How the Freedom Dollar (fUSD) Works

fUSD is backed by far more value than it issues. Each fUSD token (worth $1) is supported by a reserve of the cryptocurrency ZANO. At launch, fUSD is roughly 10× overcollateralized – meaning for every $1 of fUSD in circulation, there's about $10 worth of ZANO locked in reserve. This large surplus of collateral acts as a safety buffer, ensuring that even if conditions change, every fUSD remains securely backed. And this isn't just a claim; it's transparent and verifiable. All reserve wallets are public, so anyone can check the blockchain to confirm that fUSD's collateral far exceeds what's needed.

fUSD's reserves continuously strengthen themselves. fUSD starts off highly overcollateralized from day one, and that buffer naturally grows even more over time. First, when new fUSD is sold into the network, the ZANO paid by buyers goes straight into the reserve, increasing the backing for all fUSD. Second, the market making bot can earn a slight profit on every sale or purchase of fUSD, further adding to the strength of the collateral reserves. Third, the reserve ZANO is put to work — it's continuously staked (locked in the network to help secure it) and earns regular rewards in additional ZANO. These three factors mean the collateral pool is always expanding. Every new fUSD purchase and every staking reward adds more backing behind fUSD. Over time, fUSD's safety net becomes even stronger automatically, enhancing stability without any manual intervention.

fUSD's $1 price target is upheld by market forces, not by forceful controls. To keep fUSD trading around $1, the system relies on passive market-making rather than any rigid peg mechanism. The project's decentralized and distributed market-maker bots (automated trading programs) continuously place buy orders for fUSD just below $1 (around $0.99) and sell orders just above $1 (around $1.01). These act as gentle stabilizers: if fUSD's price dips, the standing buy orders provide a floor by purchasing fUSD and pushing the price back up. If the price climbs above $1, the standing sell orders increase supply and nudge the price back down. This way, the $1 target is maintained by normal market dynamics and liquidity, without any heavy-handed intervention or artificial controls. In essence, fUSD's peg holds firm because the market naturally pulls fUSD's price back to $1 whenever it strays.

A strong reserve means even tough markets don't break fUSD's stability. Cryptocurrency markets can be volatile, but fUSD is built to weather those swings gracefully. Because fUSD is so overcollateralized, even if the price of ZANO (the asset backing fUSD) drops sharply, fUSD remains safely backed. There's plenty of cushion, so the reserves stay more than sufficient to cover every fUSD in circulation. This means the system can continue to buy back fUSD from the market or honor redemptions at $1 without strain, even in a downturn. In other words, fUSD's value stays protected and steady, giving holders peace of mind that a dip in the crypto market won't compromise the stablecoin's integrity.

fUSD's stability is a community effort, with open data and open participation. Everything backing fUSD is out in the open for the public to see. The addresses holding fUSD's reserves are transparent, and the collateralization ratio (the ratio of reserve assets to fUSD issued) is continuously published. Anyone can audit and confirm at any time that every fUSD is fully (and abundantly) backed – there's no behind-the-scenes magic, just open data and sound math. This radical transparency builds trust: you don't have to take anyone's word for it when you can verify the numbers yourself on-chain.

Moreover, maintaining fUSD's value isn't the job of a single, central entity. The network is designed so that anyone can contribute to its stability. Community members are free to run nodes, stake ZANO, provide liquidity, or even operate their own market-making bots to help keep fUSD's price steady (and earn trading fees in the process). In other words, the very tools that defend fUSD's value are available to everyone. This decentralized, community-powered model makes fUSD's stability especially robust and resilient – it's a collective effort that doesn't depend on trusting any one company or middleman.