How it Works
The Mu Digital protocol provides DeFi users with access to a diversified pool of USD-denominated, principal-protected real world assets (“RWAs”) through a dual token structure which allows users to choose their yield based on risk/reward preference
Two Product Offerings
AZND (Asia Dollar)
Credit backed USD yield token designed for capital stability
Senior risk tranche, overcollateralized by the muBOND junior tranche (~118% at inception)
80-90% of the yield from the Asset Pool is allocated to the AZND locking contract (see locking)
muBOND
Credit backed USD yield token designed for higher potential returns
First loss credit tranche; returns get paid after AZND returns have been achieved
Designed to absorb losses first in exchange for excess spread
Reprices periodically to reflect performance of underlying portfolio
10-20% of the yield from the Asset Pool is allocated to muBOND holders
Underlying Asset Pool
The underlying portfolio consists of high quality fixed income assets held with reputable TradFi custodians. These assets are all denominated in USD (no FX risk) and are principal protected at maturity
Principal protection comes in the form of contractual agreements of the asset borrowers to pay back principal and all stipulated interest payments at the end of the duration of a credit agreement. Principal protection is not a guarantee of no loss. It is the structural prioritization of repayment and recovery in the event of default
These assets include, but are not limited to:
Government bonds
Corporate bonds
Bank bonds
High Yield bonds
Private Credit
We target a gross APY of 7-10% for the Asset Pool, although returns may deviate from these targets subject to markets and the performance of the underlying portfolio
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