What is the USDS/stUSDS Pool?
The Curve USDS/stUSDS pool facilitates trading between Sky Protocol's USDS stablecoin and its staked variant stUSDS. This pool enables users to enter or exit the stUSDS yield-bearing position while maintaining deep liquidity for the Sky Protocol ecosystem.
Understanding USDS and stUSDS
Sky Protocol (formerly MakerDAO) offers two related stablecoins:
- USDS: The base stablecoin, pegged 1:1 to USD
- stUSDS: Staked USDS that earns yield from the Sky Savings Rate (SSR)
stUSDS continuously accrues value as SSR yield is distributed, making it a yield-bearing stablecoin similar to sDAI.
Pool Mechanics and Yield
This pool uses Curve's StableSwap algorithm optimized for yield-bearing assets:
- Trading fee: 0.04% per swap
- APY: 3.65% from trading fees and native yield passthrough
- TVL: Over $41 million
The high APY reflects both trading activity and the underlying stUSDS yield exposure.
Why This Pool Exists
The USDS/stUSDS pool serves several important functions:
- Enables instant liquidity for stUSDS holders without waiting for unstaking
- Provides arbitrage opportunities that maintain stUSDS's accurate pricing
- Allows liquidity mining while maintaining stablecoin exposure
Impermanent Loss Analysis
For stablecoin-yield pairs, IL dynamics are minimal:
- Both assets maintain approximately $1 value
- stUSDS slowly appreciates relative to USDS from yield accrual
- This creates predictable, manageable rebalancing
Standard stablecoin pair IL is negligible when both maintain peg.
Risks
- Depeg Risk: If either USDS or stUSDS loses its dollar peg
- Sky Protocol Risk: Smart contract vulnerabilities in the underlying protocol
- SSR Rate Changes: Yield rate modifications affecting stUSDS attractiveness
- Curve Smart Contract Risk: Protocol-level vulnerabilities
- Regulatory Risk: Stablecoin regulatory developments