# 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](/protocol-overview/asia-dollar-aznd/locking.md)) #### 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 --- # 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://docs.mudigital.net/protocol-overview/how-it-works.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.