💵sUSDs: A Decentralized, Yield-Generating Asset

sUSDs is Solenes’s innovative solution for users seeking a secure, dollar-denominated savings instrument within the DeFi ecosystem. By staking USDs, users can mint sUSDs, enabling them to earn yield from the protocol’s revenue streams in a decentralized, stable environment. This synthetic asset functions as an "Internet Bond," combining the benefits of stable dollar value with consistent yield generation, making it ideal for long-term value preservation.

How sUSDs Works: A Detailed Look at the Staking Mechanism

To receive sUSDs, users deposit USDs in the Solenes protocol, effectively staking their stable, dollar-pegged assets. The protocol then deploys these staked assets in various yield-generating strategies, including:

1. Staking Rewards: If the underlying collateral supporting USDs includes staked assets (such as stSOL), the staking rewards contribute to the yield of sUSDs. For example, if stSOL provides a 5% annual staking reward, this directly enhances the yield on sUSDs.

2. Funding Rate and Basis Spread from Derivatives: The protocol uses a delta-neutral hedging strategy involving short positions in derivatives. Profits generated through these positions are returned to sUSDs holders as yield.

3. Dynamic Reinvestment: The Solenes protocol continuously reinvests the revenue generated from staking rewards and derivatives to ensure sUSDs offers a competitive yield. The yield formula can be approximated as:

The combination of these revenue sources results in a steady, predictable yield that enhances the value of sUSDs over time.

Numerical Example of Yield Generation for sUSDs

Let’s break down a scenario where sUSDs yield is composed of both staking rewards and funding rates:

• Staking Reward Rate: 5% per year (from staked assets like stSOL).

• Average Funding Rate Spread: 3% per year (from derivatives positions).

If a user stakes 1,000 USDs to receive sUSDs, the annual yield would be:

Thus, the user would earn an additional 80 sUSDs per year, providing a robust incentive to hold sUSDs for long-term yield.

Key Advantages of Holding sUSDs

1. Stability: sUSDs is dollar-denominated, backed by USDs, providing a stable foundation even as it generates yield. This stability is further reinforced by delta-hedging, which helps maintain the value peg of the underlying USDs.

2. Consistent Yield: Through a combination of staking rewards and derivatives strategies, sUSDs holders enjoy predictable, decentralized income without relying on traditional banking systems.

3. Long-Term Value Preservation: sUSDs functions as a decentralized savings instrument, offering users a way to preserve and grow their capital over time. The protocol’s yield-generating mechanisms ensure that sUSDs retains and even enhances value, aligning with users’ long-term financial goals.

4. Decentralized, Permissionless Access: Unlike traditional savings products that often come with entry barriers, sUSDs is available to anyone with access to the Solana blockchain. This provides global users with an unrestricted means to save in a dollar-denominated asset and earn yield securely.

5. Risk Mitigation through Protocol Controls: Solenes’s protocol includes controls and automated rebalancing mechanisms, which help minimize risk and preserve yield stability, even under varying market conditions. This adds an additional layer of reliability for users who rely on sUSDs as a savings tool.

How to Stake USDs for sUSDs

1. Deposit USDs: Users deposit their USDs in the Solenes protocol.

2. Mint sUSDs: The deposited USDs automatically convert to sUSDs at a 1:1 ratio.

3. Earn Yield: As the protocol generates income from staking rewards and funding rates, users’ sUSDs balance grows proportionally.