> 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/introduction/why-usdusdu-is-different.md).

# Why $USDu is Different

$USDu introduces a fundamentally new approach to building a yield-collateralized stablecoin. It combines the strengths of traditional credit structuring with on-chain transparency and DeFi-native mechanisms. While many stablecoins today attempt to use CDO-style designs, they often inherit major limitations such as static fee models, rigid tranching, poor capital efficiency, and limited flexibility for integrations.

$USDu was designed from the ground up to avoid these issues and provide a flexible, composable liquidity layer that is sustainable and scalable.

**Key differences compared to conventional CDO-style stablecoins:**

* **Protocol-minted only**\
  No user minting. $USDu is only issued against verifiable, yield-bearing collateral managed by the protocol.
* **Dynamic yield obligation model**\
  Floating APY obligations adapt to real-time lending income, avoiding unsustainable fixed rates.
* **Immutable core design**\
  The core of $USDu cannot be altered, providing maximum security. Extensibility is handled through Curator-proposed modules.
* **Governance with built-in checks**\
  A Guardian role is able to veto proposals, ensuring protocol stability.
* **Optimized for liquidity**\
  $USDu is designed to be the liquidity layer for other assets. Its architecture allows low-cost borrowing and lending for recursive strategies and cross-market trading.
* **Yield-backed, not fee-backed**\
  Protocol revenue comes directly from on-chain lending income, not from user participation fees.
* **No reliance on dilution**\
  New $USDu cannot be minted without new yield-bearing collateral. This prevents over-minting and ensures long-term sustainability

$USDu provides an adaptable foundation for the next generation of stablecoins, enabling both protocols and traders to scale advanced DeFi strategies with confidence.