USDX price prediction: What is the Kava USDX stablecoin for?

Can USDX ever achieve parity with the US dollar?

USDX                                 
Kava’s USDX should be worth $1 – Credit: kava.io
                                

Contents

USDX is designed to be traded at $1, which means that making a USDX price prediction is a bit of a fruitless task. That said, though, there are still things worth noting about this crypto, so let’s take a look at them.

What is a stablecoin?

The important thing to note about USDX is that it is a stablecoin. This means that, at least in theory, it is meant to be worth $1 at all times. It makes sense right now to talk a little about stablecoins in general.

The idea behind stablecoins is a reflection of the incredible volatility of many cryptocurrencies. Because prices can fall and rise pretty substantially in a very short space of time, many people who might otherwise be open to the idea of potentially investing in crypto are put off.

On the other hand, there are many issues that crypto enthusiasts might have with a traditional, fiat currency.  For instance, one of the reasons that cryptocurrencies have become so successful is that hardline crypto fans believe that there are potential concerns about privacy, or rather the lack of privacy, surrounding traditional fiat currencies.

There are also some people who feel annoyed by what they see as a collective reliance on centralised financial institutions, such as banks and regulators, while there are worries about people who don’t actually have bank accounts – the people who, at least in theory, the whole world of decentralised finance (DeFi) was designed to help.

The speed of fiat transactions is something else that comes in for frequent criticism, as well as high fees charged to those who need to send money internationally. These issues are usually not a problem when it comes to crypto, at least in theory. 

So, stablecoins were set up, to basically serve as a kind of compromise. The idea is that you have the stability of traditional fiat, while you have the privacy, flexibility, theoretical low cost and speed associated with crypto – or at least the version of crypto that exists for the commodity’s most enthusiastic evangelists. 

What is USDX?

Anyway, USDX is the native cryptocurrency of the Kava protocol. Kava was founded by Brian Kerr, Ruaridh O’Donnell and Scott Stuart in 2018 and it is designed to effectively serve as a decentralised lending platform.

The idea is that Kava, which is based on the Cosmos and Ethereum blockchains, ultimately acts as a kind of decentralised bank, allowing people to access a range of services, most notably crypto loans. The loans can be made in a variety of crypto coins and tokens. Other services that Kava hosts on its network are a crypto exchange, an automated market maker (AMM) to back the exchange, a play-to-earn game called Elfin Kingdom and a yield farming scheme called Foundation.fi.

It is worth pointing out that these platforms all have their individual crypto tokens, as well as the KAVA token existing above all of them to tie the whole platform up. One crypto that we have not mentioned for a while, though, is the USDX stablecoin. So, let’s talk about that.

USDX is designed to allow people who own crypto assets to mint it. In order to create USDX, you have to put in more crypto assets into the Kava platform’s Kava Mint program than you want to create of the USDX crypto. Different crypto assets have different collateralisation ratios, and users can earn rewards for minting USDX in the shape of KAVA. 

USDX and the dollar

The price of USDX is, at least in theory, supposed to stand at $1. As a stablecoin, that is pretty much par from the course. The thing is that there is no clear way to ensure the price stays at parity with the dollar. While there are some stablecoins, such as Tether, which are apparently backed by real assets, and there are others that maintain their equilibrium by relying on an algorithmic mechanism – something that has attracted a lot of controversy since the ill-fated UST coin became depegged in May and led to collapse of the associated LUNA crypto – it does not appear that USDX is either of these.

Indeed, according to a blog post by Stuart: “There is nothing inherent to the USDX digital asset design which itself guarantees it trade in markets around $1, or even that it will trade in a stable range. Market price and volatility is a function of an asset’s rate of supply and demand flows in that market. USDX asset design has features which can be tuned to potentially impact the rate of supply / demand of the asset and thereby the price in markets, but only indirectly.”

While the post goes on to say that USDX does not have to match $1 to be a success, this still might well leave potential investors with a problem – if there is no specific way of pegging USDX to the US dollar, then how can those investors be sure that a USDX token will be worth $1 at any time? We have contacted Kava, but have not heard back.

Anyway, this leads us to another potential issue with USDX. Most cryptocurrencies have a whitepaper, a piece of technical documentation that explains what the crypto is, what it is supposed to do, and how it is meant to work. This helps investors decide what it is that they will spend their money on.

The problem here is that, while Kava has a whitepaper, USDX itself does not. Even within Kava’s technical documentation, there are no references to the USDX stablecoin itself. This might well serve as a red flag for people. After all, if there is no precise way to learn what it is that a particular stablecoin does, then it might make more sense to make use of a stablecoin that has its usage attested. 

That said, another Kava blog post goes on to say: “The primary utility of USDX is its use cases within the Kava ecosystem. Because USDX is a consistent store of value, the stablecoin also presents opportunities for longing or shorting assets and locking in the value of assets that demonstrate fluctuating value. Additionally, $USDX receives extra incentives on Kava Lend – the primary partner for exchanging coins or adding liquidity on Kava Swap – and is tradeable on the Ascendex Exchange.”

One other key point to be aware of is that it is very important not to confuse Kava’s USDX with Lighthouse’s stablecoin of the same name. You should also avoid mixing the Kava USDX up with AnchorUSD, dForce USDx or the Dollars crypto, all of which share the same USDX ticker handle.

USDX price history

USDX price history
USDX price history – Credit: Currency.com

In terms of the USDX price history, it is, as you have probably already worked out by now, mostly uneventful. Please note, though, that we have said mostly uneventful, rather than entirely uneventful.

The token has seen some ups and downs since it first came onto the open market in November 2020. In fairness, there have been as many downs as there have been ups, especially in the first few months of its existence. At various times in February, April and May 2021, it fell below $0.70, while between early January that year and the start of June it did not even break through $0.90.

Things got better in June that year and, while full parity was rather hard to find (it peaked at $1.06 on 15 June), the so-called stablecoin was at least able to operate in the high $0.90s for the rest of the year, which was a definite improvement from the first half of 2021.

It continued to hover around this value until May 2022. It was at this time that UST became depegged, LUNA collapsed and the cryptocurrency entered a world of pain. USDX did not exactly cover itself in glory, dropping to an all-time low of $0.4548 on 12 May.

After that, though, there were some returns to somewhere in the general vicinity of dollar parity and, as of 17 August, USDX was trading at about $0.96. At that time, there were, according to CoinMarketCap, a little over 111.5 million USDX in circulation. It had a market cap of $107.5m, making it the 252nd largest crypto by that metric. 

USDX price predictions

Anyway, in terms of a potential USDX price prediction we cannot repeat enough that, in theory at least, it should stand at $1, because that is what USDX is meant to be worth. That’s not to say that USDX crypto price predictions don’t exist. However, at the time of writing (17 August 2022) because many of them are made with the aid of algorithms, they should be taken with an even larger pinch of salt than normal.

While DigitalCoinPrice was rather rational, having a USDX price prediction for 2022 that said that the token should be worth $0.97 and stay there for the foreseeable future, other sites do not appear to be quite as sober in their forecasts.

For instance, Gov Capital had a USDX price prediction for 2025 that saw it worth a little under $7.56 by 17 August of that year. Meanwhile, CryptocurrencyPricePrediction made a USDX price prediction for 2030 that saw it trade at $88.28 by the end of the year.

Considering the highest the crypto has traded at was $3.90 on 21 November 2020, coupled with its supposedly stable nature, that might just raise some eyebrows.

Final thoughts

Anyway, before we finish, a few things to point out. First, although USDX is a stablecoin, it has very rarely reached parity with the dollar, but has spent most of its time a few cents below. The crypto has, rather unfortunately for it, also spent quite a lot of time significantly below the dollar, meaning that quite how stable it is might well be questioned.

Second, as we have already seen, there is no particular way in which USDX maintains a stable level. While we could possibly bend reality to suggest that if there is no mechanism, the mechanism cannot break, that would be rather facetious and, in truth, people interested in stablecoins might prefer a stablecoin that has a specified way in which it is pegged.

Finally, again as we have already said, there is no whitepaper for the USDX stablecoin. There is nothing which sets out precisely what it is, what it is used for, or how it works. Potential investors might well prefer to put their money somewhere which is explained for them. As ever with cryptocurrency, you will need to be careful if you want to invest in USDX.

FAQs

What is USDX?

USDX is a stablecoin, based on the Kava crypto platform.

How and where do you get USDX?

You can mint USDX on Kava, and it can also be bought, sold and traded on some, but not all, crypto exchanges. Before you do so, though, you will have to do your own research in order to learn whether or not USDX is right for you.

Will USDX go up?

While USDX is a stablecoin and is designed to be pegged to the US dollar, we have to hope that it won’t go up too much. That said, even stablecoins can be very volatile and prices can go down as well as up.

Should I invest in USDX?

This is a question that you will have to answer for yourself. However, bear in mind that USDX should keep to a value of $1 because its a stablecoin – and that’s its point. It is meant to be a stable store of value. Before coming to any decision about whether or not to invest in USDX, you will have to do your own research, remember that prices can go down as well as up, and make sure you never invest more money than you can afford to lose. 

Further reading

The material provided on this website is for information purposes only and should not be regarded as investment research or investment advice. Any opinion that may be provided on this page is a subjective point of view of the author and does not constitute a recommendation by Currency Com Bel LLC or its partners. We do not make any endorsements or warranty on the accuracy or completeness of the information that is provided on this page. By relying on the information on this page, you acknowledge that you are acting knowingly and independently and that you accept all the risks involved.
iPhone Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image
Trade the world’s top tokenised stocks, indices, commodities and currencies with the help of crypto or fiat
iMac Image