FAQ

1. What is ELUSD?

ELUSD is a synthetic dollar that generates yield from the price difference between Korean crypto markets and global markets — also known as the “Kimchi Premium” arbitrage. Users deposit USDT to mint ELUSD, and they earn a share of the protocol’s trading profits by staking. The target peg is 1 ELUSD ≈ 1 USDT.

2. How is the 18% APY generated?

The protocol monitors the Kimchi Premium in real time and repeatedly buys during undervalued periods and sells during overvalued periods. This automated cycle captures structural arbitrage returns. Any KRW exposure created during trading is hedged, which reduces volatility and turns the gains into stable yield.

Our target yield is based on five years of Kimchi Premium data and multiple strategy models. Some backtest configurations produced over 40% annual returns. However, markets are never guaranteed. We prioritize downside protection and long-term robustness, so we set the initial target yield at 18% APY. As the strategy scales up, we expect the sustainable long-term yield to gradually normalize to around 10%+.

3. Is the yield fixed or variable?

The initial target is 18% APY, but actual returns may change depending on market conditions — such as the size of the Kimchi Premium, trading frequency, and trading costs. The protocol continuously monitors real market data to keep yields stable.

4. Where is the collateral (USDT) stored, and how is it verified?

All USDT flows related to minting, redemption, and reserve management are transparently tracked and verified through on-chain smart contracts or the zkTLS secure API. zkTLS provides proof of balances and fund movements without exposing sensitive source data, allowing users to reliably verify the collateral status.

5. How does redemption work?

Users can redeem ELUSD for USDT at a 1:1 rate at any time. Redemptions are processed with a 1 business-day waiting period.

Redemption fees depend on the Kimchi Premium at the time of minting vs. the time of redemption:

• If the Kimchi Premium is lower when redeeming than when minting → 0% fee

• If it is higher, the fee equals the difference.

There is no maximum redemption limit.

Examples

• Mint premium 0.8% → Redeem premium 0.3% → 0% fee

• Mint premium 0.8% → Redeem premium 1.0% → 0.2% fee

6. How does ELUSD keep its 1 USDT peg?

Because anyone can always mint 1 ELUSD for 1 USDT and redeem 1 ELUSD for 1 USDT (with a 1-day settlement delay), arbitrage keeps the price near the peg.

The protocol aims to maintain a stable price within 0.995–1.005 USDT. If the price moves outside this band, traders step in to take profit and bring the price back.

• Price above 1 USDT : mint ELUSD at 1 USDT → sell on market → more supply → price goes down

• Price below 1 USDT : buy cheap ELUSD → redeem for 1 USDT → supply decreases → price goes up

7. Are there any risks?

Yes. No system has zero risk, but ELUSD manages and publicly reports key risk indicators.

Smart-contract risk Bugs or oracle issues may cause loss of funds. → Audits, limited permissions, multi-sig, time-locks, and phased deployment help reduce this risk.

Operational risk Delays or issues in custody, transfers, or partner systems → All USDT movements for minting, redemption, and reserves are verifiable on-chain or through zkTLS proofs, without revealing sensitive data.

Market/external risk Sharp FX moves or shrinking Kimchi Premium may reduce returns. → The protocol uses built-in FX hedging and adjusts trading triggers (buy/sell zones) with AI to keep trading efficient. Secondary strategies may be added when needed.