Cap USD cusd

Cap USD (cUSD) is the dollar-denominated stablecoin minted by Cap, an Ethereum-based credit marketplace. Cap separates lending, borrowing, and underwriting and enforces those relationships with smart contracts. Lenders deposit whitelisted dollar-denominated assets into Cap’s reserve and receive cUSD.

The protocol’s documentation describes cUSD as being backed 1:1 by reserve assets and by a layer of financial guarantees. Underwriters escrow collateral against specific borrower exposures; that collateral is intended to be the first-loss buffer if a borrower becomes undercollateralized or defaults.

Cap also offers stcUSD, a staked, yield-bearing representation of cUSD. Users can stake cUSD to receive stcUSD and earn auto-compounding yield generated from idle reserve assets and interest paid by institutional borrowers. cUSD is therefore the base stablecoin, while stcUSD is the yield-bearing position.

The cUSD contract is deployed on Ethereum mainnet and is also listed by Cap documentation on MegaETH, Tempo, and Katana mainnets. Cap’s current website presents the product as “Verifiable Money” and describes a covered-credit platform for the US dollar.

Conventional dollar stablecoins generally give holders a payment asset but do not inherently provide access to credit-market yield, while on-chain lending protocols often expose lenders to pooled or opaque counterparty and strategy risk. Cap’s stated objective is to connect dollar liquidity with borrowers while making guarantees, collateral, and borrower exposure verifiable onchain.

Borrowers also need access to capital without selling or immobilizing productive assets, and lenders need protection if a credit strategy fails. Cap addresses this by assigning underwriting decisions to specific Underwriters, requiring collateral delegation, and liquidating that collateral when a borrower’s health factor falls below the protocol threshold. The model still carries smart-contract, market, oracle, liquidity, borrower, and underwriter risks; the documentation explicitly maintains a separate risks section and does not make a risk-free guarantee.

A lender deposits an accepted reserve asset—such as a supported stablecoin or tokenized money-market asset—into Cap’s reserve and mints cUSD. Idle reserve assets can earn rewards through their underlying instrument or integrated lending protocols. cUSD can then be staked into stcUSD, whose exchange rate reflects accumulated yield.

Before a borrower draws liquidity, an Underwriter performs due diligence and delegates collateral to support that specific borrower. The borrower can draw reserve assets through Cap’s contracts only when the required collateralization and access conditions are satisfied. Underwriters set borrower-specific risk parameters and negotiate an underwriting premium; Cap’s FAQ says accepted underwriter collateral is limited to blue-chip crypto assets, including ETH, WBTC, liquid-staking tokens, and stablecoins.

Borrowers repay principal plus the hurdle rate. The hurdle rate combines a fixed underwriting premium with a dynamic hurdle component based on a benchmark floor, external market rates, and reserve utilization. In the successful path, lenders receive the applicable yield, Underwriters receive their negotiated premium, and the borrower keeps surplus strategy yield after those costs.

If the borrower’s health factor falls below the liquidation threshold, a grace period and permissionless liquidation window apply. Underwriter collateral is sold through a descending-price Dutch auction; liquidators repay debt in exchange for collateral at a bonus, and the recovered reserve assets are redistributed to Cap’s reserve. This is the mechanism intended to keep cUSD fully backed and protect lenders against borrower credit losses, subject to the protocol’s stated risks.