USDMD · Midas Chain testnet
A dollar held in gold, with the gold's price hedged away.
USDMD is a stablecoin that aims to be worth one US dollar. It is backed by gold, and the gold's price risk is offset by an equal short position, so the reserve's dollar value should hold whichever way gold moves. It runs on Midas Chain testnet today, where the gold is a mock and the tokens have no value.
How the peg holds
Gold is priced in dollars and moves one or two percent on an ordinary day. A token that owes a dollar while holding gold would be a bet on gold. USDMD removes the bet.
The gold leg
Every USDMD is minted against gold delivered to the reserve contract, valued at a median gold price from several independent sources. On testnet the gold is MockXAU, a token that stands in for one troy ounce and is backed by nothing.
The hedge leg
A short gold perpetual of the same size cancels the gold's price exposure. Long gold plus short gold is, in dollar terms, flat. On testnet the hedge is meant to be a short PAXG perpetual on the Pactol testnet; the reserves page shows whether it is open.
The buffer
The reserve is kept above the supply. The target is 1.08 dollars of reserve for each USDMD. If the ratio falls to 1.02, the controller refuses new mints until it recovers. Holders are never stopped from redeeming or transferring.
Redemption
Anyone can return USDMD to the controller and receive the reserve asset at the oracle price, less a 0.10% fee, within a disclosed daily redemption limit. That route is what ties the token to a dollar: below a dollar, it pays to buy and redeem.
What the issuer cannot do
The USDMD token contract has no owner, no pause, no blacklist, no freeze and no upgrade path. No one, the issuer included, can stop a transfer or take a holder's tokens. What can change, in public and after a delay, is the minting and redemption rules in the controller.
Real, and simulated
The contracts, the minting and redemption rules, the price feed and the hourly proof of reserves are real and running. The gold is not, and the hedge is on a test venue. Guide 6 sets out exactly which is which.
Where to go next
Nothing on these pages is an offer, a solicitation or a recommendation to buy, sell or hold any asset, in any jurisdiction. Test USDMD is not sold and has no value.