People dm me about @SonicLabs new stables protocol @stout_fi. Here's my non-biased analysis.

There are 4 tokens in this protocol:

1. $STTX - utility token with a rising price floor

2. $veSTTX - Governance token by locking STTX

3. $DUSX - USD-pegged stablecoin

4. $stDUSX - earns 75% of the protocol revenue

It sounds complicated, but I think most people can ignore the yield of DUSX/stDUSX, as you can probably earn a better yield from @ethena_labs.

The interesting design for $STTX here is the "time-based burn mechanism". STTX will be burnt continuously, and therefore its floor price will increase. Any STTX held in a normal wallet will gradually burn away, so users are incentivized to either provide liquidity or lock STTX as veSTTX to avoid the burn​.

If we break down the flow:

(i) STTX bootstrap funds the DUSX reserve by giving DUSX initial liquidity

(ii) veSTTX holders gain value from floor increases

(iii) Using veSTTX as collateral ties the stablecoin (DUSX) health.

Risks:

(i) STTX actual demand - if market demand for STTX is weak, it could trade very close to its floor (=minimum backing). If mass redemptions happen (everyone burning STTX for DUSX), it could deplete that reserve.

(ii) Lack of DUSX adoption - A stablecoin without adoption will not go anywhere. The protocol fundamentally encourages users to "borrow DUSX, stake it, earn yield". It means much of the DUSX supply might remain locked in staking; its long-term sustainability will depend on having enough real economic activity to feed the revenue that pays stakers.