Summary
Replace sDAI for sUSDS in the USD3 collateral basket.
Current Basket:
25% sDAI DAI Savings Rate(DSR) - Supply APY: 2.25% and dropping
25% Morpho Steakhouse USDC Vault
25% Comp v3 USDC
25% Aave v3 USDC
Proposed Basket:
25% sUSDS Sky Savings Rate(SSR) - Supply APY: 4.5%
25% Morpho Steakhouse USDC Vault
25% Comp v3 USDC
25% Aave v3 USDC
Abstract
This proposal, if enacted, would replace Savings DAI(sDAI) from the DAI Savings Rate(DSR) with Savings USDS(sUSDS) from the Sky Savings Rate(SSR).
Problem Statement
In August 2024, Maker rebranded to the Sky Ecosystem. Following the rebrand, a key change was the introduction of USDS(an upgraded version of DAI), the new stablecoin associated with the Sky Protocol.
Over the past month, the DAI Savings Rate dropped from 3% to 2.25%. The DSR is likely to continue dropping over time. The DSR and the SSR have the same yield sources, both are funded by Sky’s revenue, which includes fees from crypto collateralized loans, investments into U.S. treasury bills and its liquidity provisioning into SparkLend and the Spark Liquidity Layer. It is clear that the Sky Ecosystem is trying to incentivize utilization of sUSDS over sDAI by keeping rates elevated for sUSDS(4.5%) and continuing to lower rates for sDAI(2.25%).
Rationale
Savings USDS (sUSDS) is the upgraded version of sDAI, which offers higher yield than sDAI. sUSDS is a tokenized representation of USDS deposited in the Sky Savings Rate (SSR) offered by Sky. sUSDS increases in value according to the SSR, as its USDS denominated value gradually increases over time. sUSDS is a value accumulating token, not a rebasing token. Each sUSDS is fungible and always instantly redeemable for USDS. Deposited USDS is never locked, as it can always be withdrawn instantly. There are no liquidity constraints when withdrawing USDS from sUSDS or the SSR.
Risks
There are technological risks with this proposal i.e. smart contract risk. However, Sky has implemented various security measures to mitigate risks, including smart contract audits, formal verification, and bug bounty programs. There are counterparty risks i.e. governance and regulatory risks. The consideration should be given to governance risks as the Sky Savings Rate is set by Sky governance.
USD3 governors should be aware that RSR seizure can occur during normal rebalancing. The backing buffer is set at the recommended value(0.15) to mitigate this risk. Additionally both sDAI and sUSDS have deep onchain liquidity and are unlikely to see trade slippage that would result in RSR seizure.
- Yes, I am for this proposal
- No, I am against this proposal
