APEX: AI-Algorithmic-Stablecoin-to-Foreign-Currency Exchange Protocol

APEX (AI-Powered Exchange) is a decentralized protocol based on Matrix’s AI technology, supporting the minting and cross-chain exchange of multiple algorithmic stablecoins. By integrating AI with algorithmic stablecoin, APEX will create scalable decentralized stablecoins suited for the specific needs of different countries and regions, and support the free exchange among all types of stablecoins. Here are five core features of APEX:

Smart Stabilization Algorithm: Users need to stake a certain number of assets to mint algorithmic stablecoins. Smart stability adjustment is dependent on both stakes and stabilization algorithms. When the ratio between algorithmic stablecoins and the currency it is pegged to is bigger than 1 on APEX, the weight of stakes will decrease, and the weight of algorithms increase. When this ratio is smaller than 1, the weight of staking will increase, and that of algorithms decrease;

DAO: autonomous community, featuring decentralized management;

Cross-chain Transaction: Since APEX supports the exchange among algorithmic stablecoins on different blockchains pegged to different fiat currencies, the platform’s cross-chain functions are fully capable of facilitating the transactions of different types of assets;

On-chain Oracle Machine: APEX has direct access to the real-time data of DEXs and reads the real-time exchange rates of currencies through Chainlink;

AI-powered Currency Exchange: AI algorithms will help find the best exchange rates for different asset types on APEX. Users may also choose to ignore these AI recommendations and use any currency exchange service they want;

There are two types of tokens on APEX: 1. the algorithmic stablecoin ASC, and 2. the governance token AX, which grants voting power in matters related to governing APEX.

APEX’s System of Algorithmic Stablecoins

APEX is essentially a service that provides each country, region or institution with an algorithmic stablecoin pegged to the fiat currency that the group is most accustomed to using. This is to say that, APEX will host quite a number of algorithmic stablecoins, which sets it apart from other stablecoin projects.

When APEX plans to enter a new market, a voting round will start in its community. If there are enough votes, an algorithmic stablecoin will be created. (This doesn’t describe the first algorithmic stablecoin). Each stablecoin will be named after the fiat currency to which it is pegged plus the letter A as a prefix, e.g. AUSD, ASGD, etc.

If a new stablecoin is passed, APEX will release the contract for minting it, and users can stake the designated type of asset to start minting. In the original state, the percentage of stakes on APEX will be 100%. After algorithmic stablecoins are created, APEX will enter a mixed stage, where the percentage of stakes is calculated and updated hourly through functions contained in the stablecoins’ contracts. Each adjustment will be within 0.25%. Take AUSD as an example. When its price is higher than $1, the contract functions will reduce the staking rate by 0.25% every hour. When the price of AUSD is lower than $1, the same rate will be raised by 0.25% hourly.

APEX’s Smart Price Stabilization Mechanism

By supporting the free minting and redemption of algorithmic stablecoins, APEX has created a system where arbitrageurs can help balance the supply and demand of algorithmic stablecoins in open-market transactions.

Again take AUSD as an example. If the market price of AUSD is higher than $1, this creates an opportunity for arbitrage. To do so, people can mint an AUSD by depositing $1 in the contract, and then sell the AUSD for higher than $1 in the market. At any time, to mint a new AUSD, one US dollar’s worth made up of stakes and AX must be deposited into the system. When AUSD is in a state of 100% stakes, then the value deposited into the system for minting AUSD is 100% stakes. As the contract enters a mixed stage, AX will start to make up part of the value that goes into minting stablecoins and afterwards be burnt in circulation. For instance, at 98% stakes, it will take stakes worth $0.98 and burn AX worth $0.02 to mint an AUSD. While at 97% stakes, to mint an AUSD will consume $0.97 worth of stakes and burn $0.03 worth of AX.

When the market price of AUSD is lower than $1, this also presents an opportunity for arbitrage by simply buying AUSD in the market for less than $1 and exchanging it for one dollar. Users can redeem the one-dollar value in an AUSD at any time from the system. The difference is only in the percentage of stakes and AX that people get through redemption. When AUSD is made up of 100% stakes, people will get 100% stakes through redemption. In a mixed stage, part of the value people redeem will be AX (newly created for redeemers). For instance, at 98% stakes, every AUSD can be exchanged for a combination of stakes worth $0.98 and AX worth $0.02. While at 97% stakes, every AUSD can be exchanged for stakes worth $0.97 and AX worth $0.03.

No matter what price AUSD is at, there will always be chances to arbitrage. This will motivate arbitrageurs to mint or redeem stablecoins, thus helping AUSD to remain stably in a range close to $1.

Smart Stake Percentage Adjustment

Generally speaking, stablecoins on APEX go through two cycles: the inflationary cycle and the deflationary cycle. In an inflationary cycle, APEX will reduce the percentage of stakes but raise the percentage of AX required to mint an algorithmic stablecoin. While in a deflationary cycle, APEX will raise the percentage of stakes, and people redeeming their AX will get more AX and fewer stakes.

The functions contained in stablecoin contracts will calculate and update the smart adjustment process on an hourly basis, and the percentage of stakes will be adjusted by 0.25% each time. Take AUSD for example. When its price is higher than $1, the percentage of stakes will be adjusted down 0.25% for each passing hour; and when its price is higher than $1, the stake percentage will go up by 0.25% every hour. If the price of AUSD should stay under $1 for a long time, the percentage of stakes will gradually move close to 100%.

Minting

Every type of algorithmic stablecoins has its independent contract and staking pool on APEX. Stablecoins of the same type are interchangeable and have an identical stake percentage regardless of what percentage they had at the time of minting.

APEX’s functions for minting are as follows.

Definition of Symbols

N is the number of target algorithmic stablecoins minted;

X is the number of AX that are burnt for minting stablecoins;

P_AX is the current price of AX;

∑_1^n〖(Y_n*P_(coll-n))〗 is the total value of the assets staked for minting;

Y_n is the number of the nth type of stakes required for minting;

P_(coll-n) is the current price of the nth type of stakes;

C is the current stake ratio.

Take AUSD for example. If we have C=97%, then to mint an AUSD requires $0.97 worth of stakes and burns $0.03 worth of AX.

Note that on APEX minting algorithmic stablecoins costs a minting fee, which is charged in AX at 0.2% of the total value of the minted stablecoins.

Redemption

The functions for redemption are as below.

Definition of Symbols

N is the number of target algorithmic stablecoins redeemed;

X is the number of AX that people would receive as a result of redemption;

P_AX is the current price of AX;

Y_n is the number of the nth type of stakes in the redemption process;

P_(coll-n) is the current price of the nth type of stakes;

C is the current stake ratio;

∑_1^n〖(Y_n*P_(coll-n))〗 is the total value of the stakes users would receive as a result of redemption.

Note that on APEX redeeming algorithmic stablecoins costs a fee, which is charged in AX at 0.45% of the total value redeemed.

Governance Token—AX

AX is APEX’s governance token. It grants voting power regarding 1. the addition of a new algorithmic stablecoin, 2. the increase or decrease of staking pools and the adjustment of stake percentage, and 3. the extent and frequency of stake percentage adjustments in inflationary and deflationary cycles.

In the genesis stage, a total of 100 million AX will be issued, and for every new algorithmic stablecoin added, an extra 30 million AX will be issued. As the demand for algorithmic stablecoins grows, AX will be on a deflationary trend.

AX’s market value is bolstered by APEX seignorage as well as the cash flow from minting and redemption fees. An increase in net value also will happen when unused stakes are used. At the same time, AX plays an important role in stabilizing the market. As the market value of AX increases, so does the stability of the system get strengthened.

Cross-Chain AI Transaction

A cross-chain router hub supports the exchange of algorithmic stablecoins on APEX or between APEX and other blockchain platforms. When a transaction request is launched, the oracle machine will snatch real-time price information from the liquidity pools on different blockchains. Combining all information, Matrix’s AI stablecoin exchange protocol will help users find the best price and pick the optimal transaction route. Once a transaction is confirmed, users pay with stablecoins they have on one blockchain and receive stablecoins on the target blockchain.

AI Quantitative Trading

As APEX hosts multiple algorithmic stablecoins whose price movements create opportunities for arbitrage in a market that is open 24/7, a quantitative trading strategy tool based on Matrix AI will be provided for users.

APEX’s AI quantitative trading works through trial and error to track the price movements of different algorithmic stablecoins. It helps users take control of trading by making strictly followed strategies and monitoring their results.

APEX Derivative Platform

ETF

By the time there are at least five different algorithmic stablecoins on APEX, the platform will launch APEX ETF, an investable asset whose price follows a composite index tracking the market value of every stablecoin traded on APEX. This index will reflect the stablecoin market’s overall trend.

APEX Perpetual Swap

Perpetual swap is a decentralized perpetual contract that supports all types of assets. It is made possible through virtual AMM. Like with Uniswap, traders can trade with virtual AMM when there are no counterparties. Virtual AMM is market neutral and adopts a full-stake mechanism. It sets the predictable price of an underlying using constant product to guarantee liquidity onchain.

Perpetual Swap allows users to

long or short any type of asset;

make trades with up to 10 times leverage;

trade 100% onchain;

make 100% non-custodial transactions.