Sky’s Solana rollout has been a smashing success, with its stablecoin USDS seeing rapid adoption. Less than a day into launch, USDS’s circulating supply on Solana has already surpassed $89 million. This 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. 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, said that “with Sky heavily incentivizing it’s no surprise” that USDS is growing so fast.
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.
However, 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.
Predictions:
1. Sky’s Solana rollout will continue to see rapid adoption in the short term, driven by the incentivization program.
2. Once the incentives dry out, USDS may see a decline in adoption, as yield-chasing stable farmers swap back into USDC or other stablecoins.
3. However, if Sky can successfully build brand recognition and integrations during the incentivization period, USDS may be able to maintain a significant market share on Solana.
Quote: “With Sky heavily incentivizing it’s no surprise” that USDS is growing so fast – Rooter, pseudonymous leader of borrow and lend protocol Save.
Author’s Bio: Danny Nelson is CoinDesk’s Managing Editor for Data & Tokens. He owns BTC, ETH, and SOL.
