> 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/risk-management/depeg-risk.md).

# Depeg Risk

$USDu is designed in a way that fundamentally prevents a depeg event.

* **Protocol-minted only**\
  $USDu is fully minted by the protocol itself, not by external users. It is minted directly against its own protocol-held positions in verified, credit-rated, yield-bearing lending collateral.
* **No user-minted liabilities**\
  Users cannot mint $USDu or take leveraged positions that could force bad debt onto the system.
* **Collateral is not tradable**\
  The vault tokens used as collateral to mint $USDu cannot be traded or dumped onto the market. They remain locked within the protocol.
* **No floating yield obligations**\
  There is no risk of over-promised yield causing a liquidity mismatch. Yield is simply what the lending markets pay, distributed via $sUSDu.
* **A-rated credit structure**\
  Because $USDu is minted only against its own locked lending positions and is 100% overcollateralized, the probability of default is extremely low. This structure earns $USDu an A-Rating in credit risk scoring frameworks.

In other words: There is no mechanism that could cause $USDu to become undercollateralized, no way to "run the bank," and no liquidity mismatch that could trigger a depeg.