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DUSD (Mint, Borrow)

DUSD is Alto’s native stablecoin and the unit of account inside all markets. For collateral checks, interest accrual, and liquidations within the protocol, DUSD is treated as 1 USD. Anchoring all markets to a single dollar-denominated asset keeps risk calculations consistent across different collateral types and simplifies accounting.

Where DUSD comes from​

DUSD appears in positions in two distinct ways, depending on the market type:

  • Borrow Markets: DUSD is borrowed from liquidity previously supplied by lenders.
  • Mint Markets: DUSD is newly issued by the protocol against posted collateral, subject to a market-level debt ceiling.

These paths are intentionally separate. Borrowing reallocates existing DUSD; minting expands supply in a controlled manner.

Borrow Markets​

In a Borrow Market, lenders deposit DUSD into a pool and earn variable interest. Borrowers post collateral and draw DUSD from that pool. The amount available to borrow depends on supplied liquidity, and each position must remain below the market’s maximum loan-to-value threshold. When a new borrow is opened, an opening fee is charged. Ongoing interest paid by borrowers is distributed to the DUSD lenders in that market.

Mint Markets​

In a Mint Market, the protocol creates new DUSD against posted collateral. A configurable debt ceiling caps the total DUSD that can be minted in that market at any time. Positions accrue interest while open. Both the opening fee and the ongoing interest from mint positions are routed to ALTO stakers, reflecting that minted DUSD does not rely on third-party DUSD suppliers.

Internal pricing and risk​

Inside the lending system, DUSD is priced at 1 USD for all health-factor and liquidation logic. If a position breaches its liquidation threshold, Alto performs a partial liquidation that sells only the collateral required to restore a safe LTV. This applies identically in Borrow and Mint Markets, with market-specific parameters controlling thresholds and incentives.

Fees and interest flows​

Fee routing follows the market type:

  • Borrow Markets: opening fee to stakers; ongoing interest to DUSD lenders.
  • Mint Markets: opening fee and ongoing interest to stakers.
  • Liquidations: a defined share of liquidation fees to stakers.

Keeping these flows consistent around DUSD provides a clear separation between supplier yield in Borrow Markets and protocol revenue in Mint Markets.

Circulation beyond markets​

Once in circulation, DUSD can be transferred and integrated wherever supported. Within Alto, DUSD is an accepted payment asset when exercising Alto Reward Options to acquire ALTO at a discount, linking stablecoin usage to governance ownership without conflating borrowing with issuance.

Summary: Borrow Markets move existing, lender-supplied DUSD to collateralized borrowers. Mint Markets create new DUSD against collateral within a debt ceiling. Internally, DUSD is fixed at 1 USD for risk and accounting, and fee flows differ by market type to align incentives for lenders, minters, and stakers.