30s Summary

Sky’s newly launched stablecoin, USDS, on the Solana blockchain has grown rapidly, with its supply surpassing $89 million within a day, making it the fastest-growing stablecoin on Solana. To promote USDS use, Sky is spending $2 million monthly and Save protocol is offering 400,000 USDS to suppliers. Despite these efforts, there are concerns that the growth might not be sustainable once the incentives end, with users possibly reverting to USDC or other stablecoins.

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Solana’s newest stablecoin, USDS, made a big splash in the decentralized finance (DeFi) world. Released by Sky – previously known as MakerDAO – USDS has seen its supply on Solana grow rapidly, rising beyond $89 million within just one day of its launch. This impressive start positions USDS as the fastest-growing stablecoin on Solana, outpacing other recent entrants like PayPal’s PYUSD.

Rooter, the anonymous head of borrow and lend protocol Save, revealed that Sky is spending a whopping $2 million a month to encourage traders to convert to and use USDS. Save is also supporting the new stablecoin’s growth by offering 400,000 USDS each month to its suppliers. With backing like this, it’s no surprise that USDS is growing significantly.

Lenders of USDS on DeFi platforms like Save, Drift, and Kamino are reaping high returns due to the rewards provided by Sky. The boost in yields makes farming USDS competitive with USDC, the most popular stablecoin on Solana. Sky is further encouraging migration to Solana by incentivizing traders to use Wormhole, a token bridging service.

However, Rooter warns that the current spurt of growth might not last. Surviving on free money is unsustainable, and when the rewards taper off, those utilizing USDS may revert to USDC or other stablecoins, as was the case with PYUSD. So, despite the current buzz, the real challenge lies in achieving sustainable traction, established brand recognition, and successful integrations before the incentives end.