Compounding Yield Without Leverage

In traditional DeFi, users often “loop” assets—borrowing and re-depositing the same collateral multiple times—to artificially boost returns. This introduces risk of liquidation, volatility, and complex failure points.

Pi Protocol takes a safer, simpler approach. When a user deposits an RWA, the system splits that value into:

USP: A stablecoin representing the principal.
USI: A yield-bearing token that accrues interest from the underlying asset.

Because USP is liquid, users can reuse it—e.g., mint more assets, provide liquidity, or swap it—without touching the original yield stream. This allows them to earn additional returns on their USP while still collecting interest via USI.

This design enables natural compounding without leverage. Yield is generated from real assets. Users who strategically redeploy their USP can amplify returns across the ecosystem without facing the risks of margin or liquidation.