How KUSD Generates Rewards: A Unique Approach đĄ
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 âĄïž Settles âĄïž Repays âĄïž Capital is reused
Hereâs the step-by-step process:
1ïžâŁ Liquidity is minted into KUSD.
2ïžâŁ KUSD is staked into sKUSD.
3ïžâŁ Institutions draw liquidity for payment settlements.
4ïžâŁ Transactions clear.
5ïžâŁ Borrowers repay principal + interest.
6ïžâŁ 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. â
Liquidity is only drawn when essential and utilized for minutes, hours, or daysânever 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:
đ https://blogs.kerneldao.com/blog/how-kusd-generates-rewards
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