# Elixir deUSD (DEUSD) > Elixir deUSD (DEUSD) is a fully collateralized synthetic dollar by Elixir Network, enhancing liquidity and stability in DeFi ecosystems. - Canonical URL: https://iq.wiki/wiki/elixir-deusd-deusd - Categories: Cryptoassets - Created: 2024-09-17T16:20:52.576Z - Last updated: 2024-09-30T04:23:42.365Z - Source: IQ.wiki — the world's largest blockchain and crypto encyclopedia (https://iq.wiki) --- **deUSD** is a decentralized synthetic dollar developed by the [Elixir](https://iq.wiki/wiki/elixir) Network. It functions as a fully collateralized [stablecoin](https://iq.wiki/wiki/stablecoin) designed to provide stability and liquidity across both [decentralized](https://iq.wiki/wiki/decentralized-exchange) and [centralized exchanges](https://iq.wiki/wiki/cex-centralized-exchange). Collateralized using [stETH](https://iq.wiki/wiki/lido-staked-ethereum-steth) and sDAI, deUSD offers an approach aimed at mitigating funding rate volatility. Integrated within the Elixir ecosystem, it plays a role in [liquidity provision](https://iq.wiki/wiki/liquidity-providers) and yield opportunities, contributing to the infrastructure of [decentralized finance (DeFi)](https://iq.wiki/wiki/defi). [\[1\]](#cite-id-whiecrdtyqb) [\[2\]](#cite-id-k3ar6qesi7)[\[3\]](#cite-id-kxy0pttnbio) ![20240731151945-fb31f127-df2c-4428-a17f-1faf2c532af7-117 (1).jpg](https://ipfs.everipedia.org/ipfs/QmfKQCK6sKuFTep7Ff9WwXiUT6rvdCFG2iUocaDCDThsrn) # Overview deUSD ("decentralized US Dollar") is a synthetic dollar created by the [Elixir](https://iq.wiki/wiki/elixir) Network, fully collateralized through assets such as [stETH](https://iq.wiki/wiki/lido-staked-ethereum-steth) and sDAI. The protocol utilizes these assets to maintain a delta-neutral position by shorting [ETH](https://iq.wiki/wiki/ethereum), while funding rate arbitrage within Ethereum is employed to mint deUSD. Even in environments of negative funding, deUSD is structured to maintain stability. Within the [Elixir](https://iq.wiki/wiki/elixir) ecosystem, deUSD functions as a preferred collateral for exchanges powered by the network, enhancing liquidity across orderbook exchanges and offering users opportunities to earn yield. Its future objective includes becoming a cross-chain currency, integrated natively into [DeFi](https://iq.wiki/wiki/defi) systems. During the initial bootstrapping phase, the protocol's revenue will contribute to the Over Collateralization Fund (OCF), primarily composed of sDAI and [Tether](https://iq.wiki/wiki/tether). Notably, deUSD is not collateralized by US dollars, nor is any issuer maintaining dollar reserves for it. [\[1\]](#cite-id-whiecrdtyqb)[\[2\]](#cite-id-k3ar6qesi7)[\[3\]](#cite-id-kxy0pttnbio)[\[4\]](#cite-id-jpiwgnjem6e) # Key Features ### Decentralization The [Elixir](https://iq.wiki/wiki/elixir) Network provides decentralized execution for deUSD through verifiable proofs, open-source code, and on-chain liquidity. Over time, the system aims to enable permissionless minting and redeeming of deUSD, with users interacting fully on-chain. ### Resilience in Negative Funding Conditions To minimize exposure in negative funding environments, deUSD adjusts its collateralization through the [Elixir](https://iq.wiki/wiki/elixir) Network, ensuring stability during adverse conditions. ### Collateral Use within the Elixir Ecosystem deUSD is accepted as collateral by multiple orderbook [DEXs](https://iq.wiki/wiki/decentralized-exchange) within the [Elixir](https://iq.wiki/wiki/elixir) ecosystem, enhancing liquidity and contributing to orderbook depth. ### Over Collateralization Fund (OCF) The Over Collateralization Fund (OCF) supports deUSD’s resilience, particularly in challenging market conditions. Its primary role is to manage costs related to executing transitions to sDAI in negative funding environments, minimizing exposure to negative basis trades by converting collateral into sDAI, which generates yield through [MakerDAO’s](https://iq.wiki/wiki/makerdao) T-Bill protocol. The OCF operates based on predefined health factors within the protocol. Should the fund's health decline, the system shifts to a defensive mode, reducing exposure and converting collateral to sDAI. During periods of positive funding, the OCF allows deUSD to capture additional yield, balancing risk and return. [\[1\]](#cite-id-whiecrdtyqb)[\[2\]](#cite-id-k3ar6qesi7)[\[4\]](#cite-id-jpiwgnjem6e)[\[5\]](#cite-id-ferharugpj9) # Tokenomics deUSD operates as a synthetic asset backed primarily by [stETH](https://iq.wiki/wiki/lido-staked-ethereum-steth) and sDAI. These assets are used to manage positions and provide stable yield through the OCF. Collateralization adjusts dynamically based on the protocol’s health to maintain stability in both positive and negative funding rate environments. deUSD is integrated with both [centralized](https://iq.wiki/wiki/cex-centralized-exchange) and [decentralized exchanges](https://iq.wiki/wiki/decentralized-exchange), where authorized participants, such as market makers, can mint and redeem deUSD in exchange for collateral. Decentralized protocols facilitate trade execution and [liquidity provision](https://iq.wiki/wiki/liquidity-providers). [\[1\]](#cite-id-whiecrdtyqb)[\[2\]](#cite-id-k3ar6qesi7)[\[3\]](#cite-id-kxy0pttnbio) The ELX token serves as the governance and utility token for the Elixir Network. Following the mainnet launch, ELX holders will be able to vote on governance decisions, including fee distribution across the network. Validators are required to stake ELX tokens, incentivizing them to secure the network. [\[1\]](#cite-id-whiecrdtyqb)[\[2\]](#cite-id-k3ar6qesi7)