Create a stable coin backed by LST yields

[Azrangar]

Centrally backed stablecoins USDC and USDT makes up majority of crypto transactions. Attempts to create a decentralised stablecoin have been met with sustainability challenges and low adoption rates. The most successful decentralised stablecoin is USDS formally DAI.

USDS is a collateralise stablecoin. The issue with collateralise stablecoin is when the price of the assets depreciate the stablecoin can lose its fiat peg. To maintain the peg, complex mechanisms are developed. Example USDH.

Solana lacks a successfully decentralised stablecoin. LST yields offer a sustainable way to create a stablecoin backed by value.

[0xheat]

Interesting take usdcloud

[Mrl]

Interesting take.
Curious how that would look like in terms of sustainability.

[DoubleU]

Reminds me of Luna and usually doesn’t end well with Crypto volatility

[Azrangar]

Luna was a Ponzi. This would be backed by the economic activities on Solana.

[DoubleU]

Doesn’t matter. Economic activities and prices come down. Luna backed it with Btc too other than their token.Has been done and failed unfortunately

[bigpp]

I have added some points here

Discussion on how to create a LST yield backed stablecoin

Yup, this is a good idea as the whole concept of Sanctum’s LST is not have LP’s for them as that would invalidate the yield bearing price increase on them, we have to find as many use-case as possible with the yield of the LST without disturbing the collateral in Stake Accounts, one such case is lending of LST. But this protocol has to coded by community only cause there are many things going on in Sanctum and they are trying to be a base layer for everything LSTs, so the community can build as…