> For the complete documentation index, see [llms.txt](https://docs.goevolve.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.goevolve.xyz/how-it-works.md).

# How It Works

**eUSD** is a yield-bearing token on **SEI**. It represents a pro-rata claim on a **bankruptcy-remote segregated vault structure** that holds the underlying yield sleeves (e.g., **RWA yield**, **AI infrastructure yield**, and **SEI lending yield tokens**) and reflects strategy performance through a periodically updated **Net Asset Value (NAV)**, net of applicable fees.

Users interact with eUSD through two core flows:

* **Mint (instantaneous)**
* **Redeem (request → queue → payout)**

***

#### Mint (Instantaneous)

When you deposit a supported asset into Evolve to mint **eUSD**, the system mints **eUSD** at current NAV to your wallet, representing your pro-rata claim on the eUSD vault.

***

#### Redemption (Redeem Queue → Payout)

To redeem **eUSD**, you submit a redemption request which enters the **RedeemQueue**. You may cancel the request any time before it is processed.

Once processed:

* the redeemed **eUSD** is **burned**, and
* the underlying assets are transferred to the specified receiver wallet address (per the supported payout rails).

***

#### Yield Distribution

Yield is distributed by **updating eUSD NAV** to reflect portfolio performance, net of any applicable fees.

* **Positive performance (NAV ↑):**\
  If the new NAV is above the **High Water Mark**, the increase is not applied as a single step. Instead, the NAV update is **vested over a defined epoch period**, reducing the ability to front-run a known NAV jump by minting right before it or redeeming right after it.
* **Negative performance (NAV ↓):**\
  If the new NAV is below the current NAV, the NAV update is applied **instantly**, ensuring losses are reflected immediately.\
  Even in this scenario, front-running is mitigated because redemptions can be configured to settle at the **lower of Current NAV or End-of-Epoch NAV**, preventing users from exiting at a temporarily higher NAV before accounting is finalized.

***

#### Redemption SLAs & Fees

Expected redemption processing times and all applicable fees are disclosed on the **eUSD factsheet / product page**, so users can evaluate liquidity and costs before minting.


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