Introduction

The Solana network is rapidly expanding its stablecoin ecosystem, driving the future of decentralized finance (DeFi) through a series of innovative projects. Among these, sUSD stands out as the first restocking-enabled, yield-bearing stablecoin backed by U.S. Treasury Bills (T-Bills). It provides the stability of a 1:1 peg to the U.S. dollar while simultaneously generating a 4-5% annual yield. What makes sUSD particularly unique is its ability to contribute to securing crypto-economic infrastructure. In this post, we’ll explore the technical architecture of sUSD, its functionality, and the security mechanisms that power it.

1. Overview of sUSD

   sUSD is a yield-bearing stablecoin backed by U.S. Treasury Bills. It is one of the first stablecoins to adopt the Token 2022 interest-bearing extension, which allows the token to accrue yield while remaining fully on-chain. Beyond its role as a stablecoin, sUSD also plays a critical role in securing exogenous Actively Validated Services (exoAVS), making it a key asset in the Solana network. Its dual utility—yield generation and infrastructure security—positions sUSD as a vital component in DeFi liquidity and system stability.
   
   

   
   

2. Key Technical Features of sUSD

   
   

   1. sUSD Token Design

      The core feature of sUSD is its ability to generate yield. Backed by U.S. Treasury Bills, sUSD offers an annual yield of 4-5%. While users hold sUSD in their wallets, the balance grows automatically with interest—much like how a traditional bank account earns interest. This design leverages Solana’s Token 2022 Program, specifically its interest-bearing extension.

      Due to constraints in Solana’s account model, minting tokens for every holder is not feasible. Instead of directly altering the token amount, the interest-bearing mechanism accrues interest on the token balance every second. This allows the sUSD balance in a wallet to increase passively, with interest being automatically applied through continuous balance updates.

      
      

   2. sUSD Pool Design

      The sUSD Pool operates using a decentralized, non-custodial Request for Quote (RFQ) protocol. This allows users to easily receive the yield generated by T-Bills without additional manual steps. The RFQ protocol enhances capital efficiency by leveraging multiple liquidity providers, thus maximizing yield opportunities while distributing risk.

      
      

      1. RFQ Protocol

         The RFQ protocol is central to how sUSD manages liquidity and transactions between users and liquidity providers. When a user locks USDC, market makers compete to fulfill the order, ensuring a decentralized and trustless transaction process. This decentralized setup minimizes risks of market manipulation and promotes fair pricing.

         
         

         

         
         

      2. Subscription Process

         The subscription process starts when a user locks USDC, which is then converted into wrapped T-Bills that back the minted sUSD. The steps involved include:

         
         

         

         
         Step 1. User Locks USDC: The user locks USDC to initiate a transaction. A quote is generated, specifying the USDC amount, expiry time, and commission rate.

         Step 2. Fulfillment by Qualified Liquidity Provider (QLP): The QLP fulfills the buy order by transferring USDC and receiving a wrapped T-Bill in return.

         Step 3. Forwarding Wrapped T-Bill: The wrapped T-Bill is forwarded to the sUSD minting program, where it is locked

         Step 4. Minting sUSD: The Solayer sUSD Program mints sUSD based on the value of the wrapped T-Bill, maintaining a 1:1 peg with USDC

         Step 5. Delegate sUSD to Secure Exogenous AVS (Coming Soon): The user can delegate sUSD to secure our exogenous AVSs (exoAVSs) when it goes live.

         
         

      3. Redemption Process

         Similarly, the redemption process allows users to withdraw USDC by returning sUSD to the program. The process unfolds as follows:

         
         

         

         
         

         Step 1. Undelegate sUSD: The user requests undelegate sUSD

         Step 2. User Sends Back sUSD: The user initiates the withdrawal by returning sUSD to the program.

         Step 3. Protocol Calculates Wrapped T-Bill: The program calculates the amount of wrapped T-Bill corresponding to the withdrawal request.

         Step 4. QLP Fulfills Withdrawal: The QLP redeems the wrapped T-Bill and transfers the corresponding USDC back to the protocol.

         Step 5. USDC Returned to User: The protocol returns USDC to the suer, completing the withdrawal process.

   
   

3. Transparency and Security

   
   

   1. Transparency

      All transactions and T-Bill holdings associated with sUSD are recorded on the Solana blockchain, ensuring full transparency and traceability. This immutable record provides users with assurance regarding the integrity of the system, allowing participants to verify asset movements at any time.

      
      You can track:

      sUSD Token Info here
      Our Pool Account here

      Program ID here

      Program IDL here

      
      

   2. Security

      sUSD implements a security framework where each market maker holds their assets in a Program Derived Account (PDA), ensuring that assets are securely stored in isolated environments. Additionally, the decentralized RFQ system mitigates the risks of unauthorized access and ensures that pricing remains fair and competitive, making the protocol more resilient to manipulation.

      
      
      

4. Risk and Audits

   
   

   1. Risk Considerations
      While sUSD offers stable yields backed by T-Bills, users should be aware of potential market and investment risks associated with holding such assets. For more detailed risk assessments, users can refer to risk documentation here.

      
      

   2. Audits

      sUSD underwent a comprehensive audit by Halborn in October 2024. This audit reflects Solayer’s commitment to security and scalability as part of building a secure crypto-economic infrastructure. The broader community is encouraged to review the contracts and report any vulnerabilities to report@solayer.org.
      
      

5. Conclusion

sUSD is a game-changing asset in the Solana ecosystem, combining yield generation, transparency, and security into a single, versatile stablecoin. Its integration with Actively Validated Services (AVS) expands its utility beyond just a stable store of value, making it a vital tool for securing decentralized infrastructure. sUSD is poised to attract both DeFi-native users seeking yield and more conservative investors looking for stable, low-risk returns.

Through this exploration of sUSD’s technical architecture, we’ve seen how this innovative stablecoin is reshaping liquidity management and asset security on Solana, offering a powerful glimpse into the future of decentralized finance.