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

# How it works

USDREFI is designed to be a set-and-forget regenerative savings experience. Here's the complete flow.

## Deposit

1. Verify your identity via [Self](/architecture/identity-and-tiers.md) to unlock vault access
2. Approve USDC spend and deposit into the USDREFI vault
3. Receive USDREFI tokens at a 1:1 rate representing your position
4. The Foundation Safe deploys your capital into curated regenerative credit positions

The vault enforces per-user caps based on your identity tier, and a global cap to manage total exposure.

## Earn Yield

Your deposited capital is deployed into curated lending sources — starting with Quipu (Colombian AI-powered microcredit) via Textile infrastructure. Yield from these real-world loans flows back to the protocol monthly.

Rewards are distributed through [Merkl](/architecture/rewards.md) as a combination of USDREFI and $REFI tokens. You claim rewards on-demand via on-chain Merkle proofs, or compound by re-depositing claimed USDREFI back into the vault.

## Exit

USDREFI does not support direct vault withdrawals. To exit, you swap USDREFI for USDC on the [Uniswap V4 USDREFI/USDC pool](/architecture/uniswap-pool.md).

USDREFI is designed to trade close to $1 but is not a hard-pegged stablecoin — the swap is a market transaction. Protocol-owned liquidity and LP incentives maintain pool depth for healthy exits.

{% hint style="info" %}
If the Uniswap pool ever loses critical liquidity, the Foundation Safe can enable emergency direct vault withdrawals as a safety measure.
{% endhint %}

## The USDREFI Flywheel

USDREFI creates a self-reinforcing regenerative cycle:

1. **Deposits** flow through the Credit Curation Framework into curated lending sources
2. **Yield** is generated from real-world regenerative loans
3. **Yield splits three ways** — to users (rewards), to the protocol (liquidity & operations), and to $REFI incentives
4. **All three streams converge** back into regeneration: users re-deposit and compound, the protocol deepens liquidity and funds new sources, and incentives attract new participants

Every dollar of yield strengthens the system's capacity to regenerate.