There are three layers: the Linus application layer, the smart contract layer, and the Ethereum blockchain layer.
Linus enables depositors to access decentralized, digital asset credit markets, without the need to ever touch digital assets. Linus takes care of that on your behalf. The only currency depositors touch is US Dollars.
Linus uses digital assets called stablecoins to transfer value, which is a fancy term for a digitized version of the US Dollar.
The specific stablecoin Linus uses is called USD Coin (USDC), which is issued by two major digital asset exchanges: Coinbase and Circle. USDC stablecoins maintain a $1.00 peg, enabled by a 1:1 ratio of US Dollars held in a trust account. Don’t just take our word for it - check out the audits yourself.
Ok, Linus converts my dollars into stablecoins. Then what?
Linus converts your cash deposits into USDC, and then moves them into digital asset credit markets, dubbed 'liquidity pools', which are powered by smart contracts (more on this below).
Smart Contract Layer
The smart contract layer is where the aforementioned liquidity pools live and operate.
What's a liquidity pool?
A liquidity pool is a place where people can send their digital assets like USDC, to be used or interacted with by other people, in exchange for some return. A couple examples of these markets are lending/borrowing platforms and asset exchanges. Liquidity pools typically have rules programmed into them that dictate how assets can be used, and what fees are paid in exchange. Combined, liquidity pools contain assets worth billions of US Dollars.
Demand for your dollar in these liquidity pools exceeds that of traditional financial markets, and so by relaying your deposits into them, Linus is able to generate return to provide your APY. The Linus APY returned depends on the supply and demand of digital assets into these markets, and Linus is built to leverage various liquidity pools.
Powering hundreds of thousands of transactions per day worth billions of US Dollars, Ethereum is the foundational layer upon which Linus and the smart contract-based liquidity pools operate. All Linus digital asset transactions into and out of the liquidity pools are secured using the shared, distributed ledger of Ethereum blockchain.
Learn more about Ethereum at https://ethereum.org/.