At a glance
Where the rewards come from
When you stake, the dollars behind your USDh are lent to other governments through short-term bonds in US dollars. A bond is a loan to a government, and the interest it pays is the income. Those governments pay more interest than the US does, and that extra interest funds your rewards. The bonds are bought and held until they mature. There is no trading, no borrowing and no new token printed to pay rewards. Every loan is in US dollars, so there is no currency risk. Which governments? sUSDh lends to governments such as Egypt and Bahrain. Today it holds Egypt, with Bahrain being added, and the list can change. Current holdings are on the sUSDh tab of the Transparency page in the app.How the price grows: an example
1
You stake
The sUSDh price is 1.00. You stake 1,000 USDh and receive 1,000 sUSDh.
2
Rewards build up
The price rises to 1.05.
3
Your balance is worth more
You still hold 1,000 sUSDh. It is now worth 1,050 USDh.
4
Someone stakes after you
They stake 1,000 USDh and receive about 952.38 sUSDh (1,000 ÷ 1.05). Same value in, fewer sUSDh, so earlier stakers are not diluted.
Who sets the reward rate
Nobody types in a new price. A staking protocol wallet that needs several signatures approves a yearly rate on the blockchain. The contract then raises the sUSDh price from that rate, second by second. The rate is set by the staking protocol, not by the USDh issuer. For now, Publius Foundation oversees it. The contract puts firm limits on the rate:- A cap. The rate can’t go above a cap written into the contract, 25% a year by default. Raising the cap takes 48 hours’ public notice, and it can never go above 100%.
- An end date. A rate can be given an end date. When it passes, the price stops rising.
- A price ceiling. A rate can be given a maximum price. When it is reached, the price stops rising.
- A pause. The rate can be paused at any time. The price keeps what it has already earned.
The trade-off
Other governments pay more interest than the US because lending to them carries more risk. That difference is why rewards are possible, and it is also the risk.- Governments restructure. Countries rarely go bankrupt, but they do restructure their debt, and lenders usually take a loss. If a government that sUSDh lends to restructures, sUSDh takes the loss on that loan. USDh does not.
- Rewards can stop. Rewards can be cut, paused or fall to zero, and nobody owes them to you. Past rewards say nothing about future ones.
- Bonds can be hard to sell in a crisis. Leaving could take longer, or bonds could be sold at a loss.