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Stablecoin protocols are nothing new to the crypto industry. However, the methods of pegging these stablecoins to the dollar have evolved over time. Most protocols offer over-collateralized debt positions as a way to issue stablecoins. The newest trend involves creating a delta-neutral position through perpetual futures, where a short futures position is taken, equal in value to the underlying collateral.
However, f(x) Protocol recognized the limitations of some of these stablecoin mechanisms and introduced a completely new type of stablecoin that derives its value from yield-bearing assets.
How does this work, and why should you care? 👇
How f(x) Stablecoins Work
The first concept to understand when learning about f(x) Protocol is the f(x) invariant formula, which is the core mechanism behind its native stablecoin and leveraged tokens.
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