What is Sky Lending?
Sky Lending, formerly known as MakerDAO, is a prominent decentralized finance (DeFi) protocol. It is best known for creating and managing USDS, a decentralized stablecoin designed to maintain a stable value against the US dollar. Sky Lending plays a crucial role in the DeFi ecosystem by providing lending and borrowing services, allowing users to generate yield on their crypto assets, primarily through the USDS stablecoin.
Factsheet: Sky Lending
Name Yield (approx.%) Sector Chains Sky Lending Variable (often competitive within stablecoin yields, historically ranging from 2.4% to over 6% and potentially higher with incentives) DeFi Lending Ethereum, Solana, Berachain (via integration), potentially more via Wormhole NTT
Note: Yield percentages in DeFi are dynamic and subject to change based on market conditions, protocol revenue, and governance decisions. The yield on Sky Lending’s USDS is generated through various mechanisms, including stability fees from borrowers and returns from Real-World Assets (RWAs).
Yield Steps:
Earning yield on Sky Lending primarily involves utilizing the Sky Savings Rate (SSR) with the USDS stablecoin. Here are the general steps:
Acquire USDS: Obtain USDS stablecoins. This can typically be done by minting USDS against approved collateral on the Sky Protocol or by swapping other cryptocurrencies for USDS on supported decentralized exchanges.
Access the Sky Platform: Connect your Web3 wallet to the official Sky Lending application interface.
Deposit USDS into the SSR: Navigate to the Sky Savings Rate (SSR) module within the platform. Deposit your USDS tokens into the SSR smart contract.
Earn Yield (sUSDS): Once deposited, your USDS begins to accrue yield based on the prevailing SSR. The yield is often reflected in the increasing value of sUSDS tokens, which represent your share of the total USDS in the SSR module plus accrued yield. Holding sUSDS is how you earn yield.
Withdraw USDS: You can typically withdraw your initial USDS deposit along with the earned yield by redeeming your sUSDS.
Earning Passive Income with Sky Lending’s USDS
Sky Lending offers users the opportunity to earn passive income through its native stablecoin, USDS, primarily via the Sky Savings Rate (SSR). This mechanism allows USDS holders to deposit their stablecoins and earn a variable yield. The yield generated by the SSR is a reflection of the overall revenue generated by the Sky Protocol.
The protocol’s revenue streams are diverse and contribute to the yield distributed to USDS holders. These include:
Stability Fees: Borrowers who generate USDS against their collateral pay a stability fee, which is a form of interest.
Real-World Assets (RWAs): Sky Lending has been increasingly exploring and incorporating Real-World Assets into its collateral base. Yield generated from these assets can also contribute to the SSR.
Liquidation Fees: Fees collected from the liquidation of undercollateralized positions on the platform.
When you deposit USDS into the SSR, you receive sUSDS tokens. These sUSDS tokens automatically increase in value over time as the yield accrues. This means that when you decide to withdraw your deposit, you redeem your sUSDS for a larger amount of USDS than you initially deposited, reflecting the yield earned.
Sky Lending’s expansion to multiple chains, including Solana and integration with networks like Berachain via technologies like Wormhole NTT, aims to make accessing USDS and its yield opportunities more accessible across the broader DeFi landscape. This multi-chain strategy can potentially increase liquidity and demand for USDS, which could positively influence the yield offered through the SSR.
While the yield on stablecoins like USDS is generally lower than the potentially high, but often volatile, yields found in other areas of DeFi like liquidity mining with riskier assets, the SSR provides a relatively more stable way to earn passive income on a decentralized stablecoin. As with any DeFi protocol, users should understand the associated risks, including smart contract risk and potential changes in the Savings Rate based on market conditions and governance decisions.
The post Navigate the Sky: Your Guide to Earning Yield with USDS appeared first on Cryptopress.
