KUSD does not earn rewards because markets go up.
It earns rewards because payments settle.

Most on-chain rewards are tied to market conditions or incentives. KUSD rewards are tied to settlement activity so the right way to understand it is the loop below:

Institution draws credit line liquidity → Settles → Repays → Capital is reused

KUSD sits directly on top of this cycle and sKUSD is staked KUSD that earns automated rewards.

No leverage.
No emissions-driven incentives.
No speculative reflexivity.

Just short-term credit doing real work, repeatedly.

The Real Bottleneck in Global Payments

Modern finance looks instant, but settlement still runs on buffers and pre-funding. In 2023, the payments industry processed ~3.4T transactions worth ~$1.8 quadrillion.

Source - McKinsey & Company

Cross-border flows alone approached ~$1 quadrillion in 2024.

• Pre-funding is mandatory: money gets parked before settlement happens.

• Cross-border: more intermediaries + more delays = bigger buffers.

• Result: massive liquidity sits idle simply to keep payments flowing.

Kred’s role is to replace “idle buffers” with on-demand settlement liquidity that can earn rewards.

Step 1: Liquidity Becomes KUSD

When liquidity providers deposit USDC or USDT, they receive KUSD as a 1:1 receipt token representing their claim on the underlying capital.

At this stage, the capital characteristics change fundamentally:

• It is no longer exposed to crypto market price movements

• It is no longer speculating on market direction

• It is allocated for deployment into short-term settlement credit

KUSD represents a claim on capital that will be continuously deployed into real payment flows. The underlying stablecoins don’t sit idle—they’re ready to be matched with verified businesses needing settlement liquidity.

Step 2: KUSD Becomes sKUSD (The Rewards Layer)

KUSD can be staked into sKUSD, which is where the rewards mechanism activates.

sKUSD serves two functions:

1. Rewards accrual: As deployed liquidity is repaid through settlement cycles, the interest earned flows to sKUSD holders

2. DeFi composability: sKUSD is an ERC-20 token that can be used across DeFi protocols while still earning from underlying credit activity

The separation between KUSD (receipt) and sKUSD (rewards-earning) creates a flexible structure: KUSD remains liquid and transferable, while sKUSD captures the economic value generated by the credit infrastructure.

Step 3: A Payment Business Draws Liquidity

KYB-verified institutions like PSPs, remitters, FX desks, marketplaces, draw liquidity when they need to settle transactions.

Key characteristics:

• Drawn only when required

• Used for minutes, hours, or days

• Bound by transparent credit limits and terms

Think of it as just-in-time settlement liquidity: drawn when needed, repaid as transactions settle.

Step 4: Real Transactions Settle

Once deployed, that liquidity enables:

• Customer payouts

• Cross-border transfers

• FX conversions

• Invoice and trade settlements

This is where value is actually created.

Rewards are generated by transaction completion and settlement.

As payments settle:

• Fees are earned

• Receivables clear

• Cash flows resolve

The credit is self-liquidating.

Step 5: Borrowers Repay → sKUSD Earns Rewards

As settlements complete, borrowers repay:

• Principal

• Plus a predefined interest rate

Those rewards flow directly to sKUSD holders.

There’s no dependency on:

• Market sentiment

• Token appreciation

• Continuous refinancing

Repayment is driven by settlement finality, not speculation.

Step 6: The Same Capital Is Reused

This is the compounding engine behind sKUSD.

Once repaid:

• Capital is immediately available again

• It can fund the next settlement cycle

• Often multiple times per week

This liquidity can support many real-world transactions per year.

Rewards are generated by capital velocity, not long lockups.

Why sKUSD Is Not a Speculative Rewards Product

sKUSD does not rely on:

• Emissions

• Leverage

• Liquidity mining

• Market reflexivity

If payment volume exists, rewards exist.
If settlements happen, value accrues.

The system scales with:

• Global payment flows

• Cross-border commerce

• Trade and settlement velocity

Not with crypto market cycles.

KUSD = High Rewards-bearing Stablecoin

sKUSD = Settlement-Native Rewards

sKUSD is best understood as settlement-native rewards, not DeFi rewards generating from real-world financial activities.

It replaces:

• Idle pre-funded accounts

• Nostro buffers

• Expensive short-term bank credit

With:

• On-demand liquidity

• Transparent on-chain rules

• Short-duration, self-liquidating exposure

For liquidity providers, this means:

• Capital is always working

• Rewards come from real economic activity

• Risk is tied to duration and settlement. Not speculation

The Core Insight

KUSD earns from within the payment loop through sKUSD

Capital → enables settlement → gets repaid → gets reused

Over and over again.

That’s where the rewards come from. That’s why they’re durable.