KernelDAO

How KUSD manages risk: designed for real-world credit 🧵

1/ KYB-verified access, not anonymous exposure

Credit is extended only to KYB-verified institutions. Every borrower is known, vetted, and assigned explicit limits before accessing liquidity.

2/ Defined limits, enforced by code

Each borrower has explicit credit limits set upfront. They can’t draw more, extend duration, or change terms mid-cycle, because contracts enforce the rules, not people.

3/ Real-time LTV monitoring

Risk isn’t checked weekly or daily. Positions are monitored continuously. If ratios move toward limits, the system reacts immediately.

4/ Chainlink Proof-of-Reserves

Backing is verifiable on-chain via Chainlink PoR feeds, covering both on-chain and off-chain components. Transparency is built into the system.

5/ Automated liquidations + insurance vaults

When risk thresholds are crossed, protections activate automatically without waiting on human intervention. Insurance vaults are designed to handle rare edge cases so losses aren’t pushed onto users.

KUSD isn’t secured by promises.
It’s secured by rules, verification, and layered defenses.

How KUSD is built for safety

Safety isn’t a feature of KUSD.
It’s the foundation.

KUSD is designed around real payment flows and institution-grade credit rails, so risk control comes first.

What that means in practice:

⍛ Short-term credit only
Capital is used for settlements, remittances, and payment cycles - minutes to days, not months or years.

⍛ Verifiable reserves
KUSD integrates Chainlink Proof of Reserve.
No PDFs. No trust-based disclosures. Reserves are referenceable on-chain.

⍛ Real repayment sources
Repayment comes from incoming payment flows and settlement finality - not future promises.

⍛ Controlled access
Borrowers go through KYB/KYC.
Screened counterparties, known exposure.

⍛ Proven infrastructure
Built on the same risk and ops stack that has already handled $2B+ on-chain.

Bottom line:
KUSD is built for safety through structure - not incentives.

Global payments move ~$200T every year.
Yet trillions sit idle because settlement is delayed while liquidity is needed instantly.

This isn’t a payments problem.
It’s a credit problem.

PayFi needs credit against payment settlement receivables.
TradFi needs credit against commercial transaction receivables.
DeFi already has liquidity.

But today:
⍛ DeFi liquidity stays trapped in crypto-native loops
⍛ Payments and commerce lock capital while waiting for settlement

What’s missing is short-term, self-liquidating credit backed by real receivables.

That’s where Kred comes in.

Kred introduces the Internet of Credit:
Receivable → Collateral → Credit → Settlement → Repayment

DeFi stablecoins fund real payment flows upfront.
Borrowers repay when settlement completes.
Liquidity is recycled, and rewards are generated from real repayment activity.

This model connects DeFi liquidity to real-world payment and commerce flows - under predictable rules, with embedded repayment.

Read the full breakdown here 👇
https://blogs.kerneldao.com/blog/the-missing-credit-layer-how-kred-connects-payment-flows-to-defi-liquidity

The countdown is on: just 90 minutes until the 2025 retrospective AMA kicks off! 🌱

Join us for exciting updates from @GoneMultichain.

P.S. get ready for some hot alpha 👀

⏰ 3PM UTC

Don't miss it!

Tune in tomorrow for the 2025 retrospective 🌱

We're going live at 2:30 PM UTC.

Be there!

We recently highlighted an overlooked issue in global finance: while $200T+ flows fast yearly, the underlying system still depends on pre-funding and idle capital due to timing mismatches.

Stablecoins improved speed but left a short-term credit gap, causing trillions to remain unproductive.

This insight led to Kred and its core tool, KUSD - offering on-demand credit backed by real repayment flows, where users can earn rewards from real-world usage.

Huge thanks to the teams at the Ethereum Foundation and Chainlink for collaborating with us on that research and helping ground it in real infrastructure constraints.

If you haven’t revisited it in a while, it’s worth a read 👇

📘   kerneldao.com/internet-of-cred...

2025 was huge for us.

Join our Head of Community & Governance, for a live AMA to recap milestones, key decisions, and how the year went.

📆 Jan 9, 2026
⏰ 3 PM UTC

Bring your questions.

KernelDAO December 2025 Recap 🍿

✦ Ecosystem growth

⍛ E-Mode unlocked for wrsETH <> WETH on Aave v3 #Base market, enabling higher LTV and more capital-efficient looping on Base.

⍛ wrsETH supply caps on Aave v3 $INK market filled rapidly, with current supply exceeding $42M.

⍛ On Aave v3 $AVAX , rsETH reached $60M TVL, fully utilizing the 20k ETH supply cap.

⍛ Kernel Points and Programmatic EIGEN rewards were strategically reallocated across protocols as Season 4 progresses.

✦ KernelDAO product & research

⍛ KUSD as Leap for $KERNEL: Positioned Kred as a new pillar of the ecosystem, expanding into real-world credit, payments, and settlement - reducing reliance on crypto cycles by anchoring to the $200T global payments market.

⍛ Kred’s Christmas Gifts: Outlined fixes for structural issues in global finance, including pre-funding ($9–11T locked idle), settlement delays, frozen capital, FX risk, and year-end liquidity crunches - unlocking just-in-time liquidity and productive stablecoins.

✦ Gain vaults performance

⍛ High Gain (hgETH) remained the #1 ETH vault for 4 consecutive months, delivering 10-14% rewards through market volatility.

⍛ Airdrop Gain (agETH) delivered ~10% weekly rewards, with $40M+ TVL, powered by institutional strategies from K3 Capital and August Digital.

⍛ Stable Gain (sbUSD) crossed the $10M TVL milestone, delivering a ~13% reward rate via UltraYield’s risk-adjusted strategies.

December was a month of quiet, steady progress - deeper integrations, stronger liquidity, and continued momentum toward the Internet of Credit.

Stay tuned for what’s next.

KernelDAO 2025 Wrapped 🎁

2025 was a year of building, shipping, and scaling.

Across Kelp, Gain, and Kernel - the TVL peaked at $2.4B+, establishing a multi-product ecosystem operating at real scale.

More than 550,000 real users participated across the ecosystem. Not bots. Not vanity metrics. Real users stacking real rewards and turning early vision into sustained usage.

The $KERNEL token launched in one of the most closely watched TGEs of the year. Chaotic in the best way.
Within days, $KERNEL was listed on 45+ exchanges, including Binance, Coinbase, and Upbit, and peaked with ~$1.5B in 24h trading volume.

KernelDAO expanded beyond restaking in 2025.
Kred, our real-world asset and credit initiative, stepped out of stealth with a research paper co-authored alongside the Ethereum Foundation and Chainlink, followed by the Kred Litepaper and the introduction of KUSD - pushing the stack into credit and settlement infrastructure.

Conviction showed up on-chain.
Over 9.55M $KERNEL tokens were staked by long-term believers - not flippers, not paper hands.

To support the next wave of builders, a $40M ecosystem fund went live, bringing serious capital behind restaking and credit infrastructure on BNB Chain.

By year-end, our ecosystem products were live across 10+ chains.
The team showed up IRL too - ETHDenver, EthCC, KBW, SmartCon - hosting flagship and side events throughout the year.

2025 laid the foundation.
2026 is where compounding begins.

See you next year.

Composability is where sKUSD compounds its advantage.

As a standard ERC-20, sKUSD isn’t confined to Kred.
It can move across DeFi - lending markets, AMMs, and structured products, without breaking the underlying credit engine.

Most real-world credit systems are closed loops.
Capital goes in, rewards come out, liquidity stays locked.

On-chain, composability changes that.

sKUSD represents live, reward-bearing credit exposure, not a terminal asset.

At the base layer:
Stablecoins → KUSD → sKUSD → interest from real-world borrowers.

That’s the Kred engine.

Because sKUSD is ERC-20, it can be:
⍛ used as lending collateral
⍛ paired in stable AMMs
⍛ integrated into structured strategies

All while continuing to earn.

Example:
A user holds sKUSD earning rewards from global payment liquidity.
They use it as collateral, borrow conservatively, and deploy capital elsewhere - while sKUSD keeps earning in the background.

This creates a layered reward stack:
⍛ base: real-world credit interest
⍛ DeFi: capital efficiency via composability

No emissions.
No synthetic leverage.

For protocols, sKUSD offers:
⍛ non-emission rewards
⍛ low-volatility collateral
⍛ returns not tied to crypto beta

As adoption grows, utilization, credit deployment, and liquidity scale together.

Composability doesn’t change risk - it reallocates it.
Credit risk stays with real borrowers; DeFi decides how efficiently it’s used.

sKUSD is a portable, productive credit primitive.

Credit that moves.
Liquidity that compounds.
Infrastructure that scales.

The gap is closing.

Vanguard just opened crypto ETF access to millions of traditional investors.

TradFi's largest players are no longer asking "if" - they're building "how."

The gap between traditional finance and crypto is closing fast with Vanguard bringing retail into crypto.

Two systems. One direction.

And KernelDAO sits at the convergence with Kred serving as the credit layer bridging TradFi receivables to DeFi rails.

When Vanguard allocates capital on-chain, it needs settlement infrastructure. When businesses tokenize payroll and remittances, they need credit rails.

That's the layer we're building.

The gap isn't disappearing. It's being bridged.

#MacroInsights

Stability through volatility.

December 2025 has already seen massive crypto liquidations with fear hitting extreme levels.

Yet through this chaos, market-neutral strategies continued to operate as designed.

Gain vaults remained consistent:
✧ High Gain: ~12% reward rate | ~$54M TVL
✧ Stable Gain: 11%+ reward rate | ~$11M TVL

This period of volatility reminded everyone of a core DeFi principle: in stress events, strategy quality determines stability.

#MacroInsights

LRTs driving L2 growth.

rsETH market size on $ARB grew ~75% month-to-date, contributing significantly to the $450M increase that helped Arbitrum become the largest L2 on Aave with over $2B total market size.

DRIP incentives targeted ETH derivatives for leveraged looping strategies.

rsETH is proving its utility beyond restaking, becoming an essential DeFi collateral.

When LRTs integrate into lending infrastructure, adoption scales.

#MacroInsights

Automation over manual management.

DeFi vault strategies hit the mainstream. Automation removes manual monitoring.

Users deposit --> vaults optimize across protocols --> rewards auto-compound.

Gain delivers this across automated strategies that adjust to market conditions without constant oversight.

#MacroInsights

What survives the cycle.

Bull markets amplify narratives. Bear markets reveal infrastructure.

2017 built $ETH. 2020 built lending. 2024 built restaking.

Every cycle, attention shifts. The protocols solving real problems compound quietly.

KernelDAO's ~$1.5B across $ETH, $ARB, $OP, #BNBChain came from restaking and vaults that function through volatility.

Now building institutional credit through Kred.

Narratives launch projects. Utility sustains them.

#MacroInsights

Build for cycles not hype.

Hype cycles fade. Products that solve real problems stay.

KernelDAO's ~$1.5B TVL survived multiple market cycles because liquid restaking and vault strategies deliver consistent value - regardless of sentiment.

Now extending that approach to institutional credit through Kred.

Sustainable growth comes from solving actual problems, not chasing narratives.

#MacroInsights

The fragmentation reality

DeFi liquidity is split across $ETH, $ARB, $OP, #Base . Users aren't consolidating, they're spreading.

Protocols forcing single-chain bets miss the point. KernelDAO's ~$1.5B TVL spans multiple chains because that's where demand actually exists.

Capital doesn't wait for everyone to pick the same chain. It flows where it finds opportunity.

Multi-chain isn't a choice anymore. It's the baseline.

#MacroInsights

The utility era

Stablecoins process trillions in volume. Governments are writing frameworks. Institutions are integrating them into infrastructure.

The question is shifting: which stablecoins add value beyond just holding $1?

KUSD will earn from real institutional credit flows—payroll, remittances, trade finance. Backed by actual receivables, composable across DeFi.

Not just stable. Productive.

#MacroInsights