USDp
USDp is the native Polaris dollar.
It tracks the value of the US dollar using overcollateralized minting positions backed by pETH.
It exists entirely onchain and is designed to remain censorship resistant. Anyone can independently verify the collateral backing every USDp in circulation, with immutable code enforcing minting and redemptions.
Using USDp
USDp is minted by depositing pETH as collateral and opening an overcollateralized minting position.
Each position must be opened at or above the minimum collateral ratio of 115%, meaning every $1 of USDp debt requires at least $1.15 worth of pETH collateral at minting. Market movements can later reduce that ratio, making positions that fall below 115% eligible for liquidations.
Once minted, USDp functions as a digital dollar that users fully own. It can be sent anywhere on Ethereum, used across DeFi applications or integrated into payment flows without relying on any centralized parties. Because USDp is issued by immutable contracts and does not include freeze or blacklist functions, it is designed to remain composable across DeFi.
On top of that, users who want to earn protocol-native yield can deposit USDp into the USDp Earn Vault, which distributes both USDp and pETH from a portion of the interest paid by USDp minters and pETH liquidation gains. The exact mechanics are explained in the Earn Vaults section.
Maintaining the Peg
The USDp peg is supported by pETH overcollateralization and by market participants using the protocol’s peg mechanisms whenever arbitrage opportunities arise.
When USDp trades above one dollar, new USDp can be minted at its $1 target value against pETH collateral and sold into the market. The additional supply creates downward pressure on the market price.
When USDp trades below one dollar, market participants can redeem USDp for the underlying collateral, which removes USDp from circulation and reduces the circulating supply.
| USDp price | Arbitrage | Result |
|---|---|---|
| Above $1 | Mint and sell USDp | Supply increases, and price returns toward $1 |
| Below $1 | Redeem USDp | Supply decreases, and price returns toward $1 |
Together, these mechanisms adjust the circulating supply in response to peg conditions.
These arbitrage paths operate through Adaptive Peg Defense, which distributes the collateral, debt, and fees created by direct minting and redemptions across open positions.
Two interest-rate mechanisms complement this peg design.
The Peg Stability Rate is the main interest rate paid by USDp minters. It adjusts in response to minting and redemption activity, helping the market expand when USDp demand is high and contract when redemption demand is high.
The Protocol Safety Rate is an always-active market-internal redistribution mechanism. It moves value from higher-leverage positions to lower-leverage or collateral-only positions, rewarding positions that strengthen the market’s collateral health.
These mechanics mean the headline interest rate does not necessarily reflect the effective cost of minting. Minters can receive protocol-generated value as pETH and, in some market conditions, may experience low or even negative effective rates.
