# sELUSD

sELUSD is a yield-bearing token minted when you stake ELUSD. It functions as an index token that reflects your pro-rata share of the staked assets and the cumulative return generated by the strategy.

When a user stakes ELUSD, they receive sELUSD of equal initial value. Over time, the sELUSD↔ELUSD exchange rate accretes (rises) to automatically reflect staking rewards (target 18% APY).

### Staking

Staking deposits your ELUSD into the protocol to participate in the Kimchi Premium arbitrage strategy; the realized profits are shared with stakers.

<table><thead><tr><th width="200.47174072265625">Item</th><th>Details</th></tr></thead><tbody><tr><td>Deposit asset</td><td>ELUSD</td></tr><tr><td>Minted token</td><td>sELUSD</td></tr><tr><td>Staking fee</td><td>None</td></tr><tr><td>Staking reward</td><td>Target 18% APY</td></tr><tr><td>Staking term</td><td>No fixed term</td></tr></tbody></table>

At inception, 1 ELUSD = 1 sELUSD. As strategy profits accrue, the sELUSD index (exchange rate) increases.\
Your token count stays the same, but the exchange rate changes, so on exit you receive more ELUSD per sELUSD.

### Unstaking

Unstaking converts your sELUSD back to ELUSD.

The amount of ELUSD you receive is determined by the sELUSD↔ELUSD exchange rate at the time of conversion.

* Waiting period: None (instant)
* Unstaking fee: None
* Conversion formula:  `ELUSD_received = sELUSD_amount × ExchangeRate_now`&#x20;
  * `sELUSD_amount` : Your sELUSD balance
  * `ExchangeRate_now` : Current sELUSD → ELUSD rate (reflects cumulative yield)
* 예시:
  * `sELUSD_amount = 100` , `ExchangeRate_now = 1.18` → `ELUSD_received = 118`
  * Put simply, with an exchange rate of 1.18, 1 sELUSD redeems for 1.18 ELUSD, representing 18% cumulative yield.

### Value Mechanism & Stability

The value of sELUSD accretes over time based on the realized returns from the protocol’s Kimchi Premium arbitrage strategy.\
The sELUSD↔ELUSD exchange rate acts as an index of cumulative performance: as the protocol performs, the rate rises.

Users crystallize the accrual by unstaking (converting sELUSD back to ELUSD). This structure is conceptually similar to other staking-style synthetic assets (e.g., Ethena’s sUSDe, Falcon Finance’s sUSDf), yet sELUSD is differentiated by its focus on realized arbitrage yields in the Korean market premium.
