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Get The Most Out Of TradFi And DeFi Yields On Your USD Stablecoins

5 min read - by Noé Caporal, Sogipec

USDA, Angle’s new USD stablecoin, will come with an onchain Dollar Savings solution called stUSD (staked USD). By depositing USDA in the Savings solution, users will receive stUSD tokens and passively earn a yield on their stablecoin. This TraDeFi dynamic yield—coming from the returns generated by the assets held by the Protocol—will maximize user gains by offering the best of TradFi and DeFi risk-adjusted yields.
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Angle Protocol just introduced USDA, its new USD stablecoin. Like EURA (formerly agEUR) with stEUR, USDA will come with an onchain permissionless Dollar Savings solution known as stUSD.

With stUSD—which stands for staked USD—users will be able to easily and passively earn a yield on their USD stablecoins on the Ethereum, Optimism, and Arbitrum networks.

The TraDeFi dynamic yield of stUSD will offer the best risk-adjusted returns among TradFi and DeFi. It will ensure stUSD holders always enjoy the highest secure yield effortlessly, requiring no action from them.

There will be no minimum deposit, no lockup period, no deposit fees, no withdrawal fees. All in one transaction! Isn't DeFi beautiful?

Before you go all in on stUSD, let's answer your burning questions.

What’s stUSD and how to get it?

stUSD, which stands for staked USD, will be the token of Angle’s Dollar Savings solution. It will enable each of its holders to passively earn a yield on their USD stablecoins.

To get stUSD tokens, users will have to deposit USDA into the Savings product.

Depositing USDA for stUSD will be as simple as a swap. There will be no minimum deposit, no lockup period, no deposit fees, no withdrawal fees. And users will earn rewards from day one.

No USDA to deposit? No worries. As USDA is as liquid as USDC, users will be able to swap their USDC to USDA without any fees and then deposit their USDA in the Savings solution on the Angle app to get stUSD.

Wait, there's something even better! USDC holders will be able to directly swap their USDC for stUSD in a single transaction as the conversion from USDC to USDA and the deposit of USDA will be made invisible to the users. Moreover, beyond the Angle app, users will be able to swap their assets for stUSD on the 1inch and Odos DEX aggregators, with more integrations to come!

Want to get back your USDA (or other assets)? Redeeming will be as simple as swapping. Whenever users want, they can go on the Angle app and click “Redeem” (or swap on 1inch and Odos), and they will instantly receive USDA (or other tokens) in exchange for their stUSD.

Where does the yield come from?

The yield allocated to stUSD holders will come from the returns generated by the assets held by the Angle Protocol, which can be categorized into two types:

1. USDA's backing

Through its stability mechanism, every USDA will be backed by a mix of:

  • liquid stablecoins (USDC)
  • Real-World Assets (RWAs) like T-bills (short-term U.S. government debt obligations) tokenized by Backed
  • DeFi yield-bearing assets (Morpho deposits)

The Angle stability system is designed to maintain a surplus of reserves compared to circulating stablecoins, while also allowing the Protocol to generate and earn yields from the backing of each stablecoin in circulation.

With RWAs in the reserves, such as tokenized T-bills, Angle will earn the US risk-free rate on a portion of its backing.

Through its DeFi yield-bearing assets, the Protocol will also earn the base lending yield in DeFi paid by USDC borrowers.

2. Interest rate

Angle Protocol will enable users to borrow USDA directly from whitelisted collateral assets. Each time USDA will be borrowed, the Protocol will collect a yield from the interest paid by the USDA borrowers.

By combining yields from various sources, both from traditional finance (TradFi) with RWAs returns and decentralized finance (DeFi) with backing from deposits in lending protocols and borrowing interest, Angle aims to provide users with the utmost risk-adjusted yield achievable.
If the best risk-adjusted yields come from TradFi, then stUSD will align on TradFi yields. However, if the best risk-adjusted yields of DeFi surpass those of TradFi, Angle will align with that and offer it to stUSD holders—a
TraDeFi dynamic yield!

How is the yield paid out?

The yield earned by holding stUSD will be directly reflected in stUSD’s value. No airdrops, no claiming, no transactions required!

Like all yield-bearing tokens (such as wstETH from Lido), stUSD's value will increase over time to reflect the underlying stablecoin deposit as well as the accumulated yield. Thus, the value of stUSD will increase compared to that of USDA, which will always be worth 1 dollar.

Let's take an example with our friend Charlie (enough of Bob and Alice).

In January, Charlie deposits 10 USDA and receives 10 stUSD in exchange. At that time 1 stUSD is equal to 1 USDA. In July, Charlie decides to redeem its stUSD. The value of stUSD has increased over time due to the Protocol's earnings allocated to stUSD holders. 1 stUSD is now worth 1.2 USDA. Thus, when Charlie redeem her 10 stUSD, she receives 12 USDA (10 x 1.2). Charlie has earned 2 USDA, even though the number of stUSD in her wallet (10) remained the same throughout these months.

When users redeem their stUSD, they will receive a larger portion of assets than they initially deposited.

stUSD will be an ERC20 token, transferable, stakeable, lendable, or usable in any way users desire.

What are the risks?

As with any DeFi product, zero risk doesn't exist.

Although smart contracts are undergoing regular audits, a vulnerability in stUSD’s smart contract could leave the funds of the protocol to be hacked.

Aside from the smart contract risk, trust assumptions are the same for stUSD and USDA. Returns may vary without notice but the deposited USDA cannot be lent or used in any way. For the risk associated with holding USDA, please refer to the documentation.

The era of major stablecoins not redistributing the value generated by their backing is over! With stUSD, users will be able to earn a yield on their stablecoin in one simple click, with no lockup period, no deposit and no withdrawal fees. Moreover, they will benefit from an utmost TraDeFi dynamic yield, getting the most out of TradFi and DeFi risk-adjusted yields.

Beyond its Savings solution and stUSD, the USDA stablecoin will offer a reliable, transparent and yield-bearing alternative to current USD stablecoin.

USDA is much more than your typical USD stablecoin. It’s a DeFi Superconductor!