The Credit Spectrum
DeFi has mastered one type of credit: overcollateralized loans. Deposit $150 of ETH, borrow $100 of stablecoins, pray the market doesn't dump. It works, but it's primitive.
asUSD operates across the entire credit spectrum, from bulletproof overcollateralized positions to sophisticated protocol-to-protocol credit lines. Each layer carefully isolated, mathematically bounded, and contributing to the ecosystem's yield.
Layer 1: Overcollateralized (The Foundation)
This is DeFi's comfort zone—Astera Lend operates here with battle-tested mechanics:
Users deposit ETH, wBTC, or blue-chip assets
Borrow asUSD at 50-80% LTV ratios
Liquidations protect the system
Interest flows to asUSD stakers
Nothing revolutionary here—and that's the point. This conservative base generates steady yield while funding more innovative layers above.
Layer 2: Algorithmic Market Operations (The Innovation)
Here's where traditional stablecoins stop and asUSD accelerates. AMOs mint asUSD without user collateral, but with mathematical guarantees:
Peg Stability Modules
Pre-minted asUSD waits in reserve
Only deploys to specific pools when price deviates
Automatically maintains peg while generating arbitrage profits
Can't leak into circulation—only moves between protocol-controlled positions
Liquidity Bootstrapping
New protocols need liquidity from day one
AMO provides asUSD paired with 100% of token supply
No tokens exist outside the pool = no unbacked asUSD can escape
Projects launch with deep liquidity instantly
Layer 3: Business-to-Function Credit (The Acceleration)
This is where asUSD becomes infrastructure, not just another stablecoin. B2F credit means lending to smart contracts themselves:
Isolated Lending Markets
External protocols need liquidity to function
asUSD provides credit lines to vetted markets
They handle their own collateral and liquidations
Interest flows back to asUSD stakers
Real Example from the Docs:
Morpho vault receives asUSD credit line
External users deposit sUSDe as collateral
Borrow asUSD to leverage their positions
Pay 10%+ interest that flows to stakers
The protocol takes the credit risk, asUSD takes the yield. No governance votes. No manual management. Just code executing strategy.
Layer 4: Business-to-System Credit (The Frontier)
The cutting edge—credit lines to entire systems:
Perpetuals Exchanges
Traders need counterparty liquidity
asUSD provides the float
When traders lose (statistically likely), yields flow to stakers
When traders win temporarily, system absorbs variance
Cross-Protocol Strategies
Yield aggregators need seed capital
asUSD provides initial liquidity
Strategies generate returns across DeFi
Profits flow back to the ecosystem
The Risk Cascade
Each layer inherits the risks below it, adds new ones, but keeps them isolated:
Layer 1: Liquidation Risk → Managed by oracles and keepers
Layer 2: Operations Risk → Contained by mathematical bounds
Layer 3: Cost of Borrowing Risk → Limited by credit caps
Layer 4: Unbacked Circulation Risk → Controlled by historical modelingA perpetuals exchange drawing credit doesn't affect your Lend position. An experimental AMO failing doesn't touch the core pool. Risk flows in one direction: down.
Why This Matters
Traditional Finance has hundreds of credit products: mortgages, corporate bonds, trade finance, bridge loans. Each serves a specific need, operates at different risk levels, generates different yields.
DeFi has been stuck with one: overcollateralized loans. Same risk. Same yield. Same limitations.
asUSD brings the full spectrum on-chain. Not through complex governance or manual underwriting, but through isolated Facilitators that can each operate at their optimal risk level.
The Yield Stack
As credit moves up the spectrum, yields increase:
Overcollateralized: 5-10% (safe, stable)
AMO Operations: 8-15% (algorithmic, efficient)
B2F Credit: 10-20% (managed, scalable)
B2S Credit: 15-30% (sophisticated, selective)
All flowing to the same staking pool. All contributing to asUSD holders. All without requiring holders to understand or manage the complexity.
The Competitive Reality
Maker/Sky is trying to move up the credit spectrum through real-world assets—complicated, slow, requires trust in legal systems.
Aave/Compound remain stuck at Layer 1—overcollateralized only, yields fragmented across pools.
Frax experiments with AMOs but doesn't extend credit beyond their own protocol.
asUSD is building the full stack. On-chain. Permissionless. Today.
This isn't about being another stablecoin. It's about being the credit layer that DeFi needs to actually compete with traditional finance.
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