ELUSD’s core yield comes from the Kimchi Premium. The protocol monitors market data in real time and automatically executes in two directions depending on the premium level.
1) When the Premium Is High
The domestic USDT price is overvalued vs. global markets. The protocol sells USDT to realize the spread and hedges KRW/USD FX risk during the KRW-holding window.
Flow (Spot/Fiat-based Hedge)
Sell USDT → KRW on a Korean exchange (spread realized).
Withdraw KRW to the exchange-linked bank account.
Remit KRW to the FX-hedging platform.
Convert KRW → USD on the platform and hold (FX risk hedged).
Flow (Futures-based Hedge)
Sell USDT → KRW on a Korean exchange (spread realized).
On a global futures venue, open an offsetting KRW short of equal notional (with N× leverage, as applicable).
2) When the Premium Is Low
The domestic USDT price is undervalued vs. global markets. The protocol uses KRW to accumulate USDT, positioning for future sell opportunities when the premium widens.
Flow (Spot/Fiat-based Hedge)
On the FX-hedging platform, convert USD → KRW.
Remit the converted KRW to a bank account, then deposit to the exchange.
Buy USDT with KRW and hold (for future sale).
Flow (Futures-based Hedge)
Buy USDT with KRW on the exchange.
On the global futures venue, close the existing KRW short.
