> For the complete documentation index, see [llms.txt](https://usdu.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://usdu.gitbook.io/docs/how-usdusdu-works/minting-and-redemption.md).

# Minting & Redemption

* **Protocol-minted $USDu**\
  Only the protocol can mint new $USDu, based on productive, yield-bearing collateral.\
  Users themselves cannot mint $USDu.
* **How users get $sUSDu**
  * Users acquire $USDu from secondary markets or partner protocols.
  * They deposit $USDu into a $USDu Lending Vault.
  * In return, they receive $sUSDu, a non-rebasing, yield-generating vault token.
* **How Redemption works**
  * Users can redeem either $USDu or $sUSDu at any time, as long as there is sufficient liquidity in the vault.
  * If all liquidity is borrowed, the interest rate model dynamically increases:
    * Yield on $sUSDu rises automatically to compensate depositors.
    * High interest incentivizes borrowers to repay their loans.
    * If borrowers do not repay and exceed allowed LTV, the system liquidates their position to restore vault liquidity.
* **Built-in stability**\
  The dynamic rate model ensures that:
  * Yield adjusts in real time based on vault utilization.
  * Liquidity pressure is self-correcting through market incentives and automated liquidations.
* **No staking, no lockups**\
  Users maintain flexibility at all times with simple deposit and withdrawal mechanics.