Collateralization Process

All USP and USI tokens are minted against fully collateralized tokenized real-world assets (RWAs). Accepted assets include U.S. Treasury Bills, money market instruments, and insurance-linked receivables (IIAs). Each asset must meet minimum liquidity, creditworthiness, and maturity standards set by protocol governance.

Collateral is deposited into protocol-controlled vaults. Once locked, the asset is algorithmically split into two parts:

• Principal: Tokenized as USP (stablecoin)

• Yield: Tokenized as USI (NFT-based, interest-bearing)

This structure allows users to unlock liquidity via USP while retaining ongoing returns via USI. Vaults are non-custodial and enforce smart contract-based control over collateral until maturity or redemption.

To maintain transparency, vault balances, maturity schedules, and risk flags are visible on-chain. Each vault is linked to a specific asset class, enabling granular control over risk-weighting, reward rates, and haircut parameters.

Redemption requires both USP and USI to be returned to the protocol. This ensures that full value is reclaimed only when the original asset has matured and yields have been accounted for.