Solayer’s sUSD: The First RWA-Backed Synthetic Stablecoin Shaping a Secure Open Internet
Stablecoins have become essential tools in the digital economy, with a market capitalization surpassing $150 billion. They power various applications, from decentralized finance (DeFi) to seamless payments, establishing themselves as foundational to DeFi’s ecosystem. However, these assets are pegged to traditional fiat currencies like the US dollar, facing the same depreciation and inflation challenges. This dependency presents a paradox for an industry striving to create superior forms of alternative currency, as stablecoins remain vulnerable to the economic forces they aim to transcend.
As the Financial Times points out, the cryptocurrency movement began as a response to the risks of fiat currency devaluation caused by inflation. Yet, ironically, the most widely adopted crypto innovation stablecoins operates as a digital version of traditional money, inheriting many of the same pitfalls, such as inflation-driven devaluation.
Solayer sUSD offers a remedy, by being softly pegged to inflation, positioning itself as a middle ground between Bitcoin’s high volatility and the rigid stability of traditional stablecoins. Designed to preserve value even amidst economic shifts, sUSD blends the best of both worlds offering stability without sacrificing adaptability. This approach redefines what a stable digital currency can achieve, marking Solayer as a pioneer in creating resilient financial assets for the DeFi ecosystem.
Before delving into Solayer sUSD, it’s crucial to understand stablecoins, which have become the go-to option for crypto users seeking to escape the volatility inherent in most digital assets. Stablecoins are cryptocurrencies pegged to the value of a real-world asset, typically the US dollar, to maintain price stability. This attribute makes them suitable for transactions and preserving value without significant price fluctuations. However, stablecoins are not immune to inflation. As the purchasing power of the underlying asset (e.g., the US dollar) erodes over time, the value stored in stablecoins also depreciates proportionally.
In this essay, we will first take a detailed look at Solayer’s sUSD to understand its key concepts and underlying mechanisms. Drawing insights from sUSD, we will then make a case for why a stablecoin like sUSD represents a significant opportunity for the broader DeFi ecosystem, exploring different operating models, potential implementations, and Go-To-Market strategies for its adoption and growth.
If you are already familiar with Solayer’s sUSD, you can skip the first few sections, but we highly recommend reading the entire essay for a comprehensive understanding of its impact and potential in the DeFi ecosystem.
Ready? Here you go🚀
What is sUSD?
Solayer’s sUSD is a stablecoin designed to address the unique challenges of the DeFi ecosystem, offering a stable alternative to the volatility of cryptocurrencies. With the Solana stablecoin market cap currently standing at $3.5B+ and over $2B in stablecoin assets flowing into Solana from other ecosystems in just the past year, sUSD is positioned for significant growth. This stablecoin represents an opportunity to build meaningful utility around stable assets in the rapidly expanding Solana network. Like Bitcoin, which was created to provide funding for open-source software development by leveraging Ethereum, Solayer’s sUSD aims to capture value within the Solana ecosystem by offering a stable, yield-bearing digital asset that can support DeFi projects, investments, and everyday transactions.
Solana’s stablecoin ecosystem is experiencing rapid growth, drawing in significant new assets and showcasing strong confidence in the network’s infrastructure. As more users and projects look for secure, scalable, and efficient digital assets, Solana’s stablecoins especially innovations like sUSD are emerging as trusted solutions. This surge in adoption highlights the growing belief in Solana’s ability to support stablecoins that not only maintain value but also drive real-world utility across the DeFi ecosystem, setting the stage for even greater expansion and innovation in the future.
sUSD is a groundbreaking, yield-bearing, restacking stablecoin designed to maximize utility within the Solana network. The sUSD vision extends far beyond simply launching a stablecoin. They are committed to creating the foundation for a bankless economy while strengthening the future of decentralized systems. sUSD, is not just fostering stability and growth within the Solana ecosystem. They are setting the stage for a more resilient, interconnected financial infrastructure that can support the next generation of decentralized applications and innovations.
What does the sUSD constitute?
sUSD is the first-ever yield-bearing stablecoin on Solana, offering the best of both stability and growth. Pegged 1:1 to the U.S. dollar and backed by U.S. Treasury Bills (T-bills), sUSD combines the reliability of traditional financial systems with the power of blockchain. This unique setup ensures that sUSD retains its stable value while generating a 4–5% annual yield through T-bills one of the safest and most trusted forms of short term government debt. In essence, sUSD not only provides a stable store of value but also allows users to earn returns in a secure and innovative way.
sUSD acts as a key reference for the 2022 interest-bearing token extension, solidifying its 1:1 USD peg while introducing a new level of stability. The sUSD pool simplifies and streamlines yield generation, making it more accessible and efficient for the entire stablecoin ecosystem, helping users earn returns while maintaining the stability they rely on.
Due to Solana’s unique account model, directly minting tokens for all holders isn’t feasible. Instead, the interest-bearing extension adjusts the “multiplier” of the holding amount to reflect interest accumulation, rather than increasing the token quantity. This approach allows for seamless interest growth without altering the total token supply, ensuring efficiency within Solana’s ecosystem.
sUSD: The First Real-World Asset-Backed Synthetic Stablecoin Securing the Open Internet
sUSD (Solayer USD) stands at the forefront of the stablecoin market, offering a fresh alternative to the dominance of USDC and USDT, which collectively control over $100 billion in supply. While these centralized stablecoins are widely used, they come with concerns over centralization and the risks tied to the asset management practices of their issuers.
An example of these risks became evident in March 2023 when USDC lost its peg during the Silicon Valley Bank crisis, highlighting the vulnerabilities of traditional, centralized stablecoins.
In contrast, sUSD aims to offer a decentralized solution to the shortcomings of existing stablecoins. By bridging the gap between internet-native money and real-world infrastructure, sUSD is not just a stablecoin but a vision for the future of financial freedom, security, and decentralization.
sUSD The Real Magic Internet Money
On January 3rd, 2009, the Bitcoin genesis block dropped with a message: “Chancellor on brink of second bailout for banks.” Fast forward 15 years, and crypto is still the underdog — David to finance’s Goliath. Today, the crypto market is valued at a little over $2 trillion, while traditional finance towers over it with a $100 trillion stock market, a $130 trillion bond market, and behemoths like BlackRock, with its $11.5 trillion in assets, far surpassing the entire crypto industry.
sUSD is a fully decentralized stablecoin designed to bridge the gap between the real world and the blockchain, paving the way for a truly open and borderless internet.
Despite this, cryptocurrency continues to gain momentum. With 6.8% of the global population now holding crypto, the journey toward mainstream adoption remains a challenge, akin to rolling a boulder uphill. Yet, as we push forward, the vision is clear bring real-world assets on-chain, bridging the gap between the old and the new financial worlds.
Crypto isn’t just about market cap or trading volume — it’s about revolutionizing finance by eliminating middlemen and providing everyone with equitable access to financial freedom.
The next 15 years will be the true test of mainstream adoption, and the key to unlocking it is bringing the real world on-chain. We’re already witnessing the transformation of traditional assets — from U.S. Treasury Bills to government bonds, commodities, and even real estate — all being tokenized. This marks the beginning of a new financial era, where barriers are broken down and true decentralization opens up opportunities for all.
The irony: Many stablecoins remain tied to traditional banking systems, straying from crypto’s core promise of individual freedom. To unlock the true potential of an open internet, stablecoins must be decentralized and user-owned — an automated asset that only the user can control, create, or destroy, free from external interference.
sUSD, a Stable Gateway to the Real World Infrastructure
sUSD is backed by a carefully curated basket of low-risk real-world assets, tokenized by qualified providers. The U.S. Treasury Bill is the first asset in this basket, with plans to expand to other stable, real-world assets like oil, gold, and more, ensuring a diversified and secure foundation for sUSD’s value.
sUSD is revolutionizing the stablecoin space by being backed by a carefully curated basket of low-risk, real-world assets, all tokenized through trusted and qualified providers.
sUSD, Permissionless for Anyone
Blockchains like Solana enable transactions at lightning speeds while ensuring transparent self-custody of assets, bringing true financial freedom to users. This is where sUSD shines. By leveraging these capabilities, sUSD can provide stability and security in regions with volatile or unstable monetary systems. Just as USDT has become dominant in emerging markets like LATAM, sUSD is poised to offer a more stable and accessible alternative, empowering users in areas where traditional currencies fail to deliver the same level of trust and resilience. With sUSD, financial inclusion becomes not just a possibility, but a reality.
sUSD, Decentralized via an RFQ Marketplace
sUSD is a decentralized stablecoin powered by the Solayer RFQ (Request for Quote) protocol, a cutting-edge marketplace matching engine. This platform connects USDC quotes with qualified tokenizers, ensuring the most optimized interest rates. The marketplace operates through a non-custodial, fully automated smart contract, handling minting, redemption, and order matching seamlessly. By eliminating intermediaries, sUSD offers a truly decentralized experience, enabling secure and efficient transactions while maintaining transparency and trust.
This diagram illustrates the process of minting and redeeming sUSD through the decentralized T-Bill RFQ (Request for Quote) protocol on Solana. Here’s a step-by-step breakdown:
sUSD: Instant Liquidity for Seamless Minting and Redemption
Liquidity constraints and user friction have hindered the on-chain adoption of real-world asset (RWA) holdings. Currently, there’s no easy way for someone with just $5 to directly access U.S. Treasury assets, and even if purchased through an exchange, there’s no straightforward mechanism to redeem it.
With sUSD, anyone can mint and redeem instantly through a user-friendly portal, gaining direct access to U.S. Treasury-backed assets with interest paid out in USDC, making it accessible and rewarding for everyday users.
sUSD, Rebase USDC Interest automatically
USDC and USDT issuers hold massive reserves in U.S. Treasury Bills — comparable to the foreign currency reserves of entire nations like Norway and even exceeding South Korea’s. Yet, the yield from these assets goes to the issuers, leaving holders with no returns. sUSD flips the script: it allows holders to directly earn yield from real-world assets, starting with U.S. Treasury Bills. Imagine a savings account that doesn’t need a bank — yield is paid automatically in USDC, creating a steady stream of passive income on-chain. With sUSD, you’re not just holding a stablecoin; you’re holding a piece of real-world value that works for you.
sUSD: Bridging Blockchain Security with Real-World Assets
Solana and Ethereum stand as two of the most widely used decentralized “open internet” platforms, driving countless dApps and decentralized networks. Both blockchains are secured through the crypto-economic principles of Proof of Stake consensus, where SOL and ETH serve as collateral assets to maintain network integrity.
Solayer introduces sUSD, a decentralized stablecoin backed by real-world assets (RWA), as a collateral asset within Proof of Stake consensus mechanisms, particularly on networks built atop Solana. This allows diverse networks like SVM L2s, bridges, and oracles to benefit from the robust economic security provided by real-world infrastructure.
Did You Know sUSD is Live on Mainnet?
Steps to participate:
- Convert all stablecoins into USDC
- Visit app.solayer.org
- Deposit USDC to redeem sUSD
- Receive sUSD in your wallet
- Earn 4.33% Treasury Bill yield in USDC
- Earn exo AVS delegation reward (coming soon)
sUSD Transparency and Security
- Transparency: All transactions and T-Bill holdings associated with sUSD are recorded on the Solana blockchain, ensuring full transparency and traceability. This immutable record provides users with assurance regarding the integrity of the system, allowing participants to verify asset movements at any time.
sUSD: Where your stablecoin not only holds steady but grows like watching your savings sprout wings, one yield at a time!
You can track:
sUSD Token Info here
Our Pool Account here
Program ID here
Program IDL here
2. Security: sUSD utilizes a robust security framework in which each market maker’s assets are stored in a Program Derived Account (PDA). This approach guarantees that assets are kept in secure, isolated environments. Additionally, the decentralized RFQ system reduces the risk of unauthorized access, while maintaining fair and competitive pricing. This structure enhances the protocol’s resilience against manipulation and promotes a more secure trading ecosystem.
sUSD Technical Features
1. sUSD Token Design
The key feature of sUSD is its ability to generate yield. Supported by U.S. Treasury Bills, sUSD provides an annual yield of 4–5%. As users hold sUSD in their wallets, their balance automatically accrues interest, similar to the way a traditional bank account earns interest. This design is powered by Solana’s Token 2022 Program, utilizing its interest-bearing extension to seamlessly grow user holdings.
Given the limitations of Solana’s account model, minting tokens for each individual holder is not practical. Instead of directly changing the token amount, the interest-bearing mechanism accrues interest on the token balance in real-time, updating every second. This enables the sUSD balance in a wallet to grow passively, with interest automatically applied through continuous balance updates.
2. sUSD Pool Design
The sUSD Pool operates on a decentralized, non-custodial Request for Quote (RFQ) protocol, enabling users to seamlessly receive yield generated by T-Bills without any manual intervention. By utilizing the RFQ protocol, capital efficiency is enhanced through the participation of multiple liquidity providers, maximizing yield opportunities while diversifying and distributing risk.
I. RFQ Protocol
The RFQ protocol is central to how sUSD manages liquidity and transactions between users and liquidity providers. When a user locks USDC, market makers compete to fulfill the order, ensuring a decentralized and trustless transaction process. This decentralized setup minimizes risks of market manipulation and promotes fair pricing.
II. Subscription Process
The subscription process begins when a user locks USDC, which is subsequently converted into wrapped T-Bills that serve as the backing for the minted sUSD. The process includes the following steps.
Step 1. User Locks USDC: The user locks USDC to start the transaction. A quote is generated, detailing the amount of USDC, the expiry time, and the commission rate.
Step 2. Fulfillment by Qualified Liquidity Provider (QLP): The QLP executes the buy order by transferring USDC and receiving a wrapped T-Bill in exchange.
Step 3. Forwarding Wrapped T-Bill: The wrapped T-Bill is forwarded to the sUSD minting program, where it is locked.
Step 4. Minting sUSD: The Solayer sUSD Program mints sUSD based on the value of the wrapped T-Bill, maintaining a 1:1 peg with USDC.
Step 5. Delegate sUSD to Secure Exogenous AVS (Coming Soon): The user can delegate sUSD to secure our exogenous AVSs (exoAVSs) when it goes live.
III. sUSD Redemption Process
Similarly, the redemption process enables users to withdraw USDC by returning sUSD to the program. The process proceeds as follows:
Step 1. Undelegate sUSD: The user requests undelegate sUSD
Step 2. User Sends Back sUSD: The user initiates the withdrawal by returning sUSD to the program.
Step 3. Protocol Calculates Wrapped T-Bill: The program calculates the amount of wrapped T-Bill corresponding to the withdrawal request.
Step 4. QLP Fulfills Withdrawal: The QLP redeems the wrapped T-Bill and transfers the corresponding USDC back to the protocol.
Step 5. USDC Returned to User: The protocol returns USDC to the suer, completing the withdrawal process.
sUSD Audits
Security is a fundamental focus of Solayer’s long-term commitment to developing secure and scalable crypto-economic infrastructure. Below, we present our audit reports:
- OtterSec: April, 2024 Audit
- OtterSec: July, 2024 Audit
- Halborn — endoAVS: August, 2024
- Halborn — restaking: August, 2024
- Halborn — sUSD: October, 2024
Although our contracts undergo thorough security reviews, we encourage community members, ethical hackers, and researchers to conduct their own comprehensive audits. If any bugs are identified, please report them to report@solayer.org or through the appropriate channels.
What is the Risk in sUSD?
While sUSD provides stable, consistent yields backed by U.S. Treasury Bills, users need to be aware of potential market and investment risks tied to these assets. Treasury-backed yields are typically reliable, but they are not immune to broader economic fluctuations and regulatory changes. By holding sUSD, users benefit from a yield strategy designed for stability, yet all investments carry inherent risks that are worth considering. For a deeper dive into these risk factors, including potential impacts on yield performance and asset security, users are encouraged to consult our comprehensive risk documentation, designed to help you make informed, confident decisions while navigating the DeFi landscape.
Please refer to our detailed documentation for a deeper understanding of the associated risks and how they may impact your investments. Staying informed is key to confidently navigating DeFi’s opportunities and challenges.
Solayer’s Exogenous AVS (exoAVS)
Solayer’s Exogenous AVS (exoAVS) is an upcoming security layer that will extend the protocol’s ability to secure not just Solana but also other modular and interconnected systems. Through exoAVS, Solayer will secure modular systems using SOL and SPL tokens by establishing robust trust mechanisms powered by token economics. This layer ensures the security and scalability of decentralized services such as oracles, cross-chain bridges, messaging layers, GPU clusters, and potential Solana Layer 2 blockchains. By introducing exoAVS, Solayer aims to create a versatile and expandable security framework for any novel use case that requires a high level of decentralized trust and reliability.
To dive deeper into how exoAVS will transform decentralized security, check out our detailed documentation and stay tuned for updates. The future of modular security is just beginning with Solayer.
sUSD Restaking Mechanism Overview
Restaking allows SOL or Liquid Staked SOL stakers to engage in ‘delegated consensus.
Users restake their assets into the Solayer restaking vault, delegating them to a group of operators who then participate in other networks to validate transactions and earn rewards.
Here are more details on the Solayer stake pool:
- Stake Pool: po1osKDWYF9oiVEGmzKA4eTs8eMveFRMox3bUKazGN2;
- Pool Token Mint: sSo1wxKKr6zW2hqf5hZrp2CawLibcwi1pMBqk5bg2G4;
- Epoch Fee: 7/100 of epoch rewards;
- Stake Withdrawal Fee: 8/10000 of withdrawal amount;
- SOL Withdrawal Fee: 8/10000 of withdrawal amount;
- Stake Deposit Fee: 0/10000 of deposit amount;
- SOL Deposit Fee: 0/10000 of deposit amount;
- Stake Deposit Referral Fee: 0% of Stake;
- Deposit Fee SOL Deposit Referral Fee: 0% of SOL Deposit Fee;
Fellow Restaking Tutorial
The Features of sUSD
sUSD is setting a new standard as a uniquely positioned digital asset. With its innovative features, sUSD is poised to become a leading choice for payments, trading, collateral, and beyond, offering unmatched versatility in the digital economy.
- The first T-bill yield-bearing stablecoin on Solana.
- The first widely adopted implementation of Token 2022, bringing interest-bearing assets on-chain.
- The first restaking-backed stablecoin.
- sUSD RWA partner has the only tokenized U.S. Treasury product with an “A” rating from Moody’s, placing it in the “investment-grade” quality category by one of the leading global providers of credit ratings, research, and risk analysis. sUSD will also play a crucial role in securing Actively Validated Services (AVSs), because of its stable foundational value together with its reliable and open architecture.
Now, let’s explore the unique value propositions of sUSD.
sUSD Value Propositions
- Inherently Yield-Bearing: sUSD offers a 4–5% yield backed by U.S. Treasury Bills, giving users a steady income layer simply by holding or using sUSD. This built-in yield makes sUSD an appealing alternative to traditional stablecoins like USDC or USDT, adding value beyond mere stability.
- Securing External Systems: sUSD can be delegated to secure external modular systems, known as exoAVSs, which operate alongside Solana. By restaking sUSD, users earn a steady T-bill-backed yield and gain access to additional returns by supporting the security of key systems like oracles, bridges, network extensions, and rollups.
- DeFi Integrations: From day one, sUSD offers liquidity through strong integrations with Solana’s DeFi protocols, ensuring immediate usability and access for all holders.
sUSD is set to become the core on-chain liquidity layer, seamlessly connecting traditional fiat systems to the bankless economy.
sUSD is designed to attract new users to Solana by offering yield-bearing stability, appealing to DeFi enthusiasts seeking additional returns and to conservative investors aiming for low-risk yield. Its stable value reduces risks for borrowers, allowing DeFi platforms to provide lower interest rates and more favorable borrowing terms when sUSD is used as collateral, minimizing the chance of liquidation from price volatility.
Disclaimer
The information provided here is for informational purposes only and does not constitute financial, investment, or legal advice. All investments carry risk, including the potential loss of principal. We encourage users to perform their research and consult with qualified advisors.
These resources offer comprehensive guidance to help you make well-informed decisions.
Join a community that’s building the future of decentralized finance and secure infrastructure. At Solayer, collaboration drives innovation, and every member plays a vital role in shaping a more resilient, transparent financial ecosystem. Be part of the journey.
Closing Thoughts: A Vision for sUSD in the Solana Ecosystem
We firmly believe that sUSD represents an essential step forward for stablecoins on Solana, bringing yield, security, and stability in a way that can reshape decentralized finance. Like any transformative project, sUSD’s impact will depend on broad experimentation and community engagement, with the strongest models emerging from collaboration across the Solana ecosystem.
Initial backing is crucial, but over time, the success of sUSD will be guided by the community, aligning with the ethos of decentralized finance empowering users with a thinner foundation and a thriving, engaged community.
We’re excited to have you with us on this journey.
If you are anyone building or have opinions on this theme, feel reach to reach out at God_Did_Vel or Martin, we would love to help in the best possible ways. If you find this even slightly insightful, do share it — justifies our weeks of effort and gets us more eyeballs.
References:
- https://solayer.org/platform/susd
- https://app.solayer.org/dashboard/stablecoin-restake?id=EPjFWdd5AufqSSqeM2qN1xzybapC8G4wEGGkZwyTDt1v
- https://docs.solayer.org/susd/what-is-susd
- https://solayer.org/resources/blogs/susd-the-first-rwa-backed-synthetic-stablecoin-to-secure-the-open-internet
- https://solayer.org/resources/blogs/susd-a-deep-dive-into-the-technical-architecture
- https://github.com/solayer-labs/solayer-improvement-proposal/blob/main/solayer-litepaper-v0.pdf
