How it works

USD* is designed as a unified yield-bearing asset backed by a curated basket of vaults, managed under a single accounting layer. The purpose of this architecture is to create a scalable, composable liquidity primitive that simplifies user experience while maximizing capital efficiency at the protocol level.

Architecture Overview

At the heart of USD* is the Unified Accounting Layer (UAL). This layer aggregates the value of multiple vaults, each of which holds one type of yield-bearing asset. The UAL calculates the net asset value (NAV) of USD* and ensures all holders share the same exposure.

• Vaults: Up to sixteen vaults can exist within a single bank. Each vault is mapped to one asset type, broadly defined as any collateral unit that the system can price, track, and account for. An asset type may take different forms:

  • Direct tokens, such as USDC reserves.

  • Liquidity positions, such as Seed Pool LP tokens.

  • Strategy shares, which represent claims on external yield sources, including DeFi lending strategies or external stablecoin strategies like USD′.

  By treating both tokens and strategy positions uniformly as asset types, the system ensures that every vault can be integrated into the same accounting and collateralization logic, regardless of whether the underlying exposure is simple (USDC) or complex (multi-asset yield strategies).

• Initial configuration: USD* will launch with three vaults — the USDC Vault (for liquid reserves), the Seed Pool LP Vault and Drift Lending Vault. The USD′ vault will be added shortly thereafter.

• Accounting: Users only see USD* in their wallet, but the UAL ensures that each USD* token represents a proportional share of all vault assets.

This design separates user experience (simple: mint and hold USD*) from portfolio management (complex: vault allocation, yield harvesting, arbitrage).

Yield Model

USD* accrues yield through multiple vaults, each mapped to a specific asset type that the system can price, track, and account for. All vaults share the same collateralization and accounting logic, whether the exposure is a simple token or a complex multi-asset strategy.

Primary yield paths include:

• Liquidity Position Vault Holds liquidity-pool positions such as the Seed Pool LP tokens and captures swap and liquidity fees.

• External Strategy Vault Holds strategy shares representing claims on curated external yield sources—e.g., Drift Lending or other risk-managed stablecoin strategies, and in the future trading strategies.

These vaults collectively determine the Net Asset Value (NAV) of USD*.

Yield is expressed as price appreciation: the value of USD* rises over time in line with NAV growth.

• Holders do not stake or claim distributions; yield accrues automatically in the token’s price.

• All holders receive the same APY with no strategy selection or customization.

• The current portfolio targets an annualized yield of ~6%+, subject to market conditions and strategy updates.

Minting and Redemption

• Minting: Users mint USD* by depositing USDC. Legacy Seed Pool LP tokens can also be migrated into USD*. For Details, please refer to Legacy Seed Pool LP Upgrade.

• Redemption: Users can redeem by swapping USD* for USDC.

• Market alignment: The protocol relies on arbitrage (by the team or whitelisted keepers) to ensure USD* trades close to NAV. Premiums trigger mint-and-sell actions; discounts trigger buy-and-burn.

Long-Term Vision

USD* is a stepping stone toward a more decentralized, permissionless liquidity layer. Future iterations may include:

• Whitelisted keepers for mint/burn operations.

• Permissioned vault expansion with standardized yield strategies.

• Rebasing versions of USD* for protocols that require fixed-peg stablecoins.

In its current form, USD* provides a strong balance between user simplicity and protocol flexibility.