How KUSD Generates Rewards: A Unique Approach 💡

Unlike most on-chain rewards tied to market fluctuations or incentives, KUSD operates differently. Rewards are generated when payments settle, not from price movements.

The KUSD reward engine is anchored by a clear, sustainable loop:

Institution draws credit line liquidity ➡️ Settles ➡️ Repays ➡️ Capital is reused

Here’s how the process unfolds:

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 instantly reused for the next cycle.

KUSD offers a robust system built on real work, not speculation. ✨
🚫 No speculation
🚫 No leverage
This system provides short-term settlement credit, efficiently used for minutes, hours, or days – not months.

As settlements complete, repayments are made, and rewards accrue. The capital then becomes immediately available for continuous reuse. 🔄 Rewards are driven purely by capital reuse through settlement, independent of volatile market conditions.

For a full breakdown, explore the blog 👇
https://blogs.kerneldao.com/blog/how-kusd-generates-rewards

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