Nova Protocol
  • Nova Protocol Introduction
  • Protocol Design
    • Navigate the App
    • Overview
    • USDN Stablecoin
    • NPT Protocol Token and Staking
    • NPT Tokenomics
    • Vault Types
    • Redeeming against a vault
    • Peg Stability Module
    • Liquidations & Stability Pool
    • Governance and Immutability
    • Recovery Mode
    • Security
    • Smart Contracts
    • Community
    • Glossary
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  • What is the Peg Stability Module?
  • When can the module be used?
  • What are the fees involved?
  1. Protocol Design

Peg Stability Module

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Last updated 16 days ago

What is the Peg Stability Module?

is one of the few mechanisms offered by Nova to help further ensure that USDN stays pegged to a dollar. The PSM allows users to swap USDN for USDC and vice versa at a fixed rate.

Unlike the traditional Nova vaults, the PSM has no borrowing mechanism. The contract simply swaps the coins directly and collects a fee at the point of transaction.

When can the module be used?

It is helpful where USDN is trading above a dollar. Users can simply take advantage of the arbitrage opportunity by minting USDN from USDC. This in turn will help bring the price of USDN down closer to a dollar.

Likewise, in the event that USDN is trading below a dollar, users can redeem their USDN for USDC to take advantage of the arbitrage opportunity which eventually helps to revert USDN back up to a dollar.

Do note that there is a capped amount that the peg stability module can hold.

What are the fees involved?

  • To mint USDN from USDC - 0.75%

  • To redeem USDN to USDC - 0.1%

The Peg Stability Module (PSM)