VUSD

VUSD is a fully-backed, over-collateralised stablecoin that lives natively inside the Vaultera Protocol and stays transparent by design. It is engineered to hold a steady value pegged to the U.S. dollar, with VUSD issued by users the moment they need it, always within the mint cap limits set by Vaultera Governance. The peg is defended through open-market arbitrage together with the over-collateralisation guarantees baked into the Vaultera Protocol.

VUSD is an ERC-20 token deployed on Ethereum whose issuance is coordinated through a facilitator model. A facilitator is a contract that Vaultera Governance has authorised to mint and burn VUSD, and each one answers to its own governance-defined mint cap. Structuring supply this way lets new use cases for VUSD come online quickly while keeping control over the total supply firmly decentralized.

The VUSD Token contract defines dedicated roles that govern facilitators and the amount each one is allowed to mint:

Every facilitator is stored on-chain as a Facilitator struct made up of the fields described below.

The most direct way to move ERC-20 tokens is transfer, which sends tokens to any address and needs no approval beforehand. The catch with transfer is that only the token holder can call it, so a smart contract cannot invoke it on its own to pull funds out of a user (EOA).

When tokens must move from inside a smart contract function, transferFrom is the method to reach for. The transferFrom function only succeeds if the sender has already approved the spender address for at least the transfer amount . That approval can be granted in one of two ways:

The classic ERC-20 approve path asks the token holder to submit an on-chain transaction that authorises a chosen spender for a given amount .

EIP-2612 permit offers an alternative form of token approval built out of two parts.

The benefit of choosing permit rather than approve is that the transaction's gas can be covered by an address other than the token owner, and that the total count of transactions falls because you can batch the permit combined with a separate action, a good example being supplyWithPermit in Vaultera Protocol v3.

A facilitator is a contract address that Vaultera Governance has whitelisted with both the FACILITATOR_MANAGER_ROLE and BUCKET_MANAGER_ROLE , which together grant it permission to mint and burn VUSD tokens. Every facilitator is bound by its own bucketCapacity , which sets a hard ceiling on how much VUSD it may create. By enforcing these limits, facilitators help preserve VUSD's peg and extend its reach across many platforms and use cases.

The following functions let facilitators interact directly with the VUSD token:

The VUSD token contract additionally exposes functions to manage facilitators:

Details about a facilitator can be read back through these:

The Vaultera v3 Ethereum Market acts as a core facilitator for VUSD. A user mints VUSD by depositing whitelisted collateral assets into the Vaultera Protocol and then borrowing VUSD against that position. Because the flow relies on conventional over-collateralisation, both the protocol's safety and the stablecoin's dependability are upheld.

Working with VUSD through the Vaultera Pool Facilitator closely mirrors working with an ordinary Vaultera reserve asset, aside from two key differences:

Below you'll find technical guides for every VUSD action plus their contract references.

Minting is carried out via the borrow function on the Vaultera v3 Ethereum market. Creating VUSD works almost exactly like borrowing any other reserve. First, an address needs enough collateral, which is established by approving and then calling supply on the Vaultera Pool with an accepted collateral asset. After the address holds enough collateral, it can borrow up to a maximum collateral factor set by the makeup of its collateral assets.

Because VUSD is minted rather than borrowed from suppliers, VUSD faces no limits tied to available liquidity; instead, the Facilitator cap together with collateralization requirements set the ceiling on how much VUSD may be minted, as computed below.

availableFacilitatorCap = vusdReserveData.vaulteraFacilitatorButcketMaxCapacity - vusdReserveData.vaulteraFacilitatorBucketLevel

See core functions for more information on integrating Vaultera borrow functionality.

VUSD is paid back exactly like any other asset, by approving the Pool contract to spend VUSD tokens (through an approval transaction or a signed permit with repayWithPermit).

See core functions for further details on integrating Vaultera repay capabilities.

Whenever an address holds a VUSD borrow position, it can be liquidated according to the very same rules that apply to every other collateralized address. Should the health factor of that VUSD borrow drop beneath one — a state reached once the total borrow value climbs above the weighted average of the liquidation thresholds of the pledged collateral assets — then any address becomes free to trigger a liquidationCall on the Pool contract.

The liquidationCall settles as much as 100% of the outstanding VUSD borrow position in return for a matching USD valuation of the collateral together with a liquidation bonus.

Because VUSD is not borrowed in the way a standard Vaultera reserve is, a dedicated Facilitator steps in to reproduce the flashloan behavior offered by the Vaultera Pool.

The FlashMinter Facilitator carries a minting cap that is distinct from the one on the Vaultera Pool. Because every FlashMint transaction settles within a single transaction, no VUSD is ever left minted against this Facilitator, and the cap is enforced on a per-transaction basis.

FlashMint proves handy across a range of use cases, including liquidations, debt switches, and peg arbitrage. The VusdFlashMinter smart contract exposes the functions listed below:

function maxFlashLoan(address token) external view override returns (uint256)

function getFee() external view override returns (uint256)

function flashLoan(    IERC3156FlashBorrower receiver,    address token,    uint256 amount,    bytes calldata data) external override returns (bool)

Explore the developer flash loan guide to dive deeper into building your own flash loan integrations.

A Peg Stability Module (PSM) is a contract that permits swapping two tokens against one another at a fixed, predetermined ratio. The VUSD Stability Module (VSM) builds on the strengths of established PSM designs while extending them in a number of directions to better defend VUSD's peg. The VSM is built to enable conversions between VUSD and governance-approved tokens, supported by a collection of features aimed at flexible operation and careful risk management.

The VSMRegistry is a smart contract holding a list of all VSM instances. Ownership of this contract sits with the Vaultera Governance Short Executor.

Every token pairing within the stability module maps to a VSM or VSM4626 contract instance, which serves as the VUSD facilitator and the entry-point for buy and sell functionality.

The VSM4626 contract is a specialized form of the VSM built to accept ERC-4626 tokenized vault shares as its exogenous token.

The parameters and periphery contracts that govern how the module operates are outlined here:

The VSM brings a versatile Price Strategy framework that lets the module tailor its pricing logic to prevailing market conditions or particular strategic goals. Both fixed and dynamic pricing strategies are supported, so pricing can shift in reaction to live market data or to conditions set in advance. The first release concentrates on a straightforward fixed 1:1 pricing strategy for the sake of clarity and stability, while leaving room to evolve toward dynamic strategies whenever DAO governance calls for it.

Every VSM instance is paired with a FeeStrategy contract that fixes a percentage fee on buy and sell conversions, with the proceeds routed to the Vaultera DAO treasury.

The exposure cap is a parameter set by Vaultera DAO Governance that caps the largest quantity of an exogenous token the stability module is permitted to hold.

Should the price of the exogenous token drift away from its agreed ratio, the freeze role can be invoked by the Vaultera DAO — or delegated to some entity such as autonomous agents or contracts — to react quickly and suspend conversions.

One concrete realization of the freeze role is the OracleSwapFreezer contract. It relies on decentralized oracles and price bounds set by Vaultera Governance to freeze or unfreeze based on oracle conditions.

Should risk in an exogenous token spike suddenly, the VSM offers Last Resort Liquidations as a means of liquidating that exogenous token. In the gravest scenarios this contract role empowers the DAO to halt VSM functionality altogether and liquidate the underlying holdings of exogenous tokens.

Every VUSD token comes into existence on Ethereum mainnet. VUSD then becomes reachable on additional networks through an infrastructure built on cross-chain messaging.

The BCIP protocol has received approval from Vaultera Governance to serve as the messaging bridge that carries VUSD between networks.

Moving VUSD between networks begins with either a lock (on Ethereum mainnet) or a burn (on other networks) action on the source network; once the cross-chain message clears validation, a matching release (on Ethereum mainnet) or mint (on other networks) action then fires on the destination chain.

The VUSDBCIPTokenPoolEthereum contract handles the locking and burning of VUSD on Ethereum and on other chains, letting VUSD maintain a presence throughout many DeFi ecosystems.

VUSD Token Deployments :

VUSD BCIP Subgraph :

The VUSD Liquidity Committee (VLC) launched in October 2023 with a single mandate: safeguarding deep, resilient liquidity for the VUSD stablecoin. It began life as a governance proposal and started out with a lean, focused team. Following a strong initial 3-month trial, it was integrated into the Vaultera Liquidity Committee.

The following duties sit with the VLC in support of VUSD:

The VLC's performance metrics and VUSD liquidity targets are published in full on the VUSD Analytics platform provided by LedgerCraft.

Further detail on the mandate and scope of the VUSD Liquidity Committee lives over in Vaultera Governance forum.

VUSD Stewards is a complementary entity stood up in April 2024 to manage VUSD market parameters with far greater agility, letting VUSD scale in step with whatever market conditions prevail. The source code for the VUSD Steward contracts lives on GitForge.

The VUSD Stewards decide whether, and by how much, to move each parameter below, always within pre-set thresholds ratified by Governance:

As new liquidity pools spin up and rewards flow across them, the DAO needs to be able to raise the VUSD Borrow Cap quickly whenever VUSD drifts above $1. The VUSD Stewards are empowered to lift the VUSD Borrow Cap on short notice to keep VUSD from trading above the peg. In a single action, the VUSD Stewards may raise the VUSD Borrow Cap by up to a threshold of 50M units, to a total borrow cap of 100M.

The Borrow Rate has to move in measured steps so the ecosystem can grow without shocks. Whenever the trailing 30-day average price of VUSD sits outside the $0.995 - $1.005 band, the VUSD Stewards may shift the Borrow Rate by at most 500bps in any 2-day period, never exceeding a ceiling of 25% APR.

The VUSD Stewards are drawn from the Growth (VXG), Risk (SentinelLabs), and Finance (LedgerCraft + vaultkey) Service Providers, and act through a 3 of 4 multi-sig.