# USDHN & Earn

This page explains **what USDHN is**, **how its peg is defended**, and **how Earn (Stability Pool)** works from a user point of view.

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**Not investment advice** — Stablecoins can depeg, and Earn is not risk-free. Do your own research.
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## At a glance

* **USDHN** is minted by borrowers against overcollateralized collateral.
* Peg defense relies on **redemptions** and market incentives.
* **Earn** is a USDHN pool that absorbs liquidations and receives rewards.
* APY is variable and depends on protocol conditions.
* USDHN includes **OFT (omnichain)** cross-chain transfer functionality.

## USDHN in one picture

<figure><img src="https://758864285-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F6shl07RLB1YEOikuiffi%2Fuploads%2FyqNZ2REO24EcpcC1O72F%2FUSDHN%20EN%201.png?alt=media&#x26;token=8b2c41de-368f-48dd-b4cb-80b4c43d7365" alt=""><figcaption></figcaption></figure>

## What is USDHN?

USDHN is a Kaia-native, overcollateralized, USD-pegged asset minted from Hann Finance Troves.

* **Mint:** you deposit collateral and mint USDHN.
* **Use:** you can hold USDHN, swap it, provide liquidity, or deposit into Earn.
* **Repay:** you repay USDHN to reduce or close your debt.

## How does the peg work (conceptually)?

USDHN uses a *self-correcting* design:

* When **USDHN trades below $1**, redeeming USDHN for collateral becomes attractive, which can reduce supply.
* When **USDHN trades above $1**, minting USDHN can become more attractive, which can increase supply.

For the full mechanism and borrower impact, see [Redemptions & Risk](https://hann-finance.gitbook.io/hann-finance/protocol/redemptions-and-risk).

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**\[TBD] Exact fee and parameter formulas** — Peg mechanics include fees and market parameters defined on-chain. This page only explains the conceptual behavior.
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## What is Earn (Stability Pool)?

Earn is a protocol pool where users deposit USDHN.

In many CDP designs, the Stability Pool is the pool that absorbs liquidations:

* during liquidations, deposited USDHN can be used to offset bad debt
* in return, depositors receive liquidation proceeds and/or protocol-funded rewards

## How to use Earn

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#### Step 1: Get USDHN

You can obtain USDHN by minting it (opening a Trove) or by swapping in markets.

* Minting flow: [Borrowing & Liquidation](https://hann-finance.gitbook.io/hann-finance/protocol/borrowing-and-liquidation)
* Swapping flow: [StableSwap DEX](https://hann-finance.gitbook.io/hann-finance/protocol/stableswap-dex)
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#### Step 2: Deposit into Earn

Choose the Earn pool for the collateral branch you want exposure to, then deposit USDHN.

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Earn pools can differ by collateral branch. Your liquidation proceeds may be paid in different collateral assets.
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#### Step 3: Monitor and manage

Track:

* your USDHN deposit size
* rewards / liquidation proceeds
* system conditions that can affect returns and risk
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#### Step 4: Withdraw when needed

You can withdraw your remaining USDHN (and claim any available rewards) subject to protocol rules.
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## Main risks to understand

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{% tab title="Peg risk" %}
USDHN can trade above or below $1 in the market.

Even with redemption mechanics, peg deviations can persist under stress.
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{% tab title="Earn risk" %}
Earn is not a bank deposit.

Depending on events, depositors may end up holding collateral assets received from liquidations.
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{% tab title="Smart contract & oracle risk" %}
Failures in contracts, integrations, or price feeds can cause losses or force protocol pauses.
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## Deep dives (optional)

* Liquidations and Earn mechanics: [Liquidations & Earn Deep Dive](https://hann-finance.gitbook.io/hann-finance/resources/deep-dives/liquidations-and-earn)
* Redemption mechanics (with CR examples): [Redemptions Deep Dive](https://hann-finance.gitbook.io/hann-finance/resources/deep-dives/redemptions)

## Next reads

* Borrower-side peg impact: [Redemptions & Risk](https://hann-finance.gitbook.io/hann-finance/protocol/redemptions-and-risk)
* Swapping and LP: [StableSwap DEX](https://hann-finance.gitbook.io/hann-finance/protocol/stableswap-dex)
* Full risk list: [Risk Disclosure](https://hann-finance.gitbook.io/hann-finance/risks/risk-disclosure)