> For the complete documentation index, see [llms.txt](https://docs.keystonefi.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.keystonefi.xyz/start-here/reserve-asset.md).

# What is ksUSD?

**It is a vault share, not a pegged dollar.** ksUSD defends no peg and is not redeemable for a fixed $1. Deposits mint at the current share price and redemptions burn at it, so a share is worth whatever the vault's assets are worth. The price is meant to rise as yield accrues — and it can fall. A bad unwind or a jitoSOL depeg lands in the share price rather than being absorbed somewhere else.

Under the hood it's deliberately small: one Anchor program, one vault account the program itself controls, and one token.

## What the vault does

* **It stakes.** Holds jitoSOL, which earns 4.94% APR — but earns it in SOL, which is no use if you account in dollars.
* **It hedges.** It shorts the same amount of SOL on Phoenix, so SOL's price moves cancel and what's left is the staking yield in dollars. When funding is positive, the short is paid to sit there on top.
* **It parks.** When funding stops covering the cost of the hedge, the vault closes the short, sells the jitoSOL, and lends everything as USDC on Kamino — always USDC lending, never tokenized T-bills.

It picks its mode from an on-chain funding signal and rebalances on a schedule — nobody steers it. Which mode runs is not a judgement call: it falls out of whether staking plus funding beats lending, and the vault recomputes that break-even from live rates every cycle. [Strategy & Modes](/how-it-works/strategy-and-modes.md) has the full mechanics, the funding threshold, and the guardrails around switching.

## Where the yield comes from

Three sources, and they are not equal — the first is the engine and the other two are conditional:

| Yield source              | Active when             | Mechanism                                                                                                                                                                                              |
| ------------------------- | ----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |
| **jitoSOL staking yield** | Normal basis            | **Most of the return.** 4.94% APR, embedded in the jitoSOL/SOL rate. This is the spot leg of the hedge.                                                                                                |
| Phoenix SOL-PERP funding  | Normal basis            | A kicker, not the engine. The vault shorts the perp and collects funding whenever traders are paying it. It has averaged +1.74% APR since the venue opened, but by month it has run from −14% to +14%. |
| USDC lending carry        | Buffer, reserve, parked | Lent on the Kamino USDC reserve, currently 3.69%. Everything the vault holds runs here whenever hedging isn't worth it, which makes lending the floor.                                                 |

Staking accrual **is** hedged, and that is the point rather than a detail. jitoSOL gains against SOL at roughly 4.94% a year — that gain *is* the staking yield. Selling it forward is what turns it into a dollar return instead of a growing pile of SOL whose value floats.

Read the funding row as an average with wide months inside it, not as a rate you can add to the other two. The vault collects more than the average — it parks when funding turns, so its hedged days ran +4.31% — but removing funding from the backtest entirely costs only **81 bps**, because reacting to its swings costs nearly as much as its positive months pay. The full leg-by-leg accounting is in [Historical simulation](/how-it-works/strategy-and-modes/historical-simulation.md#where-the-yield-comes-from).

***

## Related

* [Whitepaper](/how-it-works/whitepaper.md) — full design, NAV math, security, risk disclosures
* [Deposit](/start-here/deposit.md) · [Withdraw](/start-here/withdraw.md) · [Check position & NAV](/start-here/check-position.md)
* [Risk management](/start-here/volatility-risk-management.md) — drawdown guard, slippage bounds, dwell timers, depeg and staleness guards
* [Fee structure](/start-here/fees.md) — 0% management, 20% performance above the high-water mark