# Overview USDR is a decentralized stablecoin system designed to support a predictable and sustainable borrowing strategy for ETH. It combines a collateralized stablecoin treasury with tokenized bond vaults, allowing the protocol to steadily accumulate ETH while rewarding users who participate. The main components are: 1. **USDR Treasury:** lets you mint and redeem USDR stablecoins using supported assets like USDC or WETH. 2. **USDR Bonds:** An ERC4626 tokenized vaults where you can stake USDR for fixed periods to earn rewards, similar to traditional government bonds. ### Why Does This Matter? Borrowing ETH Predictably The ultimate design of the system is to allow the Treasury to borrow ETH in a controlled and predictable way. Here’s how it works: 1. **Users Mint USDR:** Treasury accumulates stable collateral (USDC, WETH, etc.). 2. **Users Stake in Bonds:** Locked USDR provides the protocol with stable, time-bound capital. 3. **Treasury Borrows Against USDR:** Using the locked liquidity, the protocol can borrow USDC from lending markets. 4. **Treasury Buys ETH:** Borrowed USDC is converted into ETH, growing reserves in a predictable manner. 5. **ETH Exposure Drives Rewards:** Over time, ETH appreciation and DeFi yield strategies generate returns, which flow back to bondholders as rewards. This loop ensures that every user action minting stablecoins or staking them in bonds contributes directly to the protocol’s ability to borrow ETH in a sustainable, non-speculative way. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://rezerve.gitbook.io/protocol/mechanics-usdr/overview.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.