Sperax
Search
K

Auto Yield

USDs earns organic yield for holders and the yield is paid out in USDs approx. every 7 days
USDs stands out from other stablecoins thanks to its inflation fighting Auto-Yield feature. USDs is novel in the stablecoin ecosystem, because it requires no action by the user. Users do not need to stake USDs nor spend gas to claim their yield. One simply holds USDs, and their wallet balance will grow.
The collateral received for minting USDs is deployed in other audited, defi projects to generate organic yield. USDs collateral earns yield in the form of reward tokens and swapping fees from the pools. This yield is shared between USDs holders and SPA stakers (The split is 50% for Auto-Yield and 50% for SPA buyback and burns. This share can be changed through governance).
Gas free yield: 50% of yield generated on USDs collateral is used to mint USDs. This USDs is distributed to anyone who holds USDs in their wallet.
The actual yield generated depends on the yield rate of the strategies where collateral is deployed. However, the protocol will try to maintain a target yield of 11% APY (maximum) so that USDs holders get stable returns irrespective of market conditions. Any yield generated over 11% is stored in the protocol to help fund the APY for lean periods when actual yield generated is less than 11%.

Collateral and Yield Strategies

Sperax USD protocol utilizes stablecoin collateral to generate yield. Collateral is first transferred to yield strategies based on the individual collateral allocation limits and authorized collateral allocation strategies. Strategies like Aave, Compound and Stargate are simple single sided yield strategies. Stablecoin collateral is deployed in these DeFi protocols and interest income or reward token earned from these strategies is collected (harvested) and transferred to a contract where anyone can convert these tokens to USDs. Dual token liquidity provider strategies involving two stablecoins are also available and can be used to earn yield. Such strategies use a pair of stablecoins and deploy them on DEXs (Decentralized exchanges) to provide liquidity. Such strategies earn fees and DEX rewards. List of yield strategies, amount of collateral allocated is displayed on the Analytics page of Sperax USD dApp and this data is readily available for the public by querying the smart contracts.
  • USDC:
    • Compound (USDC)
    • Aave (USDC)
  • USDC.e:
    • Compound (USDC.e)
    • Aave (USDC.e)
  • DAI:
    • Aave (DAI)
  • USDT:
    • Aave (USDT)
    • Stargate (Stargate-LP USDT)
  • FRAX:
    • Stargate (Stargate-LP FRAX)
  • LUSD:
    • Aave (LUSD)

Decentralizing the harvesting and distribution of Yield

Harvest functions in strategies transfer the yield generated from the various strategies back to the main USDs vault where they are further distributed back to USDs holders in the form of auto-yield. Calling those functions will be available to the public for a pre-configured incentive. Currently the incentive is set at 0.1% of the total net yield collected. After the yield is collected in various contracts, those yield tokens will be available for everyone to swap for USDs tokens without slippage. All USDs collected in the above step is split between revenue for the veSPA holders and USDs holders (Auto yield). After the yield is collected in the form of USDs it will be released at a steady rate which can then be further distributed in the form of auto-yield based on certain pre-set parameters. Anyone would be able to call a function to distribute the auto-yield. Initially the protocol would be set to distribute auto-yield when there is enough yield to satisfy a minimum APR of 8% and a maximum APR of 10% based on the amount of USDs token balance.

Eligibility

USDs held in EOA wallets, i.e. non-contract addresses, will receive auto-yield on a regular basis. For now, USDs that are deployed by users to yield-earning strategies within the Sperax suite of yield farms will not receive auto-yield.
By default, smart contracts holding USDs are not included in the yield distribution process and do not earn any yield. A smart contract’s USDs balance remains the same after an auto-yield distribution event. However, based on community’s feedback and once approved by veSPA holders via Snapshot voting, the Sperax team can whitelist specific smart contracts to be part of auto-yield, and provide technical support to determine whether a protocol is compatible with the auto-yield feature of USDs.

Auto-Yield

The dripper contract controls the rate of release of USDs for auto-yield distribution. All USDs bought back from the market will be deposited in a new “Dripper” contract. This contract will gradually release USDs which can be distributed as auto-yield to USDs holders if certain conditions are met. The initial release rate is set to (Dripper USDs balance / 7 days), i.e. every USD deposited in Dripper will be released gradually at a constant rate per second over the next 7 days.
Conditions when someone can call the function to distribute auto-yield:
  1. 1.
    Distribution of auto-yield can happen after at least three days since the last distribution.
  2. 2.
    Auto-yield will be distributed only if the APR achieved through the distribution is greater than 5%.
  3. 3.
    Maximum APR for auto-yield will be capped at 10%. Any extra yield generated, over 10%, will be stored in the contract for future distributions.
Calling the auto-yield function is now included in the Mint and Redeem functions. As well as also available for users to directly call it. When users mint USDs, rebase is performed before the tokens are minted for the user. When users redeem USDs, rebase is performed after the tokens are redeemed for the user.