Overview
dUSD is a decentralized stablecoin built on the ERC-20 standard. Each token is soft-pegged to the US Dollar, backed by at least $1 of collateral held in chain-isolated reserves. Users can mint or redeem dUSD atomically and permissionlessly on a 1:1 basis using eligible reserve assets (minus fees).
Unlike traditional models, dUSD redirects its float revenue as interest rebates toward borrowers across integrated lending markets, including 
dLEND. Additionally, traders and LPs can swap or provide liquidity on 
Curve, the leading DEX for stablecoins as well as the primary exchange venue for dUSD.
dLEND. Additionally, traders and LPs can swap or provide liquidity on Curve, the leading DEX for stablecoins as well as the primary exchange venue for dUSD.dUSD has no minting or management fees. Redemptions may incur up to 0.5% in fees.
User Benefits
- Borrowers benefit from lower dUSD net interest rates, improving their capital efficiency and access to onchain credit. Yield loopers who borrow dUSD also benefit from subsidized leverage, allowing them to capture greater carry.
- Lenders benefit from structurally higher dUSD utilization and yields driven by subsidized borrowing demand. They also earn
dT Points for expanding reserves and credit supply.
- LPs benefit from increased dUSD trading volume and fee generation, boosted by money velocity. They also earn dT Points for expanding reserves and market liquidity.
For user instructions and current opportunities, please refer to User Guide.
Onchain Reserves
dUSD is deployed natively on Ethereum, Fraxtal, and Katana. Each network deployment maintains fully chain-isolated reserves to mitigate cross-chain contagion risk. As a result, dUSD tokens may share the same name across networks, but they are not fungible cross-chain.
Below are the addresses for dUSD and its reserve wallets on each supported network:
Network | Token Contract | Reserve Wallet | AMO Wallet |
Ethereum | |||
Fraxtal | |||
Katana | N/A |
dUSD's underlying reserves consist of stablecoins, yieldcoins, Aave deposits, and Curve AMO positions, providing at least 100% collateral backing for the circulating supply. Each reserve asset is strategically selected based on its track record, transparency, quality, and risk profile. Protocol governance may add, remove, or adjust exposure to reserve assets over time in response to evolving market conditions and ongoing risk assessments.
If a reserve becomes under-collateralized on any network, dTRINITY may temporarily pause dUSD minting/redemption and rebates/rewards on that network to protect existing users and support the re-collateralization process.
Currently, only assets from the following established issuers and protocols may be included in the reserves (subject to network availability):
Tether | Circle | Sky (fka MakerDAO) | Frax Finance |
Agora Finance | Curve Finance | Convex Finance | Aave |
The following assets are whitelisted for inclusion in dUSD’s reserve on each supported network (gray assets are planned but not live yet):
Ethereum
Asset | Deployment | Type | Issuer | Oracle | Mint | Redeem |
USDC | Native | Stablecoin | Circle | Chainlink | ✔️ | ✔️ |
USDT | Native | Stablecoin | Tether | Chainlink | ✔️ | ✔️ |
USDS | Native | Stablecoin | Sky | Chainlink | ✔️ | ✔️ |
sUSDS | Native | Yieldcoin | Sky | Sky, Chainlink | ✔️ | ✔️ |
frxUSD | Native | Stablecoin | Frax | Chainlink | ✔️ | ✔️ |
sfrxUSD | Native | Yieldcoin | Frax | Frax, Chainlink | ✔️ | ✔️ |
dUSD/sfrxUSD Curve LP | Native | LP receipt | Curve | Curve, Chainlink | ❌ | ❌ |
aUSDC | Native | Lending receipt | Aave | Aave, Chainlink | ❌ | ❌ |
aUSDT | Native | Lending receipt | Aave | Aave, Chainlink | ❌ | ❌ |
dUSD/sUSDS Curve LP | Native | LP receipt | Curve | Curve, Chainlink | ❌ | ❌ |
Convex dUSD/sfrxUSD Curve LP | Native | LP staking vault receipt | Convex | Curve, Chainlink | ❌ | ❌ |
Convex dUSD/sUSDS Curve LP | Native | LP staking vault receipt | Convex | Curve, Chainlink | ❌ | ❌ |
Fraxtal
Asset | Deployment | Type | Issuer | Oracle | Mint | Redeem |
USDC | Bridged | Stablecoin | Circle | Api3 | ✔️ | ✔️ |
USDT | Bridged | Stablecoin | Tether | Api3 | ✔️ | ✔️ |
DAI | Bridged | Stablecoin | Sky | Api3 | ✔️ | ✔️ |
frxUSD | Native | Stablecoin | Frax | Api3 | ✔️ | ✔️ |
sDAI | Bridged | Yieldcoin | Sky | Api3 | ✔️ | ✔️ |
sfrxUSD | Native | Yieldcoin | Frax | Api3 | ✔️ | ✔️ |
dUSD/sfrxUSD Curve LP | Native | LP staking receipt | Curve | Curve, Api3 | ❌ | ❌ |
Convex dUSD/sfrxUSD Curve LP | Native | LP staking vault receipt | Convex | Curve, Api3 | ❌ | ❌ |
Katana
Asset | Deployment | Type | Issuer | Oracle | Mint | Redeem |
vbUSDC | Bridged | Stablecoin | VaultBridge | Chainlink | ✔️ | ✔️ |
vbUSDT | Bridged | Stablecoin | VaultBridge | Chainlink | ✔️ | ✔️ |
AUSD | Native | Stablecoin | Agora | Chainlink | ✔️ | ✔️ |
frxUSD | Native | Stablecoin | Frax | Api3 | ✔️ | ✔️ |
sfrxUSD | Native | Yieldcoin | Frax | Api3 | ✔️ | ✔️ |
Price Oracles
Each dUSD reserve’s NAV (net asset value) and minting/redemption ratio per reserve asset are determined using exchange rate feeds via third-party oracle providers like Api3 and Chainlink, as well as direct feeds from asset issuers. Additional oracle providers may be integrated over time to improve redundancy and reliability.
To ensure pricing accuracy, yieldcoin oracles rely on composite feeds to calculate underlying value rather than exchange-traded prices, mitigating risk from market liquidity issues. For example:
- sfrxUSD/USD = sfrxUSD/frxUSD × frxUSD/USD
- sfrxUSD/frxUSD = Fundamental rate feed
- frxUSD/USD = Market rate feed
If a stablecoin feed like frxUSD/USD reports an exchange-traded price above $1 (a temporary anomaly), the dUSD smart contract will round it down to exactly $1, preventing minting activity from posing under-collateralization risk. Additionally, for minting, redeeming, lending, and borrowing transactions, dUSD’s price is hard-coded at $1 to prevent potential market manipulations. Since dUSD is disabled as a collateral to secure loans across integrated markets by default, hard-coding its price minimizes oracle-related risk without affecting lending operations.
Stability Mechanisms
1. Stability Market Operations (SMO)
SMOs are akin to the Fed’s open market purchases of financial assets. However, unlike the Fed's approach of expanding the money supply through debt issuance (i.e., printing USD to buy bonds), SMOs are designed to maintain dUSD's price stability during credit expansion cycles by contracting its reserve and circulating supply.
When dUSD trades below $1, the protocol may use its full-reserve backing to strategically buy back and redeem dUSD from DEX pools. This stabilizes the peg and strengthens the reserve through arbitrage profits from buying dUSD at a discount.
SMOs typically take place during periods of high selling pressure—for example, when borrowers swap dUSD for other assets to loop or increase leverage.
2. Algorithmic Market Operations (AMO)
AMOs are akin to the Fed’s open market sales of financial assets. However, unlike the Fed’s approach of contracting the money supply through debt reduction (i.e., selling balance sheet assets for USD), AMOs are designed to maintain dUSD's price stability during credit contraction cycles by expanding its reserves and circulating supply.
Pioneered by Frax, the AMO mechanism can automatically execute monetary policies on-chain to enhance a stablecoin’s liquidity and price stability. Similarly, dUSD's AMOs complement its SMOs by expanding the money supply with pre-minted tokens. These unallocated tokens sit on both sides of the reserve’s balance sheet. When dUSD trades above $1, the protocol may allocate or sell these tokens to designated dUSD pools, obtaining new reserves in the process. This also stabilizes the peg and strengthens dUSD’s reserve through arbitrage profits from selling tokens at a premium.
AMOs enable faster protocol response to increased dUSD buying pressure on DEXs, such as when borrowers unloop or deleverage.
3. Borrower Arbitrage
When dUSD trades below $1, existing borrowers have a natural incentive to buy it back at a discount and repay their dUSD-denominated debt at face value. Conversely, when dUSD trades above $1, borrowers can supply collateral in dLEND or partnered lending protocols, borrow dUSD at $1, and sell it at a premium to capture arbitrage profits. These processes also help reinforce dUSD's soft peg to $1.
4. Market Maker Arbitrage
Like borrowers, market makers are naturally incentivized to buy dUSD when it trades at a discount to front-run SMOs/borrowers and capture arbitrage profits for themselves. Conversely, they can mint new dUSD tokens at par to sell when it's trading at a premium. As market makers add more liquidity, dUSD’s soft peg to $1 would gradually improve, decreasing its reliance on SMOs and AMOs to maintain stability.
5. Growing Collateral Ratio
Over time, a portion of protocol revenue—from SMO/AMO profits and reserve earnings—accumulates as excess reserves, pushing dUSD above a 100% Collateral Ratio. This helps strengthen market confidence and price stability while creating a buffer against potential reserve devaluation. When the Collateral Ratio exceeds a certain threshold, protocol governance can determine how to allocate the excess reserves, such as funding extra subsidies or acquiring BTC and ETH as strategic reserve assets.
Dynamic Interest Rebates
dTRINITY has a mandate to allocate at least 90% of dUSD's reserve holdings in yieldcoins to generate subsidy funding. These holdings shall be optimized to target DeFi yield benchmarks (e.g., Sky sUSDS, Aave aUSDC), ensuring the protocol generates sufficient reserve earnings to incentivize users competitively.
The protocol mints new dUSD periodically using a majority of reserve earnings during that period in order to subsidize dUSD interest expenses on lending protocols. These freshly minted tokens are distributed to dUSD borrowers as interest rebates. The remainder of reserve earnings is retained either as protocol revenue or excess reserves to over-collateralize dUSD.
The “Rebate APY” displayed in dUSD lending markets shows the current net rebate rate that borrowers can earn based on their active dUSD debt. This rate is variable and depends on the reserve’s intrinsic yield as well as the ratio between dUSD's circulating supply vs. its TDL (Total Debt Locked).
Recursive Lending (Re-Lending)
When borrowers exchange dUSD for other assets, it flows into liquidity pools where other users may acquire and re-lend it. Users may also borrow dUSD and re-lend it to take advantage of carry trade opportunities when dUSD’s Supply APY is higher than its net Borrow APY (post-rebates). As dUSD gets re-lent multiple times, it creates a money supply and debt multiplier effect similar to the traditional banking system. This means the aggregate value of dUSD deposits and debt on lending protocols may exceed its total circulating supply (i.e., the base money supply).
Rebate APY vs. Debt Ratio
When dUSD’s TDL is the same as its total circulating supply, the net Rebate APY is the same as the reserve’s intrinsic yield. When TDL exceeds the circulating supply due to re-lending, the net Rebate APY becomes diluted and decreases below the intrinsic yield because there are fewer yield-bearing reserves and more debt to subsidize. On the contrary, when TDL is less than the circulating supply, the Rebate APY becomes concentrated and increases above the intrinsic yield because there are more reserves and less debt to subsidize. Therefore, the Debt Ratio as well as the net Rebate APY will fluctuate over time and can be calculated as follows:
- Debt Ratio = Total Debt Locked / Circulating Supply
- Net Rebate APY = (Reserve Intrinsic Yield * 90%) / Debt Ratio
Below is an example of rebate calculations, assuming that the reserve’s intrinsic yield is 5% APY:
Total Debt Locked | Circulating Supply | Debt Ratio | Rebate APY |
10,000 dUSD | 100,000 dUSD | 0.10 | 45.00% |
25,000 dUSD | 100,000 dUSD | 0.25 | 18.00% |
50,000 dUSD | 100,000 dUSD | 0.50 | 9.00% |
100,000 dUSD | 100,000 dUSD | 1.00 | 4.50% |
200,000 dUSD | 100,000 dUSD | 2.00 | 2.25% |
500,000 dUSD | 100,000 dUSD | 5.00 | 0.90% |
1,000,000 dUSD | 100,000 dUSD | 10.00 | 0.45% |
Since there are yield-bearing reserves constantly backing dUSD, even as the Debt Ratio increases, the net Rebate APY always remains above zero. Therefore, interest rebates help lower the effective equilibrium of dUSD borrowing costs vs. unsubsidized stablecoins. When the Debt Ratio and utilization are high, interest rebates may be marginal, but when they are low, rebates may become quite substantial—potentially producing negative borrowing rates (i.e., getting paid to borrow, net of rebates). This makes dUSD a super cost-effective debt instrument, ensuring constant credit demand and utilization on integrated lending protocols.
Note: dTRINITY may boost the Rebate APY with its available marketing budget during promotional periods.