# USDA: A Decentralized, Collateral-Backed Stablecoin

USDA is a decentralized, unbiased stablecoin soft-pegged to the US Dollar. Users can collateralize assets through Auro Finance and borrow USDA, ensuring stability through collateral deposited into Vault, which acts as Auro’s collateral vault.

#### Price Stability Module (PSM) - Coming soon

The Peg Stability Module (PSM) ensures USDA remains stable by facilitating seamless conversions between centralized stablecoins USDT and USDA.

**Key Features:**

1. Conversion Fee Structure:

* Users can mint USDA at a 1:1 ratio using USDT

2. Minting Cap:

* Initial cap of 100.000 USDA to LP Providers
* Pre-minted USDA is deposited into the PSM contract before launch

3. Redeeming Stablecoins:

* Users can convert USDA back to USDT with a daily limit of 100.000 USDA

The PSM helps USDA maintain a strong 1:1 peg by balancing its liquidity with centralized stablecoins.

#### USDA Liquidity & Circulation

Users can obtain USDA by:\
✅ Buying from brokers, exchanges, or DEX liquidity pools

Once acquired, USDA functions like any other cryptocurrency - used for payments, transfers, and DeFi applications.

Auro Finance’s comprehensive stability mechanisms make USDA a highly reliable, capital-efficient stablecoin, driving DeFi adoption on Aptos.

**USDA Price Peg**

To maintain USDA’s price stability & peg at $1, it is crucial to balance USDA’s supply and demand in the circulating market and LPs.

At the start, the Auro Finance core team will decide the parameter based on market conditions. In the futures, parameter changes will require a proposal and community vote.

Additionally, to ensure the stability and responsiveness of our platform, the core team reserves the right to adjust the borrow rate flexibly in response to significant market fluctuations. This approach allows us to adapt to rapidly changing market conditions without requiring a snapshot proposal.

Users can rest assured that any adjustments will be made with careful consideration to maintain balance and align with market realities.

### Interest Rate Mechanics <a href="#interest-rate-mechanics" id="interest-rate-mechanics"></a>

The interest rates in USDA markets are not static but fluctuate based on a set of factors, including:

1. The price of USDA, which is determined through Oracle
2. Other variants
