Sky Protocol, the rebranded form of Maker, continues to fuel the supply of its stablecoin, USDS, in response to the rising demand for passive yield. The protocol still maintains part of its legacy DAI supply, which finds active use in decentralized trading and lending.
The USDS stablecoin recently hit a new supply high of over 1.8 billion, following accelerated swaps from DAI. Both the new and legacy stablecoins have a whopping total supply of over 5.8 billion, finding application in both active and passive DeFi activities. The minting process for USDS continues, as the swap mechanism from DAI remains open.
The primary driver behind the expanding supply of USDS is the attractive 12.5% annualized yield on the token. An impressive total of 2.1 million USDS and DAI have been staked in exchange for this yield.
This new supply milestone follows USDS surpassing 1.5 billion tokens as of January 3. The token witnessed rapid growth in the early days of the new year, hitting peak supply on Ethereum along with smaller additions on Solana.
The asset is in its nascent stage of diffusion to other networks. Currently, approximately 1.53 billion tokens are on Ethereum. The Solana version, with over 102,000 tokens, serves as a test for the full-fledged launch of Sky Protocol with an ultimate aim to offer identical DeFi services and yield but on a far more scalable network that Solana offers.
USDS has also made provisions for its expansion on Base, promising outsized yield to the initial liquidity providers on Aerodrome. In the upcoming weeks, the inflow of USDS into Base is set to continue, a platform that already holds over $3.5 billion in other stablecoins.
Sky Protocol and Maker’s legacy vaults remain among the top DeFi apps for passive income. Several partnerships have been forged through the largest subDAO, Spark Protocol, which has unveiled its unique series of Aave vaults. Over time, Sky Protocol aspires to reclaim Maker’s former position as a leading stablecoin issuer and passive income provider.
The popularity of USDS has led to increased activity and turnover on Solana. This strategic shift to the new chain was initiated in November by Sky and has significantly displaced the volumes on Ethereum.
The total value locked on Solana has surged to $8.54 billion, witnessing rapid growth over the last three months. This increase is due not just to the higher nominal price of SOL but also thanks to the inflow of tokens and stablecoins.
Currently, stablecoins on Solana stand at $5.79 billion, with USDC usage dominating. The market share of USDS has risen to about 1% of the total supply, outpacing other niche stablecoins.
As of now, the use of USDS on Solana is relatively limited. On Ethereum, USDS transactions exceed $30,000, while the Solana version averages transactions of around $3,000 as it continues to build its adoption.
USDS on Solana is mainly concentrated among a few whale wallets. The leading address holds 1.5 million USDS and is one of the most significant yield recipients. The top four addresses on Solana hold over 50% of USDS, as retail wallets are still playing catch-up with the whales.
USDS is also available for trading on Raydium and Aerodrome, albeit with a caution that it is a mintable and freezable asset. This implies that some holders might face locked tokens if they fail to meet the terms and conditions of Sky Protocol. The Raydium USDS/USDC pair boasts of over $69 million in liquidity, while Aerodrome has $1.2 million. The token is primarily intended for staking and passive yield and does not belong to the meme token ecosystem.