# Proposal to peg $XAI to USDC market price

**URL:** <https://gov.silo.finance/t/proposal-to-peg-xai-to-usdc-market-price/346>\
**Category:** Proposal Discussion\
**Created:** [March 21, 2023, 3:36pm UTC](https://gov.silo.finance/t/proposal-to-peg-xai-to-usdc-market-price/346 "2023-03-21T15:36:23Z")\
**Posts on this page:** 1\
**Page:** 1

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**Author:** ![ayham.eth](https://yyz2.discourse-cdn.com/flex032/user_avatar/gov.silo.finance/ayham.eth/32/8_2.png) [@ayham.eth](https://gov.silo.finance/u/ayham.eth)\
**Post date:** [March 21, 2023, 3:36pm UTC](https://gov.silo.finance/t/proposal-to-peg-xai-to-usdc-market-price/346/1 "2023-03-21T15:36:23Z")

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### Introduction

Currently $XAI price is hard-coded to $1 in the Silo Protocol. In other words, 1XAI==$1 at all times. We use Chainlink ETH/USD to price XAI. The reason behind this logic is that it would create arbitrage opportunities. Please read more [here](https://silopedia.silo.finance/xai-stablecoin/cross-silos-stablecoin). With the recent USDC Volatility, the assumption fell short of reality.

The normal DeFi state for the Silo protocol is:

- The current USDC price is 1$ in DEXs, CEXs → USDC can be bought or redeemed for 1$.
- XAI price is equal to the USDC price in DEXs → Users can swap XAI to USDC 1:1 and vice versa.

We propose that we peg XAI to USDC (1XAI=1USDC) by changing XAI’s price feed to Chainlink ETH/USDC.

The table below describes the consequences of two scenarios in the case of USDC de-peg. The first column represents current solution for XAI price, and the second one is the proposed solution.

### Risks table

 ![Screen Shot 2023-03-21 at 10.39.35 AM](https://canada1.discourse-cdn.com/flex032/uploads/silo/original/1X/9ccee5b86e9aa2d0f614cc8dc289bf5b59f1c273.png)

### Conclusion

Keeping the price of XAI fixed to 1$ has risks of temporary price manipulations in case of hard USDC de-peg (USDC goes to 80/85c and below). Fixing the price of XAI to be equal to USDC price removes risks and protocol works as expected.

In the case of USDC de-pegging, the change will affect the XAI price in DEXs, however, it removes all possible risks to depositors and borrowers of other assets in the Silo protocol.