DeFi
MarginFi will launch a decentralized stablecoin backed by Solana LST this month
MarginFi said that XBY would be the first large decentralized stablecoin on Solana.
MarginFi, the sixth largest DeFi protocol on Solana by TVL, announced plans to launch XBY, its yield-generating decentralized stablecoin, this month.
Speaking during the Solana Crossroads Conference 2024MacBrennan Peet, the co-founder of MarginFi, said his team is completing the second audit for XBY and aims to launch the stablecoin before June.
Peet said that XBY will be fully collateralized by SOL-based Liquid Staking Protocols (LST), providing Solana with a decentralized stablecoin that can offset the network’s reliance on USDC, the second largest centralized stablecoin.
“Solana DeFi as a whole is currently entirely dependent on USDC,” Peet said. “If USDC deindexed like it did a year ago and remained deindexed, Solana DeFi would be in a very difficult situation – USDC underlines all major trading pairs.”
He added that the project has already secured about $12 million in initially committed liquidity and hopes to attract more than $100 million before launch.
News of XBY’s impending launch comes a month after MarginFi co-founder and CEO Edgar Pavlovsky abruptly resigned of the project. The move appears to stem from an apparent disagreement over whether the project should launch a governance token when early adopters are already accumulating points – which typically qualify holders for future projects. airdrops.
Many MarginFi users rushed to withdraw their assets from the protocol in response to Pavlovsky’s resignation, with over $300 million, or nearly half of MarginFi’s TVL, leaving the protocol in just a few days.
However, Peet said Pavlosky’s departure was not due to differences over whether the project would launch a token, instead attributing the decision to the stressful demands placed on Pavlovsky as CEO.
“There hasn’t really been any disagreement over a token,” Peet said. “It’s really stressful – it’s a 24/7 job, there are no weekends to build an on-chain financial protocol.”
Peet also confirmed that MarginFi will launch a governance token in the future and is quietly working on building its governance token.
“MarginFi is designed to be decentralized, to have one token,” Peet said. “The Margin Foundation is not as interested in issuing a token just for the sake of issuing a token. We want to have a token where it means something and it has real governance weight.
Peet added that the large withdrawals included robust “stress tests” for MarginFi, with the protocol continuing to operate smoothly despite the large withdrawals.
XBY stablecoin
XBY will include a rebasing stablecoin, meaning user balances will increase as the token’s yield increases.
XBY returns will initially come from staking rewards generated by the token’s LST collateral, with holders also expected to earn returns on MarginFi loans at a later date. Peet noted that MarginFi users have already deposited “hundreds of millions of dollars in LST” into the protocol that can be used as collateral for minting XBY from the moment the protocol goes live.
Peet said that “major protocols and DEXs” within Solana’s DeFi ecosystem plan to support XBY, providing additional opportunities for users to generate revenue.
Peet acknowledged that XBY’s market capitalization will be limited by the capitalization of SOL-based LSTs, adding that MarginFi intends to expand its supported collateral in the future.
“We’re very focused on starting LSTs, but that doesn’t mean we can’t grow outside of that,” Peet said. “There are many other options outside of USDT or USDC, for example, in terms of forms of collateral.”
Peet also revealed that MarginFI plans to launch the first “integrated stableswap” feature after the deployment of XBY. The product will allow users to swap between stablecoins using existing liquidity deposited in MarginFi, meaning users will simultaneously earn loan yields and swap fees.