> For the complete documentation index, see [llms.txt](https://pleasing.gitbook.io/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://pleasing.gitbook.io/docs/precious-metal-usd-usdpm/how-usdpm-works.md).

# How USDpm works

Rewiring how USD works for precious metals liquidity

<figure><img src="https://217962626-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FtBZ74QEzHbSbwx0W0nBo%2Fuploads%2FVy7cpUwfGnnhfF5LqveI%2F%E6%B5%81%E7%A8%8B%20(5).png?alt=media&amp;token=cd7231ff-549e-4bc0-a0e4-6826e29ac47a" alt=""><figcaption></figcaption></figure>

The USDpm revolves around three key participants:

> 1. **Depositors** — Deposit USDT/USDC, receive USDpm, and may stake USDpm to earn protocol yield. Depositors supply the liquidity that powers on-chain settlement and market depth.
> 2. **Investors** — Typically precious-metals traders (and DeFi users) who need real-time exposure to both stablecoin liquidity and metal markets (e.g., buying/selling PGOLD, hedging, or running basis strategies). They use USDpm as the transactional rail.
> 3. **Operators** — Up- and downstream physical metals businesses (vaults, refiners, dealers, market makers) that settle, finance, and hedge inventory via USDpm. Their activity generates the fees/spreads/financing income that fund USDpm staking yield, while maintaining the convertibility and real-economy linkage behind the system.
>
> In short: Depositors supply capital, Investors deploy it on-chain, and Operators convert real-world metals flows into on-chain liquidity and yield—keeping USDpm fully backed and useful 24/7.

This structure is unique because it separates capital from day-to-day operations. Backed by USDT and the underlying physical metals business, the latency and settlement risk of traditional workflows is standardized into an investable on-chain format—similar to how mortgage-backed products unlocked scale in real-estate finance. By turning lengthy precious-metals dealing into a 24/7, programmable process, USDpm delivers efficiencies that were previously inaccessible to retail participants, opening new frontiers in yield and hedge optimization.

#### USDpm is a synthetic dollar designed to finance the physical infrastructure of precious metals <a href="#usd.ai-is-a-synthetic-dollar-protocol-designed-to-finance-the-physical-infrastructure-of-ai" id="usd.ai-is-a-synthetic-dollar-protocol-designed-to-finance-the-physical-infrastructure-of-ai"></a>

Targeting 6-10% APR, it functions like a high-yield, income-linked index tied to real operating flows. As with most synthetic-dollar protocols, USDpm has three core elements:

> 1. USDpm — a fully backed synthetic dollar.
> 2. **Staked** USDpm — the yield-bearing staked counterpart to USDpm.
> 3. **Yield** — the mechanism through which the protocol generates and distributes returns.

USDpm functions similar, but by nature is not the same as a fiat stablecoin like USDC or USDT.

USDpm is a low-risk, fully backed synthetic dollar with a 1:1 conversion path to USD (subject to standard checks and settlement windows). USDpm itself does not pass through yield; instead it gives users instant metals exposure and deep market liquidity across DeFi.

**Staked USDpm** is the yield-bearing version backed by the economics of the precious-metals business. Because these assets are less liquid than fiat-backed stablecoins, USDpm stakers accrue yield for taking on that liquidity profile and may be subject to redemption periods.

**Yield** for USDpm is generated through on-chain and off-chain precious-metals activity. Depositors can earn by staking USDpm—no additional steps beyond staking. Any idle capital is preferentially held in physical gold as a defensive base and inflation hedge, with the possibility of including other precious metals (e.g., silver) in the future, as the ecosystem grows.