Resolv USR (USR) functions on the Ethereum (ETH) blockchain, utilizing its decentralized and secure infrastructure. The protocol keeps USR pegged to the US Dollar by combining overcollateralization with strategic hedging. Specifically, it uses ETH as collateral and offsets price volatility through short perpetual futures positions.
Ethereum’s consensus mechanism, which has shifted from Proof of Work (PoW) to Proof of Stake (PoS), helps protect against malicious attacks. In this PoS system, validators create blocks and verify transactions based on the amount of ETH they stake, making it economically difficult for bad actors to compromise the network.
The system includes the Resolv Liquidity Pool (RLP), which serves as an insurance layer to maintain overcollateralization. This pool is designed to be liquid and scalable. Users can mint or redeem USR and RLP by depositing collateral on a 1:1 basis, keeping the system balanced.
A key feature is market-neutrality. By hedging ETH collateral with short perpetual futures, the protocol neutralizes ETH price swings, ensuring USR’s value remains stable. This method allows the stablecoin to operate independently of fiat currencies, relying instead on ETH’s value and the hedging strategy’s efficiency.
Regarding capital efficiency, the protocol requires only $1 worth of assets to mint $1 of stablecoin, net of minting costs. This stands in contrast to other stablecoins that typically demand higher overcollateralization, achieving efficiency without sacrificing security or stability.
Arbitrage helps maintain the US Dollar peg. Because USR can always be redeemed for $1 worth of ETH, traders correct any price deviations by exploiting differences, pulling the value back to the peg.
The protocol’s business model generates profit by allocating treasury inventory into staking and earning funding fees on futures positions. This approach sustains the system and incentivizes participant engagement. Overall, Resolv USR’s technology merges Ethereum’s security, hedging mechanisms, and efficient collateral management to create a stable, overcollateralized asset.