[SIP2.34] Add stUSDS to USDC Mainnet – Higher Risk Vault (Expedited)

[samehueasyou]

Summary

This SIP proposes expedited integration of stUSDS into the USDC – Higher Risk vault on Ethereum Mainnet in the Lazy Summer Protocol.

Following prior diligence of multiple ARKs from the Sky ecosystem and a targeted technical review, stUSDS meets Lazy Summer’s standards for inclusion. Given its attractive yield profile, $50 million capacity for 20% APY, and the protocol’s established track record, this proposal requests an expedited approval process.

This integration strengthens the USDC vault’s yield diversification by introducing a high-yield, risk-bearing Sky strategy.

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Motivation

• Expand Yield Sources – Adds a Sky Ecosystem stUSDS risk token strategy, designed to fund SKY-backed borrowing. This complements existing lending-based strategies and provides differentiated yield dynamics.
• Attract New Users – Appeals to advanced DeFi users and Sky ecosystem participants, including SKY stakers and governance participants, expanding Lazy Summer’s reach.
• Increase TVL – The stUSDS strategy has a $50 million capacity and currently offers competitive high yields, supporting aggressive growth goals for the USDS vault family.

Specification

Parameter	Value
Vault	USDC Mainnet – Higher Risk
Network	Ethereum
New ARK	stUSDS
Contract Address	0x99CD4Ec3f88A45940936F469E4bB72A2A701EEB9
Risk Tier	Higher Risk
$SUMR Rewards	In line with USDC Higher Risk vault reward policy

About stUSDS

stUSDS is a risk-bearing token designed for advanced users seeking higher yield in exchange for taking on borrower shortfall risk within the Sky Ecosystem.

• Purpose: stUSDS funds SKY-backed borrowing, encouraging more participation in SKY staking and governance.

• Yield Formula: stUSDS Rate = Utilization * (SKY Borrow Rate - stUSDS Accessibility Reward) + (1 - Utilization) * Sky Savings Rate
  where U = utilization rate of the stUSDS pool.

• Risk Profile:

  • stUSDS absorbs shortfall risk if SKY-backed loans are under-collateralized.
  • This risk is ring-fenced to stUSDS holders; broader Sky Protocol is insulated.
  • This makes stUSDS distinct from sUSDS, which carries protocol-level risk but not borrower shortfall risk.

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Rationale for Expedited Integration

• High Yield Opportunity: stUSDS currently offers market-leading yields, well above stablecoin lending benchmarks.
• Proven Protocol: Multiple Sky ecosystem ARKs are already integrated in Lazy Summer with strong operational performance.
• Strategic Alignment: stUSDS aligns with Lazy Summer’s strategy to onboard high-quality, differentiated yield sources to maximize returns for sophisticated users.
• Sufficient Capacity: With a $50 million cap for 20% APY, the strategy can materially contribute to USDS TVL growth and yield competitiveness.

@BlockAnalitica @halaprix @jensei @0xtucks @chrisb

[jensei]

Seems like a strong addition, especially given Lazy Summer’s prior integrations with the Sky ecosystem.

The expedited path makes sense due to the $50M capacity. Am curious about thoughts from @BlockAnalitica as well as @Recognized_Delegates assessment of the development pipeline/requirements of such deployment.

[MasterMojo]

I am for this for proposal.

[BlockAnalitica]

We evaluated stUSDS as a potential yield source for the HR Fleet Mainnet USDC. The protocol lets SKY holders borrow USDS against their SKY, while USDS suppliers earn attractive yields.

Although the design aligns well with Summer.fi’s quality standards, the product is still finding its equilibrium. For instance, supply rates have fallen from 40% to 6.5%, with utilization around 40%, while total supply remains strong at $142M.

Furthermore, stUSDS rates are still being computed manually, and an IRM curve is planned for future implementation (see link) to provide more predictable rates. Until then, and following further analysis from BA Labs, we will reassess our decision.

Our view is that stUSDS is promising but not yet mature enough to be considered as a significant yield amplifier at this point. For the time being, we recommend waiting until rates and dynamics stabilize before adding it as an ark in the HR Fleet.

[samehueasyou]

thanks for your analysis