Haven Announces Update to xUSD Fee Structure
The Haven team is thrilled with the successful launch of xUSD. For the first time, a USD stablecoin with Monero-grade privacy protections is now available to anyone in the world.
In just two weeks we have seen the use of xUSD skyrocket. This demonstrates that users are demanding a private stablecoin option in the market, and that Haven’s unique mint and burn protocol for xUSD exchanges is working flawlessly.
Unfortunately, the successful launch of xUSD also brought with it significant attempts to gain control of XHV supply by large holders focused on manipulation. We were surprised by the scale of these large manipulation attempts — at times involving 12% of the XHV supply — which began on the very first block after xUSD went live.
These attempts have continued because the current xUSD fee structure — while built to discourage manipulation — was circumvented by bad actors with large XHV holdings to reduce their market exposure, despite XHV volatility. The primary flaw in the existing xUSD fee structure is that it focuses too much on traders and not enough on mass adoption: xUSD investors and users.
This flaw needs to be fixed, at least in the short term, to protect the majority of Haven investors. The Haven team has recognized that the xUSD exchange structure must be modified to prevent attacks like this from continuing. Our current fee system is not set up to absorb large manipulation attempts of this scale.
As the Haven network matures, additional exchanges are added, and liquidity increases, these attempts will become less frequent and less successful. But at this early stage in xUSD’s existence, we believe it is important to implement a change to the xUSD fee structure to protect the long-term growth and adoption of Haven.
Here’s how the new fee structure will work:
The price quote for xUSD exchanges will not change. It will continue to be the 24-hour (720 block) Moving Average of XHV/USD as quoted by Chainlink’s decentralized oracle.
Unlock time options for xUSD exchanges will change to:
- 6 hours (180 blocks)
- 24 hours (720 blocks)
- 48 hours (1440 blocks)
- 7 days (5040 blocks)
xUSD exchange fees for these new unlock options will be as follows:
- 6 hours: 20% of amount exchanged
- 24 hours: 10% of amount exchanged
- 48 hours: 5% of amount exchanged
- 7 days: 0.2% of amount exchanged
We want to provide private stable money for everyone, not just a group of large XHV holders. This new fee structure is better suited for investors who buy XHV to privately lock in their crypto gains, and sell xUSD on the market to users who want to pay with it.
The most basic reason for this change is this: make manipulation unprofitable again. So that investors and honest actors can use the xUSD stablecoin to privately pay, transact, and lock in crypto gains without having to fear that some malicious actors might dramatically inflate XHV supply overnight.
A fork will be required to implement this change. We have not established a block height for the fork yet, but development work is almost complete and it will likely take place this week. All Haven pools have already been notified. We will continue to share additional details as we approach the fork.
Importantly, this change has the full support of the Haven community. We have been encouraged by our growing community who obviously want to see xUSD succeed on a much larger scale than we initially realized. We look forward to working together with our community as the ecosystem develops.
Several community members have also approached us with interesting ideas to discourage bad actors in more elegant manners, at least in theory. We will implement this change first, which can be done immediately, as protection of the network is paramount. But we greatly appreciate the input and will study all new ideas for their possible benefits and feasibility.
There will always be trade-offs between convenience for all Haven users and protection of the network from bad actors. We will continue to evaluate these trade-offs as the Haven ecosystem grows and respond accordingly in consultation with our community. Keep in mind: the future of financial privacy is just beginning.