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 whole worth locked (TVL).
He beforehand stated on March 20:
“Fairly positive our crew cracked algo secure cash in the present day, however earlier cycle gave me a lot PTSD unsure if we should always implement.”
Cronje referred to high-profile scandals involving algorithmic stablecoins like TerraUSD (UST), which collapsed and brought on practically $40 billion in losses for buyers. 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 stated in a put up:
“Yohaan simply discovered a method 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 primarily based on liquidity tiers.
Moreover, the yield mannequin suggests a scalable incentive mechanism the place early adopters are rewarded with greater returns, progressively normalizing as liquidity deepens.
A $230 billion market
Sonic, a high-performance layer-1 community, is positioning itself as an execution atmosphere optimized for monetary functions.
In response to 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 just lately surpassed $230 billion in whole 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 progress 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.
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