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

# thUSD

***

### How It Works

<div data-with-frame="true"><figure><img src="/files/o05iuiwBBf0FKqMDi4ds" alt=""><figcaption></figcaption></figure></div>

thUSD is minted 1:1 with USDC or USDT. Under the hood, deposits back a delta-neutral position consisting of three components:

1. **thGOLD** — Theo's yield-bearing gold product, which captures carry from gold exposure.
2. **CME Futures Hedge** — A short hedge on CME gold futures that neutralizes price exposure, isolating the yield component.
3. **Liquid Reserves —** Idle cash for redemptions and liquidity remain in t-bills.

The result is a position that earns gold-derived yield with no net directional exposure to gold prices. Users hold a stablecoin; Theo manages the strategy.

{% hint style="info" %}
All gold related positions are delta-neutral, meaning gold price moves do not affect the backing of thUSD.
{% endhint %}

#### Buy → Stake → Earn

1. **Buy** thUSD using USDC or USDT on venues such as Uniswap and Curve
2. **Stake** thUSD to receive sthUSD
3. **Earn** yield from the delta-neutral gold strategy

The underlying capital is deployed into the gold carry position. Yield accrues to sthUSD holders. thUSD itself does not accrue yield directly — it must be staked.

{% hint style="info" %}
Whitelisted entities can mint / redeem thUSD directly. If you're interested, please contact the Theo team.
{% endhint %}

***

### Where does the yield come from?

thUSD generates yields of **6–10% APY**, sourced entirely from gold markets.

| Source                    | Description                                                                              | Amount |
| ------------------------- | ---------------------------------------------------------------------------------------- | ------ |
| thGOLD                    | Yield from Theo's yield-bearing spot gold product.                                       | 2-5%   |
| Gold Futures Basis & Roll | The spread between spot gold and gold futures on CME generates consistent positive carry | 3-5%   |
| T-Bills                   | Liquid reserves and idle cash is held in the form of t-bills                             | 3-4%   |

***

### Why Gold?

Most stablecoin yields come from one of three places: lending markets, token rewards, or crypto perpetual funding rates. All of these are crypto-native, cyclical, and compress when the market cools.

Gold is different.

The carry trade in gold — earning the spread between spot and futures — exists independently of crypto market conditions. It's a function of interest rates, storage costs, and institutional demand.

This gives thUSD a yield source that is:

* **Uncorrelated to crypto cycles** — yield doesn't disappear in a bear market
* **Backed by one of the deepest markets in the world** — gold is a $13T+ asset class
* **Institutional-grade** — CME futures are regulated, highly liquid, and well-understood

***

### Contracts & Architecture

thUSD lives on **Ethereum** with three core contracts:

| Contract         | Purpose                                               |
| ---------------- | ----------------------------------------------------- |
| **thUSD**        | The stablecoin token (ERC-20)                         |
| **sthUSD**       | The staked/yield-accruing version of thUSD (ERC-4626) |
| **thUSD Minter** | Handles 1:1 minting and redemptions via USDC/USDT     |

#### thUSD vs sthUSD

|                   | thUSD                                  | sthUSD                                                 |
| ----------------- | -------------------------------------- | ------------------------------------------------------ |
| **Description**   | The base stablecoin, pegged 1:1 to USD | The staked version that accrues yield                  |
| **Use Cases**     | Payments, transfers                    | Earning yield                                          |
| **Composability** | Standard ERC-20, integrates anywhere   | ERC-4626, composable in DeFi protocols that support it |