Introduction
Sperax is a robust Arbitrum-native DeFi protocol offering users “auto-yield” on its $USDs stablecoin. Simply put, Sperax’s main product is a yield-bearing crypto-collateralized decentralized stablecoin. Can you say that 10 times fast?
Sperax aims to create a well-rounded fully crypto-collateralized stablecoin that passes yield to its holders. With Arbitrum Nitro’s launch just around the corner, the layer 2’s ecosystem looks primed to catch a wave of speculation that Sperax will undoubtedly be apart of.
The Problem
Many of us are familiar with the utter lack of truly decentralized, scalable stablecoins with deep liquidity. Often this stems from a structural problem, leading creators to commonly default to either a fully algorithmic non-collateralized model, or majority censorable collateral from centralized stablecoin over-reliance.
What the market lacks is new re-stylings of the decentralized stablecoin that doesn’t have a massive single point of failure, or simply one that isn’t ponzi. This re-styling is exactly what Sperax brings to the table.
The Goal
Right now, Sperax USD ($USDs) is an auto-yield stablecoin 100% collateralized by a basket of non-volatile crypto assets. In preparation for Sperax’s Demeter product launch, SIP-6 moves to set a 0% mint fee for $USDs and completely eliminate the algorithmic aspect of the stablecoin. It is fully-collateralized, meaning depositors mint 1:1 with their collateral value.
With Demeter, Sperax poises itself to take the spotlight in the heavily foreshadowed Arbitrum frenzy. Demeter is just one step in Sperax cementing itself as a fundamental component of the Arbitrum ecosystem, harboring deep liquidity for new protocols and the $USDs stablecoin alike.
How Does it Work? $USDs and Auto-Yield
$USDs is distinct from other decentralized stablecoins by being interest-bearing. Holders of the stablecoin simply receive auto-yield to their wallet over time--no gas and no staking necessary. Sperax native smart contracts can never earn auto-yield on the $USDs they hold, but external smart contracts can only if they are whitelisted by the team. While only on Arbitrum now, $USDs has plans to go multi-chain.
$USDs yield is distributed approximately every 10 days, randomly timed to prevent the gaming of rewards distributions. Holders can earn up to 11% APY. Whenever the protocol is able to generate more than 11%, the extra yield is collected by the protocol and saved for future yield reserves. The collateral used to mint $USDs is deployed on other DeFi protocols to earn yield, which is then passed down to $USDs holders and $SPA stakers. While stablecoin yield is not subsidized at all by $SPA emissions currently, this is subject to change in the future.
The peg is ultimately maintained by the ability to redeem Sperax collateral 1:1 for every $USDs. In the extremely unlikely event that Sperax collateral is not available, the $SPA token is minted to pay redeemers 1:1. Sperax only accepts $USDC, $DAI, $FRAX, and $VST collateral right now. This collateral is currently deployed on Curve, Aave, and Stargate with strategy subject to change via governance.
How Does it Work? Demeter
Demeter can be described as a type of framework mostly targeted towards newly built or migrated protocols seeking liquidity on Arbitrum. Sperax pitches a “no-code environment” for deploying incentivized Uniswap v3 pools, where incentives exist via the Demeter frontend. The team calls this “farming-as-a-service” (FaaS), presenting a push-of-a-button method for new protocols to launch a Uniswap pool paired with the $USDs stablecoin.
With incentives hosted from Demeter, governance controls the gauges on these pools even though the liquidity itself remains in the Uniswap liquidity pool. Pool incentives are variably split between $SPA and the other paired token, and protocols pay a one-time $500 fee to launch (paid in $SPA and burned).
At scale, this generates deep liquidity for $USDs and other Arbitrum tokens alike. The team was inspired by a lack of existing framework for protocols to easily create their own Uniswap v3 pools, resulting in many opting for less capital efficient trading platforms that are easier to deploy on. Sperax’s Demeter solves the pressing infrastructure issue that protocols face when looking to deploy liquidity pools on Arbitrum. Demeter will be a native public good forged around capital efficiency and accessibility, currently testing proof of concept with the L2DAO/USDs pool launch.
Demeter is the largest recent single development that users are looking forward to, but a plethora of recent small developments are worth noting as well.
Partnerships
The protocol itself is backed by big names like Alameda, Jump, Polychain Capital, and more. Sperax has already initiated some native partnerships like a collaboration with Plutus to launch plsSPA. It also has openly discussed its partnership with CeFi platform Streetbeat allowing its customers to gain $USDs auto-yield exposure.
Tokenomics
- $SPA Price: $0.013
Market Capitalization: ~$17.5 million
Circulating Supply: 1,300,302,501
Total Supply: 4,743,543,982
SOURCE: Coingecko
Learn more about token distribution here.
- $USDs Price: $1.00
Market Capitalization: ~$3.7 million
Circulating Supply: 3,765,865
SOURCE: Coingecko
$SPA is the governance and incentive token of the Sperax Protocol. Taking after the veCRV pioneer token model, $SPA can be locked on either Arbitrum or Ethereum mainnet to receive veSPA. Like most vote-escrowed tokens, the amount of veSPA received is proportional to lock duration. As such, the amount of veSPA also determines governance power and staking rewards granted to the locker.
Generated revenue is used to purchase $SPA and re-distribute it to veSPA holders. 50% of all yield generated by $USDs collateral and 100% of fees from $USDs mints/ redemptions go to veSPA holders. Not unexpectedly, some $SPA emissions are involved to incentivize lockers as well. Just recently, SIP-6 looks to make $SPA deflationary from a revenue-powered burn mechanism. 50% of $SPA purchased by the protocol with generated revenue gets burned with the passing of SIP-6. This has already reduced circulating supply by -5% only to further decrease as burning persists.
veSPA follows a linear decay model. Over time, veSPA holders experience a balance decay only alleviated by 1.) extending the lock or 2.) increasing staked balance during a lockup.
Conclusion
Sperax and its team already show their ambitions to become a top-ranking protocol in the Arbitrum ecosystem. Bringing something new to the table and appealing to the spreading “real yield” narrative, the SPArtans are ready to keep pushing more prodigious developments into the cryptosphere. $USDs is an ideal combination of being decentralized, fully-collateralized, and uniquely yield-bearing. $SPA lockers will only be entitled to more and more cashflow as Sperax grows. Arbitrum SZN is upon us, and the exciting updates coming from the DeFi ecosystem lately just get exponentially more impressive.
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DISCLOSURE: I do not have any exposure to Sperax or $SPA. I was not asked to write this article and have not been compensated in any way. The information provided in this article is solely for educational purposes and should not be considered as financial advice. The views expressed in this article are my own and do not necessarily reflect the official policy or position of any company or organization. Readers should always conduct their own research before making any financial decisions.