How KUSD Generates Rewards: A Unique Approach ๐ก
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 โก๏ธ Settles โก๏ธ Repays โก๏ธ Capital is reused
Hereโs how the process unfolds:
1๏ธโฃ Liquidity is minted into KUSD.
2๏ธโฃ KUSD is staked into sKUSD.
3๏ธโฃ Institutions draw liquidity for payment settlements.
4๏ธโฃ Transactions clear.
5๏ธโฃ Borrowers repay principal + interest.
6๏ธโฃ The same capital is instantly reused for the next cycle.
KUSD offers a robust system built on real work, not speculation. โจ
๐ซ No speculation
๐ซ No leverage
This system provides short-term settlement credit, efficiently used for minutes, hours, or days โ not months.
As settlements complete, repayments are made, and rewards accrue. The capital then becomes immediately available for continuous reuse. ๐ Rewards are driven purely by capital reuse through settlement, independent of volatile market conditions.
For a full breakdown, explore the blog ๐
https://blogs.kerneldao.com/blog/how-kusd-generates-rewards
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