Introduction
In late September 2025, Dolomite announced that it had integrated two stablecoins from the CapMoney protocol: $cUSD and $stcUSD. This integration is framed not simply as a listing, but as a deeper composable inclusion: users can use these stablecoins as collateral, borrow against them, and deploy them into advanced strategies on Dolomite.
The claim is that Dolomite is expanding its “money legos” — making these stablecoins work harder by blending stability, yield, and composability.
In this article, I unpack:
What Dolomite is (structure, features)
What CapMoney’s $cUSD and $stcUSD are, how they work
The mechanics of integration & how users can use them on Dolomite
Benefits, strategies (e.g. looping)
Risks, challenges, and caveats
Broader implications and what this signals for DeFi / stablecoins
Let’s dive in.
What Is Dolomite?
Before understanding the integration, we need to grasp what Dolomite is, how it operates, and what its value proposition is in DeFi.
Core Concept & Architecture
Dolomite is a decentralized exchange + money market protocol that supports lending, borrowing, and margin trading.
A key differentiator is capital efficiency: it uses “dynamic collateral” mechanisms so that when you deposit an asset, you don’t necessarily lose its utility (e.g. staking, governance, other yield) entirely.
It also supports a large universe of assets. Dolomite claims that it supports over 1,000 unique assets for borrowing, lending, and earning.
Another design priority is composability: assets supplied or borrowed on Dolomite can be reused, looped, paired, etc., within the DeFi ecosystem, increasing flexibility.
Dolomite emphasizes that when you lend an asset, you don’t forfeit your “DeFi-native rights” (e.g. governance, staking) if feasible under the underlying token.
Use Cases & Features
Lending & Borrowing: You can supply assets to earn interest, or borrow against collateral.
Margin / Leverage / Trading: Because of its integrated DEX + markets, you can trade with leverage
Looping Strategies: Repeatedly borrow and re-supply assets to enhance yield (especially with stable assets).
Collateral Flexibility & Efficiency: Supports many collateral types, dynamic risk models.
Composability across DeFi: Integrations with other protocols to allow strategy stacking.
In short: Dolomite is trying to be an advanced infrastructure for capital-efficient DeFi, not a simple lending or swapping protocol.
CapMoney, $cUSD and $stcUSD — What Are They?
Next, we examine CapMoney’s architecture, how $cUSD and $stcUSD function, and why they may be considered “advanced” stablecoins.
CapMoney Protocol & Overview
CapMoney is a protocol that issues two stablecoin products: $cUSD (a dollar-denominated stablecoin) and $stcUSD (a yield-bearing version).
The protocol aims to combine “credible financial guarantees” with yield, while incorporating mechanisms for risk mitigation.
$cUSD: “Base” Stablecoin
$cUSD is a dollar-pegged stablecoin. In Cap’s documentation, it is described as being backed by a basket of blue-chip stablecoins (USDC, USDT, pyUSD, BUIDL, BENJI) that are issued by regulated or transparently attested institutions.
It is 1:1 redeemable for any of the underlying reserve assets. That is, holders of $cUSD can redeem it for the collateral in the backing basket.
This redeemability is central to “peg maintenance” or depeg protection: if $cUSD ever trades under $1, arbitrageurs can redeem cheap $cUSD for the underlying collateral, thus pushing the price back up, and vice versa.
Cap calls this model “credible financial guarantees” and emphasizes that the backing assets are from regulated or attested stablecoins.
$stcUSD: Yield-Bearing Version
$stcUSD is obtained by staking or converting $cUSD. In effect, you “lock in” your $cUSD and convert it into $stcUSD, and from then on it accrues yield.
The yields are generated via operators in Cap’s protocol. The operators choose strategies to deploy the underlying reserve assets to generate returns, subject to certain guardrails.
Cap’s model includes a hurdle rate: operators must generate returns above a minimal floor (for example, the base yield from something like Aave) in order to participate or remain.
Importantly, Cap asserts that downside risk from yield generation is covered. That is, even if an operator strategy underperforms, the user of $stcUSD should be shielded from downside beyond some guarantee.
Because of this, $stcUSD becomes more than a passive stablecoin: it is an “active” stable-income product.
Why CapMoney’s Model Is Distinct
Many stablecoins are purely pegged, passive assets (e.g. USDC, USDT) that do not yield.
Some algorithmic stablecoins try to generate yield but often at high risk (e.g. relying on volatile arbitrage, over-collateralization, or algorithmic mechanisms)
Cap’s approach aims to merge stability + yield with protections (redeemability, multi-collateral backing, operators) to reduce some of the failure vectors of earlier stablecoin models.
Cap is also integrating across DeFi ecosystems (Vaults, integrations) and subjecting itself to audits and transparency.
Thus, $cUSD provides a base safe stablecoin, while $stcUSD enables yield within the same “stable USD” domain.
The Integration: How Dolomite + $cUSD / $stcUSD Work Together
Now we discuss how Dolomite is integrating these assets, and how users can leverage them within Dolomite’s ecosystem.
What the Integration Provides
According to Dolomite’s announcement, $cUSD and $stcUSD are now live on Dolomite.
These tokens are available as composable collateral — meaning you can supply them as collateral, borrow against them, and reuse them in strategies.
In Cap’s “Ecosystem” page, Dolomite is explicitly listed under the protocols integrating cUSD / stcUSD.
Therefore, $cUSD and $stcUSD become part of Dolomite’s asset universe — enabling new pathways for users to move USD-aligned capital with yield.
Possible User Flows & Strategies
Here are some of the usage flows that become possible with the integration:
Supply / Deposit
A user can deposit (supply) $cUSD or $stcUSD to Dolomite’s lending markets to earn interest or yield from supply side.
Because $stcUSD already carries embedded yield, the supply yield supplements its base yield
Use as Collateral to Borrow
MkUsers can use their $cUSD or $stcUSD as collateral and borrow other assets (e.g. USDC, cUSD, or other supported tokens).
This unlocks liquidity while still maintaining exposure to the stablecoin.
Looping / Leverage Strategies (Looped $stcUSD, etc.)
Perhaps the most powerful new function is looping: borrow against $stcUSD or $cUSD, then re-supply, borrow again, re-supply, etc., to amplify yield.
Since $stcUSD yields itself, the looping effect compounds yields.
Dolomite might offer structured strategies (3× to 9× leverage) for looping, allowing users to maximize yield while ostensibly staying delta-neutral (i.e. not taking directional exposure to volatile tokens). (Your initial description mentioned up to ~137% APY under certain leverage assumptions.)
The advantage is that the underlying is a stable asset (USD peg), so volatility risk is lower than looping volatile tokens.
Redeem / Exit Options
Since $cUSD is redeemable against its backing, users always have an exit route to underlying collateral.
This ensures that even if market conditions stress, the peg and the backing provide a safety net.
Composable Strategies / Pairing with Other DeFi
Because these tokens are integrated in Dolomite’s ecosystem, they can further be used in pairs, pools, or bridged strategies with other DeFi protocols supported on Dolomite chain(s).
This means yield stacking or cross-protocol strategies become possibl
Synergies & Strengths of the Integration
Better yield options for stable assets: Instead of idle stablecoins, users have yield-bearing stablecoins plus optional leverage.
Peg stability & depeg protection: The backing and redeemability of $cUSD helps maintain trust in the peg, which alleviates one of the criticisms of yield-bearing stablecoins.
Capital efficiency: Because these tokens can double as collateral, supply, and yield instruments, capital is used more efficiently (i.e. less “idle” capital).
New incentive alignment: Users who hold $cUSD and convert to $stcUSD can access layered returns; Dolomite gains liquidity and activity; CapMoney extends reach.
Composable “money legos”: Combining stable yield with borrowing, looping, and other DeFi primitives becomes more seamless.
Benefits & Key Arguments
Why this integration is positioned as important, and what advantages it can bring to users and the ecosystem as a whole:
Stablecoins That Do More
Traditional stablecoins are passive holders of dollar value—useful for trading, parking, etc. What Cap + Dolomite offer is a stablecoin that also earns.
This closes the gap between “safety” and “productivity.
Reduced Risk of Depeg / Peg Stabilization
Because $cUSD has 1:1 redeemability and diversified backing, it is better able to absorb stress events without losing peg.
Arbitrage paths (redeem cheap $cUSD for underlying, or swap underlying for $cUSD) help stabilize deviations.
Yield with Downside Protection
Cap’s model includes protections such that yield generation downside is mitigated (i.e. claims that underperformance by operators is covered) — this is a structural guard.
This reduces one of the biggest risks in yield strategies: that attempts at high yield could lead to capital losses.
Leverage Without Volatility Exposure
Because these are stable assets, looping yield strategies amplifies returns while (in theory) not exposing users to directional price risk.
This is attractive to yield-seeking users who prefer lower volatility environments.
Network Effects for Dolomite
Integration of attractive stablecoins likely draws liquidity and user engagement to Dolomite.
It differentiates Dolomite among DeFi protocols and deepens its composability and ecosystem.
Evolution of Stablecoin Models
This partnership is a signal of how stablecoins could evolve — from simple “pegged tokens” to active financial assets that participate in yield regimes.
It may encourage other protocols to adopt more dynamic stablecoin structures.
Risks, Challenges, and Caveats
Despite the potential upside, there are nontrivial risks and caveats. Users must be cautious.
Smart Contract / Protocol Risk
As with any DeFi protocol, bugs, vulnerabilities, exploits, or logic flaws in CapMoney or Dolomite’s integration could result in losses.
Yield strategies by operators inherently carry risk: even if there is a “cover,” the cover mechanism itself could malfunctions
Operator / Strategy Risk
The operators chosen by Cap to deploy yield must perform well and safely. If they mismanage, underperform, or are attacked, then yield could be compromised.
Though Cap says downside is covered, “coverage” has limitations — it may not cover systemic risk, cascading failures, or extreme market stress
Collateral & Underlying Asset Risk
If one of the backing stablecoins (e.g. USDC, USDT, pyUSD, etc.) suffers depeg or regulatory problems, the backing basket becomes risky.
Correlation among backing assets may exacerbate risk if multiple backing assets face stress simultaneously.
Liquidity & Market Risk
In extreme conditions, redeemability or arbitrage paths may get congested or fail temporarily, causing price deviation.
Slippage, large redemptions, or mass withdrawals may stress the system.
Liquidation Risk under Leverage
Looping strategies amplify returns but also amplify risk. If interest rates shift or yield falls, positions may get liquidated
In a stablecoin loop, interest cost vs yield spread matters; if borrowing rates rise, the net yield may collapse or reverse.
Peg Stability Under Stress
While redeemability and arbitrage help, extreme or fast-moving market events may still cause temporary peg deviations.
If confidence falls, redemption pressure might overwhelm the system.
overnance, Upgrade, & Centralization Risks
The design of Cap’s governance, operator selection, and upgrade path could centralize control or governance risks.
Upgrades or changes may change parameters (e.g. hurdle rates, operator rules) in ways disadvantageous to users.
Regulatory / Legal Risk
Given that stablecoins overlap with money-like instruments, there is regulatory scrutiny. Changes in stablecoin regulation, banking rules, or securities laws could affect CapMoney or Dolomite.
Particularly, backing assets (USDC, etc.) may themselves be subject to regulatory pressure
Adoption & Liquidity Risk
The success of yield models depends on sufficient capital and demand. If not many users adopt $cUSD / $stcUSD on Dolomite, liquidity may be shallow.
If yields are not attractive compared to alternatives, capital may flow out.
erformance vs Expectations
Users may expect high yields (e.g. 100%+ APY via looping), but real net yield after costs, slippage, gas, and interest can be much lower.
Promised numbers often assume ideal conditions; the real world is messier.
Thus, while the integration opens powerful possibilities, it is not a “risk-free” advancement.
Illustrative Example (Hypothetical Strategy)
To make this concrete, here’s a conceptual example of how a user might benefit, and also where things can fail.
Alice acquires $cUSD by minting or swapping USDC → $cUSD (1:1).
She converts (stakes) $cUSD → $stcUSD to begin earning yield.
She deposits $stcUSD into Dolomite as collateral.
She borrows (say) $cUSD or USDC against it.
She re-supplies that borrowed stablecoin into $stcUSD (staking) or into lending markets, increasing her position.
She repeats (loops) up to a safe leverage level (let’s say 3×).
Her net yield is amplified: she is earning yield on the staked stablecoin, minus borrowing cost.
Over time, yield accrues, the loop augments returns, but volatility in yield, changes in interest, or liquidation risk must be managed.
If borrowing cost spikes, or operators underperform, or collateral backing weakens, then net yield shrinks or becomes negative, or positions may be liquidated. The user must monitor collateral ratios, interest spreads, and protocol health.
Broader Implications & What This Signals
This integration of yield-bearing stablecoins into an active DeFi platform like Dolomite is significant in several respects:
Evolution of Stablecoins
It demonstrates a shift from stablecoins being simple pegged tokens to being active financial primitives.
The notion that stable assets can simultaneously be safe and productive is more mainstream.
New Stablecoin Standards
If CapMoney’s model works, future stablecoins may adopt multi-collateral backing, operator yield layers, and built-in depeg protection.
This raises the bar for what users expect from “stable” assets.
Competition & Innovation in DeFi Yield
Platforms like Aave, Compound, Maker, etc., may face pressure to integrate or partner with yield-bearing stablecoins or expand stable yield options.
Protocols might compete not only on borrowing/lending rates but on the underlying financial primitives they support.
Capital Flow & Liquidity Attraction
Yield-bearing stablecoins attract capital that previously would idle in non-yielding stablecoins (e.g. USDC).
This may shift liquidity curves and capital allocation across DeFi
Increased Complexity & Risk Management
Users and protocols must upskill in risk management, auditing, peg stability, and integration guardrails.
The more “active” a stablecoin, the more nuances in its risk surface.
Composability Wins
Protocols that design for deep composability (like Dolomite) become more attractive as more modular primitives (e.g. $stcUSD) get developed.
“Money legos” compose better, enabling more sophisticated strategies.
Regulatory Pressure & Scrutiny
As stablecoins take on more financial behavior (yield, collateral, operator layers), regulators may scrutinize them more closely (are they securities, deposit-like, regulated instruments?).
Protocols must consider compliance, disclosures, audits, collateral transparency, and legal robustness.
user Experience & Access Barriers
To drive adoption, user onboarding, gas costs, ease of staking/unstaking, redeem paths, and UI/UX matter a lot.
If using $cUSD / $stcUSD on Dolomite is too complex, many users may stay with simpler stablecoins.
In sum: this integration is a signal that DeFi is entering a more mature, instrument-rich phase. The building of composable, yield-bearing, stable-value assets is part of the maturation of the ecosystem.
What to Watch & Key Metrics
If you are tracking the health or viability of this integration (or considering using it), here are some metrics and signals to monitor:
Total Value Locked (TVL) of $cUSD / $stcUSD on Dolomite
Borrow / Supply Rates / Interest Spreads (cost to borrow vs yield on supply)
Operator Performance & Yield Realization (how well operators generate yield above hurdle)
Redemption Activity / Utilization of Peg / Redeem Paths
Collateral Backing Health (diversification, exposure to backing stablecoins)
Liquidation Events / Margin Calls in looping strategies
Protocol Audits / Security Reports / Bug Bounties
On-chain Behavior (e.g. net flows, arbitrage activity, slippage)
User adoption / number of wallets putting capital into the system
Governance changes, parameter shifts, operator churn
Regulatory developments relating to stablecoins
Conclusion & Summary
Dolomite’s integration of CapMoney’s $cUSD and $stcUSD is more than just listing new tokens: it is an architectural step toward making stable assets more dynamic, yield-bearing, and composable in the DeFi world.
$cUSD is the base pegged stablecoin with diversified collateral and redeemability.
$stcUSD is the yield-bearing derivative that accrues returns via operator strategies, with built-in downside protections.
On Dolomite, these tokens can act as collateral, earn yield, and be looped into leveraged strategies while maintaining stability.
The big promise is yield + stability + capital efficiency.
But the risks are real: smart contract risk, operator risk, backing asset risk, liquidation risk, regulatory risk, user adoption risk, and more.
If this model succeeds, it may shift expectations of stablecoins across DeFi and set new norms for what stable” really means in an active financial environment