Upcoming USDs 2.0

Sperax Team
4 min readJul 3, 2023

Sperax is upgrading its Smart contract architecture to further decentralize the protocol. The key idea behind the decentralization of the protocol is to make it completely transparent and open to all users to run the protocol. We are still deliberating on features that will be upgradeable via protocol governance and features that will be governance free. Making some features governance free will allow for more transparency and faith amongst developers who are building on top of the Sperax USD protocol. Even the protocol functionalities that need a governance proposal to undergo change will be implemented via a timelock so that the participants of the protocol will have sufficient time to change their behavior or interaction with the protocol if they are unhappy with the proposed changes.

Major protocol improvements in USDs 2.0

The Smart contract architecture is been upgraded to decentralize certain functionalities which were earlier available to the admin only. Some of the functionalities which will be decentralized are:

  • Depositing and withdrawing collateral from yield strategies
  • Harvesting yield-farmed tokens from yield strategies
  • Exchanging harvested yield tokens for USDs
  • Introducing a new dripper contract
  • Distribution of auto-yield to all eligible addresses

Apart from the above upgrades, we will also be upgrading the redemption functionality to allow redeemers to redeem from a certain yield strategy to provide more flexibility to redeemers.

In a future upgrade, we will introduce a view function to help redeemers view the slippage at the yield strategy level.

Introducing Dripper and changes to Auto-Yield

The dripper contract controls the rate of release of USDs for rebase. 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. Distribution of auto-yield can happen after at least three days since the last distribution.
  2. Auto-yield will be distributed only if the APR achieved through the distribution is greater than 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.

Key parameters upgradeable via governance

  • Adding or removing collateral types to mint/ redeem USDs.
  • Adding or removing yield generation strategies for each collateral type. For example, adding new delta-neutral yield farming strategies based on other decentralized exchanges.
  • Updating the collateral cap or the maximum collateral value that can be allocated to a specific collateral strategy.
  • Updating a default redemption strategy for a collateral type. USDs can be redeemed from the default redemption strategies, in case there isn’t enough collateral left in the vault. Initially, single-sided strategies like Aave, Stargate, etc. will be set as the default redemption strategy.
  • Updating the price floor for collateral used to mint USDs. Setting the price floors for each collateral will allow the protocol to remain solvent when collaterals depeg. The protocol will not mint USDs with the collateral when the price of the collateral falls below the price floor.
  • Updating the base fee for minting or redeeming through a particular collateral type.
  • Updating the price feeds for collaterals used to mint/redeem USDs
  • Updating the incentives for those who call certain functions to help run the protocol. For example, those who call the function to harvest yield from yield generation strategies.
  • Updating the USDs dripping rate from the dripper contract.
  • Updating the pre-set APR requirements for the distribution of Auto-Yield

For the above parameters, an initial set of values will be decided in the contract that would be upgradeable via governance.

Dynamic fee modules will be introduced as an upgrade in the future. This module will be responsible for dynamically updating the minting and redemption fees associated with various collateral types. This will softly enforce a desired collateral composition for the vault.

Key functions available to the public

  • Harvesting or claiming all kinds of yield tokens from the yield generation strategies. The harvester will be incentivized with a portion of the yield-farmed tokens.
  • Purchase harvested yield tokens for market price. We will use the respective oracles for the yield tokens to determine the market price. This experience will be similar to the currently implemented buyback contract.
  • Distributing the auto-yield to all addresses eligible to collect it. Rebase will also be triggered when someone Mints or Redeems.

About Us

Sperax USD is a stablecoin and yield automator on Arbitrum. Hold $USDs and earn Auto Yield. Stake $SPA to govern the collateral investment strategy.

Read more at sperax.io and join the Sperax community!

Twitter | Discord | Telegram| Telegram Korea| Medium