Everyone is familiar with using USDC or USDT for daily purposes or trading activities in DeFi. To be honest, they are pretty cool products that showed resilience during their existence. As a result, many may consider whether they should use any other stablecoin than USDC and USDT.
In this article, we will outline the reasons to use aUSD so that you can have a clear understanding of the value proposition of aUSD.
aUSD is a decentralized yield-bearing stablecoin that is fully collateralized and backed by AVAX LSTs. It has no exposure to the risks of centralized actors and TradFi while depending on the AVAX economy.
There are several reasons to prefer aUSD instead of USDC or USDT.
-
Yield-bearing: aUSD can generate a native LST yield for the depositors in the Rebalance Pool, which will range around 12-15%. However, your idle assets on USDC or USDT won’t earn you yield.
-
Peg stability: aUSD is always collateralized at a 1:1 ratio backed by AVAX LSTs. Moreover, as there is no collateralized debt position (CDP), there won’t be selling pressure for aUSD, which allows to maintain a stable peg compared to other models. In the worst scenario, even if the protocol fails, aUSD will be pegged to AVAX so that users won’t lose their principal.
-
No borrowing cost: Compared to CDP models, users do not borrow stablecoin, so there is no borrowing cost.
-
No liquidation risk of the collateral: As the users do not open a collateralized debt position, there is no liquidation risk for the collateral.
-
No exposure to counter-party risks: aUSD is a decentralized stablecoin that has no exposure to TradFi and is an Avalanche native stablecoin that is anchored by the AVAX economy.
-
No over-collateralization: Compared to the existing decentralized stablecoin models, there is no over-collateralization requirement for aUSD minting, which increases the capital efficiency for the end user.
In the future, as we integrate with major DeFi protocols on Avalanche, you will be able to utilize aUSD on those platforms as a supply/borrow asset or as collateral which will open further use cases and opportunities!
Before finishing the article, just need to highlight that utilizing aUSD in the DeFi protocols will earn you points :)
To learn more about Stable Jack and ask your questions, follow our socials!