%)
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