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 can redirect 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 world’s leading DEX for stablecoins and the primary exchange venue for dUSD.
dLEND. Additionally, traders and LPs can swap or provide liquidity on Curve, the world’s leading DEX for stablecoins and the primary exchange venue for dUSD.dUSD has no minting fees. Redemptions incur up to 50 bps 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 and greater potential carry.
- Lenders benefit from structurally higher dUSD utilization and yields driven by subsidized borrowing demand. Stakers who deposit into the
sdUSD vault are also dUSD lenders, but with composability and secondary market liquidity access via vault receipt tokens (i.e., yieldcoins).
- LPs benefit from increased dUSD trading volume and fee generation on Curve, boosted by money velocity. sdUSD LPs also benefit from native lending yield on top of fees and rewards.
For user instructions and current opportunities, please refer to User Guide.
Chain-Isolated Reserves
dUSD is deployed natively on Ethereum, Fraxtal, and Katana. Each network deployment maintains fully isolated reserves to mitigate chain-specific contagion risk. As a result, dUSD tokens may share the same name across networks, but they are not fungible across chains.
Below are the addresses for dUSD and its reserves on each supported network:
Name | Token Contract | Reserve Wallet | AMO Wallet |
Ethereum dUSD | |||
Fraxtal dUSD | |||
Katana dUSD | N/A |
Reserve Assets
dUSD's underlying reserves may consist of stablecoins, yieldcoins, 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 incentives on that network to protect existing users and support the re-collateralization process.
At the moment, only assets from the following established issuers and protocols may be included in the reserves, subject to network availability:
Tether
(all networks) | Circle
(all networks) | Sky (fka MakerDAO)
(all networks) | Frax Finance
(all networks) |
Curve Finance
(all networks) | Convex Finance
(all networks) | Agora Finance
(Katana only) | Vault Bridge
(Katana only) |
The following assets are currently whitelisted for inclusion in dUSD’s reserve on each supported network. For simplicity, Curve LP tokens are disabled for minting/redemption. Instead, users can swap dUSD and its underlying directly in those pools with dTRINITY’s Curve AMO.
Ethereum
Asset | Status | Mint | Redeem | Type | Issuer | Deployment | Oracle |
USDC | ✔️ | ✔️ | ✔️ | Stablecoin | Circle | Native | Chainlink |
USDT | ✔️ | ✔️ | ✔️ | Stablecoin | Tether | Native | Chainlink |
USDS | ✔️ | ✔️ | ✔️ | Stablecoin | Sky | Native | Chainlink |
sUSDS | ✔️ | ✔️ | ✔️ | Yieldcoin | Sky | Native | Sky, Chainlink |
frxUSD | ✔️ | ✔️ | ✔️ | Stablecoin | Frax | Native | Chainlink |
sfrxUSD | ✔️ | ✔️ | ✔️ | Yieldcoin | Frax | Native | Frax, Chainlink |
dUSD/sfrxUSD Curve LP | ✔️ | ❌ | ❌ | LP receipt | Curve | Native | Curve, Chainlink |
Convex dUSD/sfrxUSD Curve LP | ✔️ | ❌ | ❌ | LP staking vault receipt | Convex | Native | Curve, Chainlink |
dUSD/sUSDS Curve LP | ⏳ | ❌ | ❌ | LP receipt | Curve | Native | Curve, Chainlink |
Convex dUSD/sUSDS Curve LP | ⏳ | ❌ | ❌ | LP staking vault receipt | Convex | Native | Curve, Chainlink |
Fraxtal
Asset | Status | Mint | Redeem | Type | Issuer | Deployment | Oracle |
USDC | ✔️ | ✔️ | ✔️ | Stablecoin | Circle | Bridged | Api3 |
USDT | ✔️ | ✔️ | ✔️ | Stablecoin | Tether | Bridged | Api3 |
DAI | ✔️ | ✔️ | ✔️ | Stablecoin | Sky | Bridged | Api3 |
sDAI | ✔️ | ✔️ | ✔️ | Yieldcoin | Sky | Bridged | Api3 |
frxUSD | ✔️ | ✔️ | ✔️ | Stablecoin | Frax | Native | Api3 |
sfrxUSD | ✔️ | ✔️ | ✔️ | Yieldcoin | Frax | Native | Api3 |
dUSD/sfrxUSD Curve LP | ✔️ | ❌ | ❌ | LP staking receipt | Curve | Native | Curve, Api3 |
Convex dUSD/sfrxUSD Curve LP | ✔️ | ❌ | ❌ | LP staking vault receipt | Convex | Native | Curve, Api3 |
Bridged assets on Fraxtal are issued by the Fraxtal L2 canonical bridge, backed by underlying collateral of the same denomination on Ethereum.
Katana
Asset | Status | Mint | Redeem | Type | Issuer | Deployment | Oracle |
vbUSDC | ✔️ | ✔️ | ✔️ | Stablecoin | Vault Bridge | Native | Chainlink |
vbUSDT | ✔️ | ✔️ | ✔️ | Stablecoin | Vault Bridge | Native | Chainlink |
AUSD | ✔️ | ✔️ | ✔️ | Stablecoin | Agora | Native | Chainlink |
frxUSD | ✔️ | ✔️ | ✔️ | Stablecoin | Frax | Native | Api3 |
sfrxUSD | ✔️ | ✔️ | ✔️ | Yieldcoin | Frax | Native | Api3 |
vbUSDT and vbUSDT are Katana-native stablecoins issued via the AggLayer bridge, backed by lending vaults on Ethereum. Since the underlying collateral is rehypothecated, Vault Bridge tokens are not considered bridged assets.
Price Oracles
Each dUSD reserve’s NAV (net asset value) and reserve asset minting/redemption ratio are determined using price 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.
Oracle Methodology
- 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 impacting lending operations.
- If a reserve stablecoin’s market feed reports price anomal above $1, the dUSD smart contract will round it down to exactly $1, preventing minting activity from posing under-collateralization risk.
- To enhance pricing accuracy, oracles for yieldcoins (typically ERC-4626 vault tokens) and Curve LP positions rely on composite feeds to calculate the underlying value rather than exchange-traded prices alone, mitigating potential risk from market liquidity issues.
Examples
- sfrxUSD Price = sfrxUSD/frxUSD × frxUSD/USD
- dUSD/sfrxUSD Curve LP Price = (dUSD in LP × dUSD/USD) + (sfrxUSD in LP × sfrxUSD/frxUSD × frxUSD/USD)
Stability Mechanisms
Atomic Minting & Redemption
The ability to mint and redeem dUSD 1:1 against its underlying reserves creates an onchain price anchor for the token. When dUSD trades at a discount vs. $1, arbitrageurs can mint dUSD at par and sell it on the open market, increasing circulating supply while pushing the price back down. When dUSD trades at a premium vs. $1, arbitrageurs can buy discounted dUSD and redeem it at par, contracting supply while pushing the price back up. This natural process is how most stablecoins maintain their peg stability.
dUSD's redemption fee also influences where arbitrageurs are incentivized to step in, which affects how far below $1 the token may trade. For example, a 50 bps redemption fee means dUSD may trade around $0.995, where further deviations would be arbitraged away by market participants and/or SMO.
Stability Market Operations (SMO)
SMO are akin to the Fed selling assets on the open market to reduce its balance sheet and the fiat money supply. Similarly, dTRINITY’s SMO contract circulating supply by selling reserves on Curve to buy back and burn dUSD when it trades at a significant discount. This process helps restore price stability while capturing potential arbitrage revenue for the protocol.
SMO are strategically executed to defend dUSD’s peg in the event of low market arbitrage activity. These operations typically take place during credit expansion cycles when there is more selling pressure from dUSD borrowers.
Algorithmic Market Operations (AMO)
AMO are akin to the Fed buying assets on the open market to expand its balance sheet and the fiat money supply. Similarly, dTRINITY’s AMO grow circulating supply by creating dUSD to deploy into Curve liquidity pools alongside paired reserve assets. However, unlike the Fed, Curve AMO expand protocol balance sheet without leading to an increase of the credit money supply (M2).
AMO, also known as “direct deposit modules,” were originally pioneered by Frax in 2021. They enable onchain market operations where stablecoins are pre-minted to provide programmatic liquidity in DEXs without causing significant impact to peg stability. Pre-minted dUSD in Curve AMO is self-backed, remaining on both sides of the protocol’s balance sheet until it is exchanged, at which point the token becomes collateralized with assets that users swap into the AMO. Conversely, users can swap dUSD in exchange for reserve assets held by the AMO.
Curve AMO enable dTRINITY to enhance peg stability, capital efficiency, and float revenue, unlocking greater liquidity and incentive funding for dUSD users.
- Peg stability is enhanced via AMO by injecting pre-minted liquidity into Curve pools when dUSD supply is too low (i.e., pushing price down), or removing pre-minted liquidity when dUSD supply is too high (i.e., pushing price up). The protocol may also generate arbitrage P&L from this process.
- Capital efficiency is improved by leveraging existing reserves plus pre-minted dUSD to bootstrap TVL and DEX liquidity. Similar to LPs, AMO deployments earn fees from trading volume and CRV emissions from Curve's veTokenomics. Protocol-owned liquidity in AMO pools could potentially amplify these earnings, further boosting reserve productivity.
- Float revenue may increase through a combination of AMO yield farming and arbitrage P&L, providing additional funding for user incentives or excess reserves. Similar to native yields from reserve assets, AMO earnings fluctuate based on market conditions. When yield farming is not profitable, the protocol may reduce its AMO activity until market conditions improve.
Excess Reserves
Over time, a portion of float revenue may accumulate as excess reserves, pushing dUSD’s reserve ratio above 100%. This helps further strengthen market confidence and price stability of dUSD while gradually building up a reserve risk buffer. When the reserve ratio exceeds a certain threshold, protocol governance may determine how to allocate additional excess reserves.
Adaptive Incentives
dTRINITY allocates a majority of its reserves into productive, yield-generating assets. These holdings are optimized to target DeFi yield benchmarks (e.g., Sky sUSDS, Aave aUSDC), allowing the protocol to generate float revenue and fund user incentives competitively. New dUSD is minted periodically by the protocol using a majority of float revenue earned during that period to incentivize users across the market.
Adaptive incentives refer to dTRINITY’s ability to optimize allocations of float revenue-funded incentives among borrowers, lenders, and/or LPs. Incentives can be shared with either the demand side (borrowers), the supply side (lenders and LPs), or both, subject to market conditions and protocol governance.
- When credit demand weakens, a greater share of incentives can be directed toward borrowers to stimulate utilization and debt expansion.
- Conversely, when supply inflows are lagging, incentives can be shifted toward lenders and LPs to attract new reserves, lending deposits, and liquidity, providing fuel for further expansion.
Reserve Expansion | Credit Supply Expansion | Debt Expansion | Liquidity Expansion | |
dUSD Borrower Rebate | ✔️ | |||
dUSD Lender Reward | ✔️ | ✔️ | ||
dUSD LP Reward | ✔️ | ✔️ | ||
sdUSD LP Reward | ✔️ | ✔️ | ✔️ |
Incentive Distribution Venues
The following platforms are currently whitelisted for float revenue-funded incentive distribution. Additional venues may be included in the future based on protocol governance and strategic partnership opportunities. dTRINITY also partners with Merkl to support venues that don’t have a native system to distribute external incentives.
Lending Protocols
dUSD Borrower Rebate | dUSD Lender Reward | |
dLEND (Ethereum, Fraxtal) | ✔️ | ✔️ |
Morpho (Katana) | ✔️ |
DEXs
dUSD LP Reward | sdUSD LP Reward | |
Curve
(Ethereum, Fraxtal) | ✔️ | ✔️ |
Sushi Swap (Katana) | ✔️ |
Incentive Optimization
Supply-side incentives can be optimized by routing them toward sdUSD liquidity pools on Curve rather than to dUSD lenders directly, since sdUSD holders and LPs are effectively dUSD lenders. Depending on market conditions, dTRINITY may leverage Curve’s veTokenomics mechanism to amplify its incentives through CRV emissions.
Incentivizing sdUSD pools enable LPs to earn both trading fees and CRV emissions on top of lending yield, enhancing their overall performance and capital efficiency. Not only does this help expand reserves and credit supply for the protocol, it also reinforces market liquidity and price stability via cross-pool arbitrage between dUSD and sdUSD.
Incentive Methodology
Below is how incentives are calculated for different types of market participants. In addition to float revenue, dTRINITY may allocate other sources of revenue and growth budgets toward funding user incentives, subject to market conditions and protocol governance.
Description | Significance | |
Debt-to-Reserve Ratio
(Debt Ratio) | Aggregate Debt / M0 | dUSD debt expansion relative to its monetary base. This ratio helps determine how much float revenue can be distributed as borrower rebates per unit of debt |
Lending-to-Reserve Ratio
(Lending Ratio) | Aggregate Lending TVL / M0 | dUSD credit supply relative to its monetary base. This ratio helps determine how much float revenue can be distributed as lender rewards per unit of TVL
Note: dTRINITY rebates borrowers by default. Some float revenue may be shared with lenders as rewards, depending on market conditions |
Liquidity-to-Reserve Ratio
(Liquidity Ratio) | Aggregate Liquidity TVL / M0 | dUSD + sdUSD secondary market liquidity relative to the monetary base. This ratio helps determine how much float revenue can be distributed as LP rewards per unit of TVL
Note: Some float revenue may also be shared with LPs as rewards, depending on market conditions |
Float APY | (Float Revenue - Retained Float Revenue) / M0 | Exogenous yield (float revenue) generated from M0 provides the core source of funding for dUSD user incentives, minus any protocol retentions |
Borrower Rebate APY | (Float APY / Debt Ratio) × Weight | Variable interest rebate rate for dUSD borrowers across the entire market, reducing their net cost per unit of debt |
Lender Reward APY | (Float APY / Lending Ratio) × Weight | Variable supply reward rate for dUSD lenders across the entire market, enhancing their net yield per unit of TVL |
LP Reward APY | (Float APY / Liquidity Ratio) × Weight | Variable supply reward rate for dUSD and/or sdUSD LPs across the entire market, enhancing their net yield per unit of TVL |
For more details, please refer to 📊 Stablecoinomics.