[Proposal] LST that pays out in USDC

Sanctum Products
1

Proposal Overview

This proposal outlines the creation of a Liquid Staking Token (LST) that will pay out rewards in USDC on a monthly basis. The LST will accrue staking rewards, which will be converted to USDC and distributed to token holders monthly. The goal is to provide a flexible, capital-efficient staking solution while ensuring stable reward payouts in USDC.

Objectives

  1. Enable Liquid Staking: Allow users to stake SOL and receive a transferable LST, maintaining liquidity for DeFi applications.
  2. Stable Reward Payouts: Distribute staking rewards in USDC to mitigate volatility risks associated with SOL price fluctuations.

Reward Distribution

  • Reward Accrual: Staking rewards from validators are collected in SOL.
  • Conversion to USDC:
    • Rewards are swapped to USDC via a decentralized exchange (e.g., Orca, Raydium, or Jupiter).
    • Swaps occur monthly to minimize slippage and market impact.
  • Distribution:
    • USDC rewards are distributed to LST holders proportionally based on their holdings.
    • A Solana program automates payouts using on-chain instructions.
  • Fee Structure:
    • 5% of rewards allocated to the DAO treasury for operational costs and development.

Summary

The proposed LST with monthly USDC payouts combines the benefits of liquid staking with the stability of stablecoin rewards, creating a versatile asset for investors and businesses alike. For payment processors, the LST offers a stable revenue stream, and liquidity for settlements. By adopting the LST, payment processors can enhance their financial operations and attract merchants and institutional clients, driving broader adoption of crypto payments in the Solana ecosystem.

6 Likes
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Interesting. Welcome @Adjen!

An LST that rewards USDC could be a powerful onboarding tool for risk-averse users and those seeking stable yield. But it does introduce trade-offs / risks in terms of sell pressure, technical complexity, and community alignment.

  1. This could introduce regular sell pressure on SOL, depending on how rewards are converted and at what scale.

  2. Requires automated conversion infrastructure from SOL to USDC. So this may increase gas fees or operational costs compared to simpler LSTs.

  3. Because the token’s reward mechanism is decoupled from SOL’s native economics, it might attract more yield farmers than long-term ecosystem believers, diluting community strength.

Just a few things to consider. :folded_hands:

5 Likes
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Lets do it.

What do we need to do to get this moving? Its like a bind with digital coupons

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sorry but I don’t really see the need for this though, maybe I’m not seeing the vision here, but it’ll be a no from me atm

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I totally agree with you..

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Very sound arguments

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Long-term vision:

  • Crypto’s primary use case is payments.
  • Few reliable options exist for retail crypto payments.
  • Users prefer holding assets like SOL for long-term growth rather than spending them.
  • Stablecoin LSTs enable retail payments while allowing users to retain underlying SOL for investment.
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I would go one step further and say that you can have an LST that can be “programmed” though a platform, to sell sol into various assets like usdc memecoins or whatever…
Being able to change that from a month to month basis would be nice

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This would be awesome. Choose which asset to convert your rewards to each month. Love it!

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Just remember these wifsol kind of LSTs and thought they could be one.

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I really like this idea. Integrating stablecoins into Sanctum’s LST infrastructure would create a lot of value.

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This functionality does present a “confilct of interests”.

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What would stop one to do just that with any of the LSTs on the market ?
Or any project offering this as a product. Automatically convert sol yield into stable.