How KUSD Generates Rewards: A Unique Approach 💡

Most on-chain rewards are influenced by market conditions or incentives. KUSD stands apart by generating rewards when payments settle, not from price movements. This anchors rewards to real economic activity.

The KUSD reward engine follows a clear, efficient loop:
Institution draws credit line liquidity ➡️ Settles ➡️ Repays ➡️ Capital is reused

Here’s the step-by-step process:
1️⃣ Liquidity is minted into KUSD.
2️⃣ KUSD is staked into sKUSD.
3️⃣ Institutions draw liquidity for payment settlements.
4️⃣ Transactions clear.
5️⃣ Borrowers repay principal + interest.
6️⃣ The same capital is immediately reused for the next cycle.

This model focuses purely on short-term settlement credit doing real work. There's no speculation and no leverage involved. ✅

Liquidity is only drawn when essential and utilized for minutes, hours, or days—never for extended periods. As settlements complete, repayments occur, rewards accrue, and capital instantly becomes available for the next cycle.

This continuous reuse through settlement directly drives rewards, offering a stable and predictable mechanism independent of market volatility.

Discover the full breakdown of KUSD rewards in our blog:
🔗 https://blogs.kerneldao.com/blog/how-kusd-generates-rewards

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