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MPA (Market Pegged Asset)

Market Pegged Asset (MPA) is a certain kind of cryptocurrency that is specifically designed to maintain a stable value by pegging it to an underlying asset or basket of assets, such as fiat currencies, commodities, or other cryptocurrencies.

MPA aims to reduce price volatility and to offer a stable, unifying currency for transactions, trading, and investments.

Stablecoins such as Tether (USDT), pegged to the US dollar, and MakerDAO’s DAI, which is collateralized by a basket of a cryptocurrencies, are examples of Market Pegged Assets.

MPAs seek to maintain a stable value relating to their underlying pegged assets. Being less susceptible to rapid price changes than traditional cryptocurrencies such as Bitcoin or Ethereum makes MPAs more suitable for use in everyday transaction.

The official issuance of MPAs at UPCX is managed through an over-collateralization method in UPC, the native currency of UPCX, that requires greater than 100% collateral value to stabilize values.

MPA collateralization in UPC is managed by UPCXs smart contracts, which tremendously reduces counterparty risks. Collateralization of multiple MPAs in general further reduces the risk of UPC price volatility, providing users with more currency stability.

The smart contracts that manage MPAs include collateral ratios and allow for collateral management with the ability to liquidate if necessary.

MPA issuers deposit and lock UPC into a smart contract based on the to be issued volume of MPAs and the defined collateralization rate.

For UPCX, the over-collateralization Rate (OC Rate) is set to be 200%. This means that for every USD $10,000 to be issued in MPA, at least USD $20,000 UPC must be deposited and secured as collateral.

By setting the OC Rate to 200%, a buffer is created for the case that the value of the collateral declines (based on the price of UPC at the time of MPA issuance).

Formula to calculate the maximum percentage drop in collateral value to be handled:


Maximum Rate of Decline = (1 – (1 / OC Rate)) * 100

In this case

Maximum Rate of Decline = (1 – (1 / 2.0)) * 100
Maximum Rate of Decline = (1 – 0.5) * 100
Maximum Rate of Decline = 0.5 x 100
Maximum Rate of Decline = 50%

This means that by setting the OC Rate to 200%, the MPA can be held stable up to a decline in value of the collateral by approximately 50%.

If the case that the value of the collateral for the issued MPA falls below the minimum collateral ratio, UPCX’s Smart Contract will liquidate the MPA’s collateral and forces the MPA to be released. Simultaneously, MPAs that are held by users are changed to UPC. This settlement mechanism is used to maintain the stability of the MPA ecosystem. The minimum collateral ratio is set to 100%.

If the MPA issuer’s collateral ratio falls below the required minimum, the issuer can either increase the UPC collateral or reduce the total issued amount of the MPA in order to restore the required collateral.

In case that the MPA issuer wishes to redeem the MPA, the issuer can unlock the UPC used as collateral in the smart contract by returning the MPA to the smart contract.

UPCX integrates a reliable price oracle to provide real-time, accurate pricing data for the collateralized UPC as well as the MPA. This is essential for maintaining correct collateral ratios and triggering liquidation events when necessary.

Benefits for MPA issuers

While the over-collateralization method increases user confidence in the MPA, it burdens the MPA issuer financially.

Nevertheless, there are several benefits for MPA issuers.

First, a portion of the transaction fee of the UPCX Decentralized Exchange (UPCX DEX) is returned to the issuers.

MPAs are traded on the DEX for asset management purposes, but transactions can also take place for UPCXs core services like cross-currency transfers and payments.

Cross-currency transfers and payments are transactions where the sender/payer and the receiver/payee decide to use different assets. The sender could for example use Asset A, which is pegged to JPY, and the receiver could receive the amount as Asset B, which is pegged to USD. In this case, Asset A is automatically exchanged to Asset B via the UCPX DEX.

The issuer of a MPC receives a part of the transaction fee each time his/her MPA is involved in such a transaction. Users may also use MPA to pay network commission fees. Every time this happens, the issuer of the MPA receives part of the fee in his/her MPA.