Staking USDu
This section explains how staking USDu works, how sUSDu accrues value, and how rewards are distributed.
Overview
sUSDu is the staked version of USDu. Its value increases overtime as yield is earned and deposited into the staking contract.
Staking is the mechanism through which users access the yield generated from the strategies performed by Unitas. Users deposit USDu into the staking contract and receive newly-minted sUSDu, which represents a proportional claim on the yield produced by the protocol’s market-neutral operations.
Overtime, Unitas compounds yield directly into the staking pool. As revenue is added, the amount of USDu backing each unit of sUSDu increases. Users realize yield through appreciation in the sUSDu's exchange rate, relative to USDu.
Staking is optional. Users who hold USDu without staking do not receive yield.
Staking Workflow
1. Staking USDu
Users stake USDu by depositing it into the staking contract.
Upon deposit:
USDu is locked in the staking contract
sUSDu is minted and transferred to the user
The user’s sUSDu balance represents their share of the staking pool
The total supply of sUSDu and the total USDu held by the staking contract are tracked continuously.
2. Earning Yield
Yield generated by the protocol's strategies is periodically transferred into the staking contract in the form of USDu.
Sources of yield include:
Revenue from JLP trading activity
Funding rate payments associated with the hedged positions
When revenue is deposited:
The USDu balance of the staking contract increases
The sUSDu to USDu exchange rate increases
No new sUSDu is minted during reward distribution
This mechanism ensures that all stakers benefit proportionally from the protocol's revenue.
3. Unstaking USDu
To exit staking, users burn their sUSDu and initiate an unstaking request.
The unstaking process includes a cooldown period:
sUSDu is burned at the current exchange rate
The corresponding amount of USDu is placed into a dedicated withdrawal contract
A 7-day cooldown applies before withdrawal is available
After the cooldown period, users can withdraw their USDu from the withdrawal contract.
During the cooldown, the user's USDu is no longer earning yield.
Key Components
1. Staking Contract
The staking contract manages:
USDu deposits
sUSDu minting and burning
Exchange rate accounting
Reward accumulation
It enforces the rules governing staking, unstaking and reward distribution.
2. Reward Distribution
All staking rewards are paid in USDu.
Rewards are deposited directly into the staking contract. This increases the total USDu backing sUSDu and causes sUSDu’s value to rise over time.
This design avoids emissions, variable payout schedules or manual reward claims.
3. Risk and Design Considerations
The staking system is designed to provide predictable behavior under all market conditions.
Key properties include:
Rewards are additive and do not reduce principal
Users cannot owe funds to the protocol through staking
Yield accrues only when the underlying strategy produces revenue
The cooldown period helps manage liquidity and system stability
FAQ
Do I need to stake USDu to earn yield?
Yes. Yield accrues only to users who stake USDu and hold sUSDu.
Why is there a cooldown period for unstaking?
The 7-day cooldown allows the protocol to manage liquidity and unwind positions without disrupting system stability.
Where is my USDu during the cooldown?
After unstaking is requested, USDu is placed in a dedicated withdrawal contract until the cooldown period ends.
Can I sell sUSDu before the cooldown finishes?
sUSDu may be transferable if secondary markets exist, but Unitas does not guarantee liquidity for sUSDu outside the staking system.
Can staking result in a negative balance?
No. Staking rewards are additive, and users cannot owe funds to the protocol.
What asset are rewards paid in?
All rewards are paid in USDu and compounded into the staking contract.
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