kfUSD and kafUSD

Two tokens, and the difference between them is the whole design. kfUSD is a dollar backed by the stablecoins that minted it. kafUSD is kfUSD you have locked, and it is the thing the protocol's fees are paid to. Holding the first earns nothing; holding the second earns.

Minting kfUSD#

Collateral is USDC, USDT or USDe. It goes in, kfUSD comes out, and the fee is 0.05% — five basis points, charged in kfUSD, deducted from what is minted rather than added on top.

The mint entry point is role-gated, and that is a structural decision rather than a lock on the door. The function takes two independent numbers — how much collateral arrives and how much kfUSD to issue against it — and does not derive one from the other. That flexibility is what lets a mint be denominated correctly across collaterals with different decimals, and it is exactly why the caller has to be an authorised minter: the role, not an on-chain ratio check, is what guarantees the supply is backed.

Redemption carries no such gate, which is the asymmetry that matters. Anyone holding kfUSD can redeem it.

Where your collateral sits#

Minting splits the collateral in half:

That ratio is a parameter, not a constant, and 50/50 is what it is set to. The idle half is the honest part of the design: a stablecoin that deploys everything is one that cannot pay a redemption without a queue.

Redeeming#

Name an amount and name the collateral you want back. You get it one for one, less the same 0.05%, provided the contract holds enough of that particular token — the idle balance is per asset, so redeeming into a collateral nobody minted with will tell you so rather than silently substituting another.

Two floors apply. The smallest redemption is 0.001 kfUSD, which exists because kfUSD carries eighteen decimals and USDC and USDT carry six: below that the conversion would round to nothing. And the conversion itself is checked rather than trusted — if scaling eighteen decimals down to six would lose value, the transaction reverts instead of quietly keeping the remainder.

A full round trip therefore costs 0.1%. Both legs are capped at 3% by the contract, so the ceiling is known even though the setting is not fixed.

Locking for kafUSD#

Lock kfUSD and you get kafUSD one for one. From that moment your share of every fee the treasury receives accrues to you, in proportion to your kafUSD balance against everyone else's.

Coming back out takes three moves, and it is not the same shape as the going-in:

• Request the amount. Unlike the staking vault, this one names a figure up front, and it is that figure the cooldown applies to.
• Wait seven days. Enforced on chain.
• Complete it, naming an asset. The kafUSD is burned then, not at the request, and you are handed back the same asset you locked — normally kfUSD.

That last point is the one people trip on. Unlocking does not return collateral. Leaving the system entirely is unlocking and then redeeming, two decisions rather than one, and each has its own step.

How the yield actually reaches you#

The treasury keeps a running accumulator per asset instead of a per-holder balance. When fees arrive, a 10% performance fee is taken off the top and sent to the protocol's fee vault — the same vault the lending fees go to, deliberately, so there is one place to account for revenue rather than two. The remaining 90% moves the accumulator, and your claim is the difference between the accumulator now and where it stood when your balance last changed.

The practical consequences:

• Yield is claimed, not rebased. Your kafUSD balance does not grow; a claimable amount does. Claim one asset, claim all of them at once, or compound a claim straight back into more kafUSD.
• The performance fee applies only to fees arriving after it was set. Past distributions have already moved the accumulator and are not retroactively re-cut. The ceiling on it is 20%.
• An unset fee recipient means the fee is waived and depositors take everything, which is the safe default rather than the intended state.

What feeds the treasury#

kfUSD's mint and redeem fees are pushed to the treasury as they are charged. The lending protocol's cut of interest goes to the same fee vault. And the staking vault harvests from the treasury, which is how protocol revenue ends up moving an stKLD balance — see holding KLD as stKLD.

Every charge in the system, with its rate and its ceiling, is on the fee page. The contracts are kfUSD.sol, kafUSD.sol and YieldTreasury.sol, and the pages are at /stable.