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Introducing USDA: Angle's USD Stablecoin for Boosting Onchain Forex Efficiency

6 min read - by Noé Caporal, Sogipec

Angle is launching USDA, a new decentralized dollar stablecoin. USDA will offer an unmatched combination of reliability, yield, liquidity and transparency. USDA will provide the same liquidity as USDC while incorporating a native Savings solution, along with borrowing & leverage feature. By combining USDA and EURA (Angle’s Euro stablecoin), the Protocol is paving the way for efficient and scalable forex markets onchain.
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After establishing EURA (formerly agEUR) as the most liquid Euro stablecoin on the market, Angle Protocol is now expanding its offering with USDA, a new decentralized dollar stablecoin.

USDA will offer an unmatched combination of reliability, yield, liquidity and transparency to tackle the main challenges faced by stablecoin users: fear of depeg and “frozen” stablecoins in their wallets, along with non-sharing of backing yield by stablecoin issuers and opaque reserves.

Angle’s USD stablecoin will be available cross-chain and will provide users with the same liquidity as USDC while incorporating a native Savings solution generating sustainable yield, along with a borrowing & leverage feature. To ensure unwavering stability, USDA's design will incorporate advanced anti-depeg mechanisms, drawing insights from recent stablecoin depeg incidents such as USDC in March 2023. Finally, everyone will be able to verify USDA’s collateral reserves 24/7 thanks to its transparent real-time balance sheet.

With USDA and EURA (Angle’s Euro stablecoin) trading at competitive rates, the Protocol will give individuals and institutions access to the foremost onchain foreign exchange (forex) market.

USDA will enter a private beta phase in the coming days, pending a governance vote. The USD stablecoin will be more broadly available in April.

An integrated Savings solution

USDA will offer a permissionless Savings solution allowing users to passively earn a Dollar yield on their stablecoin.

The yield will come from the returns generated by the assets held by Angle Protocol. One part originating from USDA’s backing with Real-World Assets—like Treasury bills and tokenized securities—and DeFi yield-bearing assets. The other part will come from interest rates paid by users who will borrow USDA from the Protocol.

The objective is to align with the best risk-adjusted yields offered, whether in Traditional Finance (TradFi) or Decentralized Finance (DeFi), depending on market cycles.

This yield will automatically be allocated to USDA holders who deposit their stablecoins in Angle's Savings solution, known as stUSD.

The era of major stablecoins not redistributing the value generated by their backing is over!

Deep liquidity

Unlike many other stablecoin providers, minting USDA will be as simple as a swap, without any KYC requirements, fees, or slippage.

USDA will offer the same liquidity as USDC. Users will be able to swap from USDC to USDA, and vice versa, instantly.

There will be no lock-up with USDA. Getting in will be as easy as getting out.

Anti-depeg mechanisms

USDA’s design will rely on Angle Protocol's proprietary Price Stability Module (aka The Transmuter) designed to withstand any adverse market condition. This innovative risk management framework, created in August 2023 and continuously refined, draws upon three years of research & development on EURA and insights gained from last stablecoin depeg incidents such as USDC in March 2023.

Thanks to the Price Stability Module, all USDA or stUSD holders will have the possibility to redeem their USDA or stUSD for any of the Protocol's collateral assets in the event of a black swan, ensuring liquidity and stability. This marks a significant milestone in stablecoin design innovation!

For example, should one of the tokens used as collateral for USDA experience significant depreciation, users would be assured of being able to exchange their USDA for any other tokens in the reserves, if they wish.

With this, trust assumptions for using USDA will be lower than in any other system, as users can always return to the underlying tokens.

Borrow & leverage

Upon its launch, users will be able to borrow USDA and get leverage on Morpho Blue. Liquid Staking Tokens (LSTs) and Liquid Restaking Tokens (LRTs) will be the primary assets to borrow from USDA. Angle Protocol will guarantee that it's possible to get leverage on those assets in one transaction and at a stable cost over time.

USDA will also feature dedicated Metamorpho vaults for people to lend USDA.

With this, USDA will offer all the functionalities found in major Collateralized Debt Position (CDP) platforms such as MakerDAO, including fixed-rate loans, right from the start!

A Battle-tested infrastructure

The USDA design mechanism sounds familiar, doesn't it?

USDA leverages the same mechanism that has been utilized for EURA, Angle Protocol’s Euro stablecoin, which has been in production for over two years.

This codebase has undergone multiple audits, and several bug bounty programs have been run on it. Everything will run on smart contracts and will be fully visible onchain.

Finally, as with EURA (formerly agEUR), users will be able to track collateral reserves behind each USDA in real-time by checking the open Balance Sheet of the Protocol on Angle website. Don’t trust, verify!

So, what does USDA bring that's new compared to EURA?

Institutional-grade reserve management

Many stablecoins have failed to maintain their peg due to poorly designed mechanisms or nonexistent asset liability management. Ensuring that a stablecoin maximizes its risk-adjusted returns and maintains its peg at scale requires professional management and advisory. Thus, Steakhouse, a financial advisory for DAOs, will provide guidance to Angle Protocol, ensuring institutional-grade reserve management.

Boosting onchain forex opportunities

Following EURA—which currently is the preferred route for users swapping USD to Euro onchain—the launch of a resilient and liquid USD stablecoin will pave the way to establish an onchain forex hub.

The forex market is one of the largest financial markets, with trillions of dollars of daily volume. However, in DeFi, EUR/USD trades rarely occur at prices comparable to those found on traditional forex platforms. As a result, few people regularly exchange Euros and U.S. Dollars onchain due to uncompetitive prices.

In recent months, Angle Protocol has been focused on enhancing the resilience and depth of onchain forex markets. The team has developed systems to minimize slippage for any onchain forex trade. This is achieved through market-making systems that involve the balance sheets of boths EURA (formerly agEUR) and USDA.

With USDA and EURA, Angle will be able to offer onchain trades at true forex rates between its two stablecoins, but also any Euro and U.S. Dollar stablecoins!

Angle team will soon provide more information about their work to establish Angle as the hub for onchain cross-currency settlement, remittances, and forex trading. Stay tuned!

With USDA, Angle Protocol is leveraging years of expertise in building resilient stablecoin systems to offer an unparalleled combination of reliability, yield and liquidity.

USDA, more than just a decentralized, over-collateralized, liquid, yield-bearing USD stablecoin, will serve as the DeFi superconductor, unlocking streamlined opportunities and efficiencies for all stakeholders, regardless of their use case.

With USDA and EURA (prev. agEUR), Angle Protocol is paving the way for efficient and scalable forex markets onchain.

We have a lot more planned for this launch that we'll be sharing soon! Follow @AngleProtocol or join our Discord to stay updated!

USDA private beta will start in the coming days, pending an approval from the Protocol's Governance. USDA will be officially launched in April 2024. USDA and stUSD will not be available to U.S. users.