Yield Mechanism

$USDu is a yield-collateralized stablecoin where real on-chain lending income powers the system. The entire yield flow is transparent, sustainable, and does not rely on token emissions or external subsidies.

How It Works:

• Users acquire $USDu on open markets and deposit it into the official $USDu Lending Vault.

• Upon deposit, users receive $sUSDu, a non-rebasing vault token that automatically accrues yield.

• Yield comes from interest paid by borrowers who borrow $USDu from the vault for trading, looping, or liquidity purposes.

• The vault token value (exchange rate) increases over time as yield is earned.

• No staking or lockups are required. Users simply hold $sUSDu and see the value grow.

Yield Distribution:

• The USDU Finance protocol itself does not charge a fee.

• The protocol participates as a liquidity provider in lending markets and major pools (via approved minting modules), earning interest on its positions.

• The protocol earns net revenue from its participation and uses this income to:

  • Provide incentives for $USDu adoption (e.g. Curve gauges, trading pools)

  • Potentially subsidize borrowing rates in key markets

  • Further deepen liquidity and strengthen the utility of $USDu

Key Points:

• Yield is organic and lending-based, not based on token emissions

• All $USDu and $sUSDu are fully backed and redeemable

• The system remains highly capital efficient, with dynamic rates adapting to market demand