Vault Overview

1. A Synthetic Dollar Without Centralization

The USDN token is the first fully decentralized synthetic dollar structured product, designed to operate around the value of the US dollar while overcoming the limitations of existing centralized solutions. Where many approaches rely on a central entity to ensure stability and interactions, the USDN token allows users to interact directly with the protocol, without external intervention. This decentralized model enhances the system's security, transparency, and resilience, providing a robust alternative to traditional solutions.

2. Yield Directly for Holders

The USDN token allows its holders to effortlessly receive yields directly in their wallets, unlike other dollar-pegged tokens that provide no returns. To achieve this, USDN employs a rebase mechanism. When the value of the USDN token exceeds a certain threshold, additional tokens are automatically added to users' wallets, bringing the value of the USDN token back to around $1. Holders don’t need to do anything—the yields are delivered directly to their wallets without requiring staking or any additional actions.

3. Delta-Neutral Strategy for Stability and Growth

The USDN token is designed to maintain a stable value close to the dollar using a delta-neutral strategy. The protocol constantly aims to adjust its two sides to stay as close as possible to a delta-neutral position. This allows the USDN token to remain near the value of one dollar while generating profits for its users, combining stability with yield. For more details on this mechanism, refer to the Protocol Balance section.

4. Censorship Resistance

The USDN token is designed to be resistant to censorship, providing complete financial freedom to its users. Due to its fully decentralized nature, no central authority or entity can freeze funds, block transactions, or impose restrictions. Unlike centralized systems, where accounts can be frozen or transactions denied, the USDN token operates autonomously on the blockchain, ensuring that all users can access their funds and perform transactions freely.

This resistance to censorship further strengthens the security and reliability of the USDN protocol, making it immune to interference from external actors, whether financial or governmental. By offering this protection, the USDN protocol stands out as a solution of choice for users seeking a truly decentralized alternative, independent from the traditional financial system's constraints.

5. No Reliance on Other Stablecoins

Some synthetic tokens, such as Ethena’s USDe, rely on existing stablecoins like USDT to maintain their value. This dependency can expose users to risks associated with the stability or fluctuations of these stablecoins. The USDN token, on the other hand, is designed to be directly tied to the US dollar, avoiding these risks and enhancing the protocol’s robustness, thereby providing greater long-term stability for its users.

6. No Custodial

The USDN protocol is decentralized. No human actor or externally owned account (EOA) will ever hold your assets, USDN tokens, or underlying tokens. The protocol ensures that 100% of funds are always accessible as long as there is no imbalance.

7. A Safe and Transparent Oracle System

Although the protocol uses oracles to determine mint and redeem prices, it is designed with advanced protections to prevent manipulation. This ensures that users interact with reliable and transparent market data, further strengthening the system’s security.