# UWU Cash (UWU)

UWU Cash (UWU) is the fully-backed and unstoppable stablecoin of UWU Protocol. It's over-collateralized with STX, the native cryptocurrency of the Stacks layer, and is designed to be highly decentralized and resistant to censorship.

## Overview of UWU Cash

* **Over-collateralized:** Each UWU is backed by at least $1.50 worth of STX deposited in Vaults. Vaults that fail to maintain a collateral ratio of at least 150% are liquidated to prevent insolvency
* **Soft-pegged:** The protocol values UWU at $1.00, while letting the price float on the open market. Arbitrageurs stabilize the peg on the open market
* **Decentralized:** UWU is only backed by STX, the native cryptocurrency of the Stacks blockchain. This eliminates reliance on centralized assets like Wrapped Bitcoin or USD Coin

## Why UWU Cash?

* **Stable:** UWU Protocol uses a variety of mechanisms to help maintain a price that floats around the value of $1.00 at all times
* **Permissionless:** UWU is accessible to anyone with an internet connection, regardless of their location or financial status
* **Unstoppable:** UWU is decentralized and governance-free. No entity can stop or shut down the protocol, and nobody can freeze or confiscate UWU

## How is UWU generated?

When a user deposits STX as collateral into a Vault, they can borrow UWU against it. Vaults must maintain a minimum collateral ratio of 150%, which means the user must deposit a minimum of $1.50 worth of STX for every UWU that is borrowed. The collateral is locked in a smart contract until the borrowed UWU is repaid.

## How does UWU maintain peg?

UWU Protocol maintains stability of UWU through the use of liquidations and arbitrage.

### Vault Liquidations

In the event that a Vault fails to maintain a minimum collateral ratio of 150%, the Vault is liquidated (closed). During a liquidation, liquidators are able to acquire the collateral held in a Vault by repaying the Vault's debt.

### Arbitrage

An arbitrage opportunity arises when the price of UWU on the open market deviates from $1.00. As the protocol always values UWU at $1.00, arbitrageurs can profit by buying or selling UWU to stabilize the price on the open market.