# Value-Backed USD (VBUSD)

{% hint style="info" %}
VBUSD is an all-new, fully decentralized stablecoin, offering Ethereum liquid staking and GMX funding fee yield on USD-denominated deposits!
{% endhint %}

### Value-Backed USD (VBUSD): the first delta-neutral, fully decentralized stablecoin with [Embedded Yield](https://docs.vbusd.com/vbusd-stablecoin/embedded-yield)!

{% embed url="<https://www.youtube.com/watch?v=j9M5_xX1P5w>" %}

{% hint style="success" %}
The VBUSD contracts will be deployed on Arbitrum One soon. The [Initial Raise](https://docs.vbusd.com/sinking-fund/initial-raise) will be conducted before deployment! If interested, please get in touch via our [Contact](https://docs.vbusd.com/reference/contact) page.
{% endhint %}

<mark style="color:orange;">**VBUSD's**</mark> [**stablecoin collateral**](https://docs.vbusd.com/vbusd-stablecoin/value-backed-reserves) <mark style="color:orange;">**initially consists of half wstETH and half 1x ETH short on GMX:**</mark>

* The short position is [reinitialized](https://docs.vbusd.com/vbusd-stablecoin/stablecoin-design/reinitialization) when necessary to avoid liquidation
* The value of the collateral stays the same with ETH price movement if reinitialization is done

<mark style="color:orange;">**The protocol should earn a**</mark> [**positive income**](https://docs.vbusd.com/vbusd-stablecoin/embedded-yield) <mark style="color:orange;">**on both parts of the collateral holdings:**</mark>

* The wstETH earns income from [Lido](https://lido.fi) Ethereum liquid staking
* The 1x ETH short should earn Funding Rate Fees on GMX (which are usually [positive for shorts](https://blog.bitmex.com/dust-on-crust/))

<mark style="color:orange;">**To prevent any shortfall, the protocol has a**</mark> [**Sinking Fund**](https://docs.vbusd.com/sinking-fund) <mark style="color:orange;">**and other**</mark> [**Stabilization Mechanisms**](https://docs.vbusd.com/vbusd-stablecoin/stablecoin-design/stabilization-mechanisms)**:**

* The Sinking Fund, seeded by the [Initial Raise](https://docs.vbusd.com/sinking-fund/initial-raise), is the first defense against decollateralization
* The protocol has 4 other [stabilization mechanisms](https://docs.vbusd.com/vbusd-stablecoin/stablecoin-design/stabilization-mechanisms) to ensure that VBUSD remains fully backed

<mark style="color:orange;">**The protocol also issues a proprietary token,**</mark> [**GoVBUSD**](https://docs.vbusd.com/govbusd-protocol-token)<mark style="color:orange;">**, that handles governance and yield:**</mark>

* Governance may choose between trading platforms, handle distribution of earnings, etc.
* Users can earn GoVBUSD by depositing wVBUSD liquidity or single wVBUSD or GoVBUSD

<mark style="color:orange;">**Therefore, VBUSD users can earn two forms of yield simultaneously:**</mark>&#x20;

* Protocol income from Ethereum liquid staking and GMX funding fees accrues via [wVBUSD](https://docs.vbusd.com/vbusd-stablecoin/stablecoin-design/wvbusd)
* GovBUSD token yield on wVBUSD liquidity deposits&#x20;

<mark style="color:orange;">**Users also have other**</mark> [**yield options**](https://docs.vbusd.com/govbusd-protocol-token/govbusd-token-design/yield-options)**:**

* Deposit single wVBUSD tokens in the [wVBUSD Safety Pool](https://docs.vbusd.com/vbusd-stablecoin/wvbusd-safety-pool) to earn GoVBUSD
* Deposit single GoVBUSD tokens in the [GoVBUSD Safety Pool](https://docs.vbusd.com/govbusd-protocol-token/govbusd-safety-pool) to earn GoVBUSD&#x20;

### A Fully Decentralized Stablecoin

VBUSD is based on Arthur Hayes' [NakaDollar Concept](https://blog.bitmex.com/dust-on-crust/), and it uses some of the same core ideas, but VBUSD also has several [differences](https://docs.vbusd.com/vbusd-stablecoin/stablecoin-design) from the NakaDollar Concept. For example, VBUSD has embedded yield, whereas the NakaDollar proposal does not, and VBUSD runs completely on the blockchain, with no centralized custody of user funds, whereas NakaDollar's collateral is proposed to be hosted on centralized perpetual exchanges. (See [Stablecoin Design](https://docs.vbusd.com/vbusd-stablecoin/stablecoin-design) for further discussion.)

<mark style="color:orange;">**Welcome to Value-Backed USD (VBUSD)!**</mark>

## Content Shortcuts

{% content-ref url="sinking-fund/initial-raise" %}
[initial-raise](https://docs.vbusd.com/sinking-fund/initial-raise)
{% endcontent-ref %}

{% content-ref url="vbusd-stablecoin/stablecoin-design" %}
[stablecoin-design](https://docs.vbusd.com/vbusd-stablecoin/stablecoin-design)
{% endcontent-ref %}

{% content-ref url="govbusd-protocol-token/govbusd-token-design" %}
[govbusd-token-design](https://docs.vbusd.com/govbusd-protocol-token/govbusd-token-design)
{% endcontent-ref %}

{% content-ref url="govbusd-protocol-token/govbusd-token-design/yield-options" %}
[yield-options](https://docs.vbusd.com/govbusd-protocol-token/govbusd-token-design/yield-options)
{% endcontent-ref %}

{% content-ref url="reference/links" %}
[links](https://docs.vbusd.com/reference/links)
{% endcontent-ref %}

{% content-ref url="reference/contact" %}
[contact](https://docs.vbusd.com/reference/contact)
{% endcontent-ref %}