# What is reUSD ?

### reUSD ( Basis - Plus ) <a href="#reusd-basis-plus" id="reusd-basis-plus"></a>

**TL;DR**\
reUSD is a low-risk, yield-accruing token designed to generate stable returns from a blended portfolio of assets. Its base rate is calculated as the weighted average of (i) deployed capital earning the risk-free rate and (ii) undeployed capital capturing the Ethena basis trade, plus a 250 bps spread. Structurally, reUSD sits as the senior tranche, with losses first absorbed by reUSDe and Re Capital, providing an additional layer of protection. Yield accrues on-chain, while capital is deployed off-chain via Surplus Notes to provide regulatory capital, supported by transparent, oracle-verified collateral reporting.

#### 1. Purpose & Capital Stack Role

* Senior tranche:\
  reUSD sits at the top of the capital stack, above both reUSDe and the reinsurance company’s equity. Losses are absorbed first by the reinsurer’s equity and then by reUSDe, meaning reUSD is only impacted in more extreme scenarios.
* Lower risk, stable yield:\
  In exchange for its senior position, reUSD earns a more conservative spread (250 bps), prioritizing capital preservation and yield stability over higher return potential.
* Regulatory structure:\
  Capital is deployed through a §114 Trust structure, supplying regulated, admitted assets to the reinsurance program while maintaining on-chain transparency.

***

#### 2. Capital Waterfall (Losses Absorbed Top-Down)

* Reinsurance company equity — first loss
* reUSDe — absorbs losses after equity is exhausted
* **reUSD — most senior, last to be impacted**

***

#### 3. Capital Deployment via Surplus Notes <a href="#id-3.-capital-deployment-via-surplus-notes" id="id-3.-capital-deployment-via-surplus-notes"></a>

1. **On‑Chain Staking** : Users mint reUSD by depositing admitted assets into the Insurance Capital Layer (ICL).
2. **Off‑Ramp to 114 Trust** : The protocol converts a portion of the pool into cash/T‑Bills held in a §114 Reinsurance Trust Account, providing regulatory collateral to partner reinsurers.
3. **Surplus Notes** : The off‑chain entity issues surplus notes to the ICL, contractually locking in principal protection and an interest rate matching the Applicable APY.
4. **Custody & Visibility** : All trust assets are held with an independent bank/custodian. Off-chain balances are attested daily by The Network Firm (with read-only account access) and published through a Chainlink oracle.

***

#### 4. Liquidity & Redemption Framework <a href="#id-4.-liquidity-and-redemption-framework" id="id-4.-liquidity-and-redemption-framework"></a>

| **Tier**                     | **Capacity**                                                                | **Settlement Speed**           | **Source of Funds**                                              |
| ---------------------------- | --------------------------------------------------------------------------- | ------------------------------ | ---------------------------------------------------------------- |
| **Instant “Smooth‑Buffer”**  | Up to an **actuarially determined** buffer. At least 50% of reUSD deposits. | instant                        | Idle on‑chain liquidity + cash sweep                             |
| **Scheduled / Queue Window** | Once instant buffer is exhausted                                            | Processed in queue/window mode | Matured trust assets + surplus‑note repayments                   |
| **Re‑Liquidity**             | As actuarial releases occur                                                 | Continuous top‑up of buffer    | Actuary authorizes transfer of released collateral back on‑chain |

The protocol’s reserve policy targets keeping a substantial liquid on-chain share of reUSD backing to support immediate redemptions, with the remainder allocated under reinsurance and trust-account constraints. Redemption and transaction fees currently start at 6 bps (0.06%).

***

#### 5. Transparency & Risk Controls <a href="#id-5.-transparency-and-risk-controls" id="id-5.-transparency-and-risk-controls"></a>

* **Chainlink Feeds** : Real‑time NAV, buffer utilization, surplus‑note balances.
* **Fireblocks Custody** : Multisig policies governing idle on‑chain assets.
* **Audit Trail** : Smart-contract audits plus daily off-chain reserve attestations and custody ownership checks by The Network Firm.
* **No Redemption Gating Tokens** : Price increases accrue to *all* holders.

***

#### 6. Key Advantages vs. TradFi Alternatives <a href="#id-6.-key-advantages-vs.-tradfi-alternatives" id="id-6.-key-advantages-vs.-tradfi-alternatives"></a>

1. **Yield > Money‑Market Funds**: By dynamically switching to the basis trade when advantageous, reUSD often outperforms pure T‑Bill strategies.
2. **Regulatory Capital Utility**: Surplus Note structure channels DeFi liquidity into highly secure (NAIC‑compliant) reinsurance collateral.
3. **On‑Chain Composability**: Compatible with Curve, Pendle, and Morpho for secondary yield opportunities.
4. **Principal Shielding**: Surplus note rank and segregated trust accounts shield depositor principal from operating losses.

***

#### 7. Disclaimer & Forward‑Looking Notes <a href="#id-7.-disclaimer-and-forward-looking-notes" id="id-7.-disclaimer-and-forward-looking-notes"></a>

reUSD is **not available to U.S. persons** and may be restricted in other jurisdictions. Yield sources and redemption schedules are subject to change based on market conditions, regulatory guidance, and Ethena program terms. This document is for informational purposes only and does not constitute investment advice.<br>


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