coindesk.com
Solana traders are quickly embracing the newest stablecoin to join their decentralized finance (DeFi) fray: USDS, issued by Sky (formerly MakerDAO).
Less than a day into launch, USDS's circulating supply on Solana has already surpassed $89 million. Such launch day largesse puts the coin formerly known as DAI well ahead of the other recent entrant, PayPal's PYUSD, as Solana's fastest-growing stablecoin out of the gate.
The heady growth is about as preordained as anything could be in DeFi. Sky is spending $2 million a month to incentivize traders that swap into USDS and deploy it, said Rooter, the pseudonymous leader of borrow and lend protocol Save, which is handing out 400,000 worth of USDS a month to suppliers of the new stablecoin.
"With Sky heavily incentivizing it's no surprise" that USDS is growing so fast, Rooter said.
USDS lenders on Save, Drift and Kamino are chasing yields in excess of 20% because of the rewards boosts provided by Sky. The rate juicing makes USDS farming competitive with USDC, the most popular stablecoin on Solana.
It's not uncommon for new token issuers to boost their asset's initial adoption through incentive payouts. PayPal's stablecoin also benefitted from juiced initial yields. Rooter said that program spent around $10 million.
"Onboarding a new stable has a formula now: start with liquidity, start with supply then grow borrowing," said Marius Ciubotariu, co-founder of Kamino, which is giving hundreds of thousands of dollars-worth of USDS a week to liquidity providers and lenders.
Sky is going a step further by incentivizing traders to move their money into Solana via Wormhole, a token bridging service. That's further boosting circulating supply.
Yield-chasing stable farmers are a fickle type, and the free money won't last forever. When incentives start to dry out the USDS converts may swap back into USDC or other stablecoins, as they did with PYUSD, said Rooter.
"It's all about making inroads while the incentives are live, getting brand recognition or integrations," he said.