Risk-Adjusted Credit Ratings
$USDu is minted exclusively against collateral derived from credit-rated lending markets. To ensure the protocol remains resilient and overcollateralized, all collateral is categorized into credit classes based on external credit ratings.
The credit ratings are sourced from Credora, an established DeFi credit risk assessor backed by Standard & Poor and Coinbase.
Collateral is divided into Classes 1 to 6, where Class 1 is the safest and Class 6 carries higher risk.
Higher credit class collateral allows for lower Loan-To-Value (LTV) borrowing ratios. Lower class collateral can still be used, but with reduced borrowing efficiency against $USDu.
This dynamic creates natural incentives for borrowers and governance to prioritize high-quality assets and maintain overall system health.
LTVs by Credit Class:
Class 1
98.5%
Class 2
96.5%
Class 3
94.5%
Class 4
91.5%
Class 5
86.0%
Class 6
77.0%
Key Benefits:
Maintains risk-adjusted collateralization across all $USDu supply
Protects the protocol against collateral quality deterioration
Enables $USDu to function as a highly reliable liquidity layer across DeFi
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