xBacked does not allow you to passively stake either xUSD or the protocol governance token. Below it is explained how fees are distributed to participants.
The xUSD token is a USD pegged stable coin backed by ALGO. The xBacked protocol always considers one xUSD token to be $1 USD.
Staking xUSD requires those tokens to be used in liquidations executed by the protocol. The fees from this action is then distributed proportionately.
xUSD Price Peg
To maintain a stable value for xUSD the following methods are used:
Over collaterization of approved forms of collateral (beginning with ALGO). 1 xUSD token is backed by more than $1 USD of collateral. This is maintained through liquidations.
Arbitrage when xUSD is discounted: if the price of xUSD is trading at a discount (below $1 USD) users are able to purchase it, and repay debt at a cheaper rate. As participants purchase xUSD the price rises
Arbitrage when xUSD is trading at a premium: if the price of xUSD is trading at a premium (above $1 USD) participants could deposit collateral to mint xUSD to then sell on the open market. This selling of xUSD reduces the price.