This proposal seeks to onboard two new yield strategies (ARKs) to the existing USDT Vault on Ethereum Mainnet. These ARKs allocate capital to vaults built on Morpho V2 infrastructure, which currently offer materially higher yields compared to the strategies presently deployed within the USDT fleet.
The strategies route USDT liquidity into Morpho markets utilizing USDS and sUSDS collateral, enabling the Lazy Summer Protocol to capture additional lending yield while maintaining exposure to high-liquidity, blue-chip DeFi primitives.
If approved, the two new ARKs will expand the strategy set available to the USDT vault, allowing capital to be dynamically routed toward these higher-yielding opportunities while maintaining diversification across strategies.
2. Motivation
By integrating these ARKs, the USDT vault can capture higher yields while maintaining exposure to well-established collateral assets. The strategies primarily interact with markets utilizing USDS and sUSDS collateral. These assets are part of the broader ecosystem surrounding the Sky protocol (formerly MakerDAO), which remains one of the most battle-tested lending ecosystems in DeFi.
These new vaults are also seeing higher yields due to Sky’s 150,000 USDT and 150,000 USDS rewards and incentives, which are being distributed to bootstrap liquidity. They are also incentivized by MORPHO rewards to further increase bootstrap liquidity across all V2 vaults.
Lazy Summer Protocol currently has significant exposure to Morpho, and a number of V2 vaults have already been onboarded as ARKs; therefore, it is not expected to create any new risks to the protocol, both from a technical and economic viewpoint. While these strategies introduce exposure to USDS-based collateral, these risks are mitigated by several factors:
The long operational history of Maker-style collateral frameworks
Deep liquidity across major DeFi venues
sUSDS collateral is already onboarded both directly and via numerous ARKs on SummerFi Lazy protocol deployments on Mainnet and Base.
5. Next Steps
Risk Review: Tagging @BlockAnalitica to provide a risk classification and suggest initial deposit caps for these two ARKs.
Both ARKs were evaluated using the BA Labs baseline screening framework.
Using the current Lazy Summer USDT fleet parameters (TVL: $211,740, APY: 4.1%, 30d average), the minimum protocol TVL required for a new yield source to produce a meaningful APY improvement ranges between ~$16.9k and ~$19.5k.
The proposed Morpho-based strategies significantly exceed these thresholds:
ARK
Protocol APY
Protocol TVL
Minimum Required TVL
Result
sky.money USDT Savings
6.0%
$78.74M
~$16.9k
PASS
sky.money USDT Risk Capital
5.69%
$31.58M
~$19.5k
PASS
Both strategies also satisfy the APY threshold requirement (APY_protocol > 0.9 × APY_fleet, or 3.69%).
Beyond the quantitative checks, the qualitative baseline criteria are also met. Morpho provides transparent onchain data and analytics dashboards where collateral composition, market utilization, and vault performance metrics can be independently verified. The lending markets also maintain high liquidity with no long lockups or vesting schedules, allowing positions to be exited under normal market conditions.
Sky MorphoV2 Risk Assessment for Mainnet USDT Fleets, with Additional View on USDC Risk Capital
Block Analitica reviewed sky.money USDT Savings and sky.money USDT Risk Capital, the two vaults covered by this RFC. We also include a risk view on sky.money USDC Risk Capital, which is not part of the RFC but is relevant for the Mainnet USDC HR fleet.
All three vaults allocate into a single dedicated Morpho market and therefore have fully concentrated exposure. These markets are exclusively collateralized by Sky protocol tokens, either sUSDS or stUSDS. sUSDS is already used across multiple approved ARKs in existing Lazy Summer deployments on Mainnet and Base and does not introduce a new collateral exposure. stUSDS, by contrast, is not currently an approved collateral type in the Lazy Summer risk universe and therefore introduces a new source of collateral risk.
Morpho V2 vault infrastructure is production grade and well audited. Given the single market design of these vaults, the key risk factors are market concentration, collateral quality, and curator-controlled allocation constraints.
Collateral Exposure
Vault
Underlying Market
Collateral
LLTV
sky.money USDT Savings
sUSDS/USDT
sUSDS
96.5%
sky.money USDT Risk Capital
stUSDS/USDT
stUSDS
86%
sky.money USDC Risk Capital
stUSDS/USDC
stUSDS
86%
stUSDS (Sky Forum, community overview) is a riskier token compared to sUSDS. Users deposit USDS to mint stUSDS, and that capital is used to fund USDS borrowing by SKY stakers posting staked SKY as collateral. Its yield is utilization-sensitive and adjusted by the BEAM rate setter toward a target utilization near 90%. stUSDS holders can be exposed to losses if bad debt builds up in the underlying system. In addition, Sky governance retains direct control rights over the contract, which adds governance risk. On that basis, Block Analitica classifies stUSDS-collateralized markets as Higher Risk.
Fleet Classification
sky.money USDT Savings (0x23f5E9c35820f4baB695Ac1F19c203cC3f8e1e11): classified as Low Risk (LR) and eligible for the USDT LR fleet.
sky.money USDT Risk Capital (0x2bD3A43863c07B6A01581FADa0E1614ca5DF0E3d): classified as Higher Risk (HR) due to its stUSDS collateral exposure. Since no USDT HR fleet currently exists, Block Analitica does not recommend onboarding it for the time being.
sky.money USDC Risk Capital (0x56bfa6f53669B836D1E0Dfa5e99706b12c373ecf): classified as Higher Risk (HR) and eligible for the USDC HR fleet.
Conclusion
Block Analitica supports moving sky.money USDT Savings to SIP for the USDT LR fleet. Block Analitica does not recommend onboarding sky.money USDT Risk Capital for the time being, given its Higher Risk classification and the absence of a USDT HR fleet. Block Analitica also supports onboarding sky.money USDC Risk Capital to the USDC HR fleet, although this vault is outside the scope of the current RFC and would require separate governance action. Final initial caps and allocation parameters will be defined prior to execution.