aUSD Stability Mechanism
The stability of aUSD is central to the Sumplus system. aUSD is designed to remain firmly pegged to 1 USD, regardless of market volatility in the underlying assets. This section explains the mechanisms that ensure aUSD’s peg stability.
1. Value Lock at Deposit
When users deposit supported assets (USDT, USDC, USD1, SUI, WBTC, WETH) to mint aUSD, the system records the USD value at the time of deposit.
This value becomes fixed. Regardless of whether the asset’s market price rises or falls, the redemption value for aUSD remains the same.
Example:
Deposit 100 SUI at $100 each → 10,000 USD value → mint 10,000 aUSD.
If SUI rises to $200, redemption gives back ~50 SUI (minus fees).
If SUI falls to $50, redemption gives back ~200 SUI (minus fees).
In all cases, the redemption value equals the original 10,000 USD.
This mechanism ensures that aUSD is always anchored to its original USD value.
2. Redemption at Fixed 1 USD
aUSD is always redeemable at 1 USD per token.
Redemption requires burning the same amount of aUSD, with the protocol returning the equivalent value of the original asset.
The protocol’s design means that arbitrageurs naturally correct any market deviations:
If aUSD < $1 on secondary markets → buy cheap aUSD → redeem for $1 value of assets → profit.
If aUSD > $1 → users mint new aUSD at $1 → sell at premium → price returns to $1.
Thus, market forces reinforce the peg.
3. Liquidity-Sensitive Redemption Fees
To protect the system during periods of stress, redemption fees adjust dynamically:
When pool reserves are high → fees remain low (as low as 0.1%).
When pool reserves fall below the target threshold → fees automatically increase (up to 1%) to discourage large withdrawals and stabilize liquidity.
Redemption also incurs a fixed fee of 1 aUSD to prevent micro-arbitrage abuse.
This mechanism aligns user incentives with system stability.
4. Risk Mitigation Through Hedging
For non-stablecoin deposits (SUI, WBTC, WETH), the protocol applies hedging strategies (e.g., short positions in derivatives) to neutralize price volatility risk at the system level.
This ensures that the total USD value of deposits backing aUSD remains stable, regardless of market conditions.
5. Transparency and Enforcement
The net asset value (NAV) of all pools is displayed in YieldHub, enabling users to verify the reserve strength.
Redemption logic is fully enforced by smart contracts — no centralized intervention required.s
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