💵Treasury-backed private debt
Introduction
Treasury-backed Private Debt provides liquid on-chain exposure to US Treasury Bonds.
The product leverages Flux Finance, a Compound fork that enables stablecoin borrowing against tokenized Treasury Bonds issued by Ondo Finance, to tap into the lowest-risk and most liquid yield of US bonds.
Technical architecture
I. $KUSD tokens minting flow
The treasury-backed private debt token, $KUSD, a CW20 token natively issued on the Ki Chain, is a stablecoin loosely pegged to $USDC. $KUSD is only minted via collateral deposit, with a 1:1 ratio to $USDC deposits.
Tokenized Treasury Bonds currently accepts a single asset as collateral, Axelar $USDC.
II. $KUSD value accrual flow
$USDC deposited by the TFP into Flux Finance is lent out to borrowers against their overcollaterized treasury bonds tokens, $OUSG, and in return earns interest.
Rewards are distributed 50:50 in $USDC & $XKI. It's important to mention that the $XKI rewards are not inflationary but bought back from the market. After bridging it back to the Ki Chain, half of the $USDC is swapped to $XKI on Atlas before rewards are distributed.
III. $KUSD fees
Treasury-backed private debt applies a performance fee. Every time rewards are claimed, the protocol applies a 10% fee.
Note: These fees only apply to future rewards and do not concern initial collateral deposited by users.
IV. $KUSD Tokens Redemption
$KUSD shares can be redeemed at any moment by their holders in return for its underlying $USDC collateral. Deposits into Flux Finance’s lending pools are liquid and do not require a cooling-off period, however the protocol batches deposits, withdrawals and rewards distribution on a weekly basis.
Users will also have the possibility to exit their $KUSD position on the Atlas' DEX via the $KUSD liquidity pool.
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