Sonic co-founder and lead architect Andre Cronje teased plans on March 25 to launch a brand new algorithmic stablecoin on the community inside 5 weeks.
Cronje highlighted that the brand new stablecoin might supply over 19% in annual proportion yield at $1 billion complete worth locked (TVL).
He beforehand mentioned on March 20:
“Fairly certain our staff cracked algo steady cash at this time, however earlier cycle gave me a lot PTSD unsure if we must always implement.”
Cronje referred to high-profile scandals involving algorithmic stablecoins like TerraUSD (UST), which collapsed and precipitated almost $40 billion in losses for traders. The episode triggered widespread scrutiny of algorithmic fashions for stablecoins.
Regardless of preliminary hesitation, Cronje proceeded to share technical benchmarks. On March 22, he revealed a proof of idea (POC) indicating the stablecoin would yield over 200% APR at $10 million in TVL, lower to roughly 23.5% at $100 million, and stabilize close to 4.9% past $1 billion in TVL.
On March 24, he reported optimization breakthroughs that considerably elevated yield potential. He mentioned in a submit:
“Yohaan simply discovered a strategy to flip this into 95.9% APY at $100m TVL, and 19.18% at $1bn+”
Cronje didn’t disclose particular particulars on the stablecoin’s algorithmic mechanics, collateral backing, or on-chain controls. Nevertheless, the yield curve implies a variable-rate return system based mostly on liquidity tiers.
Moreover, the yield mannequin suggests a scalable incentive mechanism the place early adopters are rewarded with increased returns, regularly normalizing as liquidity deepens.
A $230 billion market
Sonic, a high-performance layer-1 community, is positioning itself as an execution setting optimized for monetary functions.
Based on Cronje, the community is tailor-made for high-throughput and low-latency operations, suggesting a stablecoin product might function a core part in its evolving ecosystem.
The stablecoin market not too long ago surpassed $230 billion in complete worth, led by Tether’s USDT’s $145 billion market cap, adopted by Circle’s USD Coin (USDC), which has a market cap of $58 billion.
Regardless of USDT’s dominance, new entrants are posing actual competitors within the sector, together with Ethena Labs’ USDe, which registered excellent development over the previous 12 months.
USDe, which can also be an algorithmic stablecoin, climbed from a $1.3 billion market cap to $5.4 billion inside a 12 months.
Talked about on this article
