Apyx’s STRC collateralized stablecoin has experienced a temporary depeg. The protocol asserts this is a feature, not a flaw.
Apyx’s apxUSD stablecoin dipped to 93 cents on Wednesday amid a drop in bitcoin below $63,000.
What you need to know:
— Apyx’s apxUSD fell to 93 cents during bitcoin’s decline.
— Apyx indicates that volatility is anticipated and mitigated through overcollateralization, dividend mechanisms, and limited liquidation risks within Morpho markets.
Depegging of stablecoins is a common occurrence in crypto bear markets, and apxUSD is the latest to join this trend, being the preferred equity-backed stablecoin of the Apyx protocol.
As the market leader, bitcoin’s fluctuations have a significant impact.
The stablecoin is fundamentally backed by preferred equity issued by digital asset treasury firms, particularly the STRC shares from Strategy, which hold a $100 par value.
The protocol acquires these shares, collects dividends, and redistributes the yield to holders on-chain. The reserve mix also consists of short-term U.S. Treasuries and cash equivalents to ensure liquidity and minimize concentration risks.
Apyx operates a two-token system where apxUSD serves as the primary stablecoin aimed at trading at $1 without yielding interest; holders depositing apxUSD receive apyUSD, a yield-bearing savings token that earns returns via dividends from the underlying preferred shares.
However, since preferred equity constitutes the bulk of these reserves, the stablecoin is affected by the volatility of the underlying shares. Thus, when STRC is traded below its $100 par value, the market value of apxUSD’s reserves diminishes, causing instability in the stablecoin in secondary markets.
Apyx views this as a normal occurrence.
«This is not a bug; it is the anticipated behavior of a stablecoin backed by preferred equity rather than cash deposits. Holders who comprehend STRC’s risk profile and its historical mean-reversion should interpret these instances as the asset class undergoing its typical cycle, not as proof of a broken peg,» the protocol elaborated in a comprehensive post on X.
It further clarified that its peg stability model incorporates various layers to manage stress. The preferred shares possess structural attributes that empower issuers to increase dividend rates, thereby enhancing demand for the shares and gradually elevating their value toward par.
Apyx mentioned that Strategy has historically leveraged this mechanism. Notably, STRC has traded below its par value on four occasions since August of last year, with each instance concluding in prices rebounding to $100.
Moreover, Apyx maintains collateral value exceeding the circulating supply of the stablecoin. This buffer assists in absorbing mark-to-market declines in the backing assets before they significantly affect the peg.
«Users can monitor the collateral position against apxUSD supply in real-time through the app dashboard,» the protocol stated.
This clarification arrives as market participants expressed concern over the brief depeg, with some fearing that ongoing volatility might undermine investor confidence.
There were also worries regarding cascading liquidations across Morpho lending markets, but Apyx contended that these fears were largely unfounded. The primary apyUSD/apxUSD Morpho market is influenced by dividend accrual rather than STRC’s spot price, meaning that fluctuations in STRC do not affect that oracle or trigger liquidations.