> For the complete documentation index, see [llms.txt](https://docs.powercity.io/litepaper/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.powercity.io/litepaper/earn-lending-protocol/usdpxdc-stablecoin.md).

# $PXDC Stablecoin

Unlike most stablecoins, $PXDC can be redeemed for PulseX ($PLSX) at face value. This means that one $PXDC can be redeemed for $1 of $PLSX at any time. The EARN Protocol has built-in mechanics to maintain the $1 price floor of $PXDC. As $PXDC falls below the $1 floor value, an arbitrage opportunity is created since $PXDC is redeemable through the Redemption mechanic for $1 worth of $PLSX.

#### Redemption Mechanic:

When $PXDC is trading at less than $1, an arbitrage opportunity arises, and users are incentivized to utilize the redemption mechanic. A user can call the redemption mechanic by providing $PXDC. The system takes the $PXDC provided by the redeemer to repay the riskiest Vault(s). The Vault(s) that the protocol selects to redeem against have the lowest collateral ratio, and transfer the respective amount of $PLSX from the affected positions/Vault(s) to the redeemer.

* The Vault(s) selected are considered risky in terms of collateral, and the redemption mechanic boosts the overall health of the protocol by increasing the collateral of the risky Vault(s). This is done by depositing $PXDC (provided by the redeemer) into the risky Vault(s), and in return, the redeemer removes some of their $PLSX collateral.
* After a redemption occurs, the redeemer profits from the arbitrage opportunity resulting from the depeg of $PXDC in comparison to the $1 face value of $PLSX, and the collateral health of the risky Vault(s) is increased.

Redemptions have a positive effect on the total collateralization of the system, increasing its robustness and price stability.

When the redemption mechanic occurs, Vaults cannot drop below the $500 minimum Vault amount.


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