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How to earn #5: Holding debt in xUSD

May 11, 2022

Holding xUSD

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In this part of How to Earn series, we will explain to you how to maximalize your profits by holding your debt in xUSD.

What is HODLing?

HODLing (Hold on For Dear Life) is a strategy widely enjoyed by investors preferring a long-term approach. It consists in holding the selected asset for...
as you can guess a long term.

What are the risks?

Even though holding can maximize your profits, you have to remember that by holding debt only in xUSD on our platform, you risk losing in case of other synthetics increases. 📈


When your whole debt is in xUSD, you play against all other synthetic assets. You bet their value will decrease, so you basically play short on them. It is a great way to earn when you’re feeling bearish and think that the token is going to decrease.

Look at the example which explaining the core mechanism of profits and the risks while participating in the debt pool below ⬇️

Debt pool explanation

Step 1
Both Alice and Olivia have the same amount of debt (50%). Entire debt is equal to $10k. Olivia holds $5k synthetic USD and Alice holds $5k synthetic SOL.

Step 2
The price of xSOL doubles, making Alice’s balance worth $10k. This causes debt to rise to $15k. Olivia still holds xUSD and the value of this token is stable.

Step 3
Both Alice and Olivia are still responsible for the entire debt of the protocol, each of them for 50% of it. Debt increased by $5k, so the debt of Alice and Olivia will rise by $2.5k. When we match positions against owned debt for Alice and Olivia, we get that Alice ended up with $2.5k profit and Olivia lost $2.5k since her debt increased by this amount.

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