Introducing XAI: A Stablecoin with a Soft Peg to the US Dollar

XAI, pronounced /zī/, is an integral part of the Silo Protocol. It’s an over-collateralized stablecoin that is softly pegged to the US Dollar.

Introducing XAI: A Stablecoin with a Soft Peg to the US Dollar

The SiloDAO, the governing entity of the Silo Protocol, has exclusive control over XAI. It can mint an unlimited amount of XAI and deposit it into various silos, or burn XAI that has been extended to any silos via governance proposals. This control mechanism allows the SiloDAO to respond swiftly and effectively to changing market conditions.

XAI’s Price Stability and Borrowing Mechanism

XAI is designed to maintain a value close to one US dollar. To borrow XAI, users must overcollateralize a token asset.

This overcollateralization serves as a stabilization mechanism, controlling the impact of price fluctuations of the collateral token. If collateralized positions approach under-collateralization, a liquidation event is triggered to protect the protocol from accruing bad debt.

The SiloDAO controls the borrow interest rate of XAI across all silos, effectively managing the circulating supply of XAI by adjusting borrow interest rates.

Silo Finance: Creating Permissionless and Risk-Isolated Lending Markets

Silo Finance is the protocol that houses XAI. It creates permissionless and risk-isolated lending markets, allowing users to lend and borrow assets without relying on a centralized entity. Any token asset can have a silo, and users and projects alike can propose markets for token holders to vote on.

The risk is isolated to each individual lending market, meaning if one token experiences an exploit, lenders in other markets will not be affected. This unique approach to decentralized lending markets makes Silo Finance a pioneering force in the DeFi space.