AUSD EXCHANGE (PSM) live on testnet!

ADADAO
5 min readSep 6, 2023

As we move forward in our journey toward the mainnet launch, and as part of our ongoing commitment to delivering a world-class Stablecoin protocol for the Cardano community, we are pleased to announce the achievement of another significant milestone: the launch of AUSD EXCHANGE on the testnet.

Our testnet platform has already provided a comprehensive array of functionalities, including Stablecoin issuance, Vault Creation/Activation and Closure, Collateral Deposit/Lending/Withdrawal, Oracles integration, stability pool management, rewards distribution, and liquidation mechanisms. These features have been meticulously developed to ensure a robust and secure ecosystem for our users.

Now, with the addition of AUSD EXCHANGE on the testnet, we are further enhancing the utility of our platform. This new feature allows users to seamlessly buy and sell AUSD, our Stablecoin, with other Stablecoins available in the Cardano ecosystem. This expansion not only broadens the range of options for our users but also facilitates greater liquidity within the Cardano stablecoin market.

We believe that this addition to our platform represents a significant step forward in our mission to provide a stable and efficient financial infrastructure for the Cardano community. We remain committed to our vision of creating a stable and reliable environment for financial transactions within the Cardano ecosystem.

How it works

To commence, we have established a limited pool featuring the DJED/AUSD trading pair, specifically designed for testing purposes. This pool serves as an essential resource for conducting trials and assessments, allowing users to engage in the direct purchase and sale of AUSD within the exchange environment.

You can visit to AUSD exchange testnet by visiting this link.

You can connect to your preferred wallet from the list.

You can either buy or sell AUSD depending on your choice.

If you already hold AUSD on testnet you can sell AUSD for DJED. In case you do not have AUSD we would recommend to follow this article and mint AUSD to your wallet. Please note that environment is Preprod.

Once you click on sell it will show you the available pools that you can use to exchange AUSD. For now just DJED/AUSD pool is available for testing purposes.

Once you confirm it, it will prompt blockchain transaction and you will get this amount of DJED in your wallet.

I n case you hold DJED tokens within your wallet on the pre-production testnet environment, you have the capability to directly engage in the acquisition of AUSD tokens from the AUSD exchange by using BUY option.

AUSD will start to reflect in your wallet on successful transaction.

Advantages of AUSD EXCHANGE (PSM MODULE)

Introduction

The purpose of the AUSD exchange is to enhance accessibility to AUSD within the community by establishing a market that enables users to buy and sell AUSD tokens at a price closely aligned with a 1:1 ratio (1 AUSD = 1 USD) without the necessity of collateral with surplus. Beyond this primary goal, there are several notable advantages associated with the AUSD exchange, as delineated below:

1. System Collateralization

Under this approach, all minted AUSD tokens enjoy full backing, either through Ada collateral with surplus via the borrowing service or through fiat Stablecoin support via the PSM service.

2. AUSD Price Regulation

The AUSD exchange adopts a strategy that partially pegs the AUSD price to the fiat Stablecoin price, eschewing additional price regulation mechanisms. Consequently, users have continuous access to buying or selling AUSD tokens at market prices, contingent upon the availability of adequate fiat Stablecoins within the Cardano blockchain for purchase and within the PSM pool for sale.

3. Enhanced System Resilience

The AUSD exchange bolsters system resilience through a comprehensive mechanism that involves the seizure of collateral from undercollateralized Vaults. This mechanism can be summarized as follows:

  • Seizure of $Ada collateral from undercollateralized Vaults.
  • Utilization of the seized $Ada to procure AUSD tokens within the PSM module.
  • The PSM module employs the acquired $Ada to acquire fiat Stablecoin tokens and mints the requisite amount of $AUSD tokens within a single transaction.
  • As part of the liquidation process, the system burns the corresponding quantity of $AUSD tokens. This process can combine minting and burning actions, effectively purchasing the necessary fiat Stablecoin tokens and depositing them into the PSM pool.

This strategy fortifies the system against sharp declines in Ada prices that could lead to the emergence of uncovered debts within the Borrowing service. By seizing collateral from undercollateralized vaults and deploying it to acquire fiat Stablecoins, the system ensures the continued full backing of all $AUSD tokens, maintaining their price parity with fiat Stablecoins.

4. Increased Flexibility

AUSD tokens naturally become more backed by fiat Stablecoins as the cost of $Ada declines. This phenomenon arises from users’ inclination to safeguard their assets by converting Ada funds into Stablecoins through the PSM module, driven by the prospect of potential liquidations. Conversely, as the cost of $Ada rises, it becomes more profitable for users to convert Stablecoins to $Ada or utilize the Borrowing service rather than retaining funds in Stablecoins. This flexibility emerges organically within a well-developed blockchain infrastructure, obviating the need for external regulation.

We hold a steadfast conviction that the integration of this feature into our platform signifies a substantial leap forward in fulfilling our mission to provide the Cardano community with a resilient and streamlined financial infrastructure. Our resolute commitment to establishing a trustworthy environment for financial transactions within the Cardano ecosystem remains resolute and unswerving.

--

--