Sperax USD (USDs)
A yield bearing crypto-collateralized algorithmic stablecoin on the Arbitrum network

USDs is now a 100% collateralised stablecoin and it will become algorithmic at 1% per year. The documentation will be updated soon with all the relevant details

USDs is a hybrid (crypto-collateralized and algorithmic) stablecoin which generates auto-yield natively. Currently, USDs is live on Arbitrum, the largest Layer-2 Ecosystem of Ethereum. It is the largest algo-stablecoin on Arbitrum and has achieved $20M TVL in the first 2 months since launch. Eventually, Sperax will build a system of interoperability so that USDs will be natively deployed to all major blockchain platforms.
The highlights of this protocol:
  1. 1.
    Hybrid Model - USDs will be explicitly collateralized by a pool of eligible crypto-assets and implicitly by the protocol through the Sperax (SPA) governance token to stabilize the uncollateralized component algorithmically. SPA is the governance and value accrual token of the Sperax ecosystem.
  2. 2.
    Dynamic Transition between Algorithmic and Collateralized Stabilization - The exact composition of the algorithmically stabilized component and explicitly collateralized component is dynamic in nature. It adjusts based on time and market conditions.
  3. 3.
    Auto-yield - Users holding USDs in their wallets automatically earn organic yield. No staking is required by the end user. Users do not need to spend gas calling the smart contract to claim their yield.
  4. 4.
    Layer 2 native — Cheaper transaction fees on Arbitrum make this protocol retail investor-friendly
The growth of the decentralized finance (DeFi) space has spearheaded the adoption of stablecoins. However, existing stablecoins like fiat backed stablecoins (USDT, USDC) are centralized, over collateralized stablecoins (DAI) are capital inefficient and algo-stablecoins (like Basis, Terra) are hard to bootstrap and tend to experience periods of high volatility. USDs has combined the best of existing stablecoin designs by featuring the price stability benefits of explicit collateral, but adds the scalability benefits from partial algorithmic stabilization. This design makes USDs highly scalable and trustless and it will be a completely decentralized stablecoin after the launch of the governance protocol.
For algorithmic stabilization, a dual token model is used with SPA supply absorbing the price volatility of USDs. For minting USDs, the protocol collects eligible crypto-assets and SPA tokens. The crypto-assets are locked in the protocol as collateral and SPA tokens are burnt. While redeeming USDs, the protocol unlocks collateral and mints SPA. The elastic schedule of SPA supply helps contract or expand the fraction of USDs supply that is algorithmically stabilized.
One of the key innovations introduced by USDs is a dynamic reliance on crypto collaterals and algorithms to provide stability, capital efficiency and scalability. This design allows us to rely on crypto collateral at genesis, and then to shift towards an algorithmic-based stability mechanism once the mechanism has proven its efficacy and there is high demand for USDs. This mechanism is likely to benefit both investors and users by taking advantage of changes in market conditions in real time.
To further influence money supply dynamics, the protocol is paying an adjustable yield rate to USDs holders. The yield rate is a function of the aggregate collateral ratio, the collateral composition and profit sharing between USDs holders and SPA stakers. Yield is generated organically by investing a part of the collateral in other audited decentralized projects, like Curve. A part of the yield earned (in the form of collateral tokens) is used to purchase USDs from the open markets and directly distribute them to USDs holders in the form of auto-yield.The other part of the yield will be distributed to SPA stakers when the staking protocol is launched.
Last modified 8d ago
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