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Providing liquidity for stablecoin pairs is one of the best ways to generate real yield in DeFi today. But less volatility also means less opportunity.
Spot is a low volatility store of value that works by perpetual tranching. It was born out of the belief that a sufficiently stable decentralized flatcoin could eliminate inflation. The SPOT:USDC LP position on Uniswap V3 exposes holders to limited volatility in exchange for higher sustainable yields. The pair outperforms over medium and long time horizons.
| Period | APY | Volatility |
|---|---|---|
| 180 days | N/A | N/A |
| 90 days | N/A | N/A |
| 60 days | N/A | N/A |
| 30 days | N/A | N/A |
| 14 days | N/A | N/A |
| 7 days | N/A | N/A |
Trading fees. Spot is a mean-reverting asset with a wider price distribution than dollar-pegged stablecoins. For this reason, providing SPOT/USDC liquidity generates much higher trading fees through arbitrage, resulting in higher APY’s.
A wider price distribution means there's more margin for gain when users buy under the mean and sell over the mean. Spot's average mean reversion cycle is 30 days.
Typically, high-yield stablecoin programs rely on demand for leverage to deliver yields. Borrowers pay interest on their loans and this interest is passed over to lenders. But demand for leverage disappears in bear markets, causing yields to disappear. Because Spot's liquidity provisioning yield is harvested from price volatility it can persist through sideways markets.
Spot's fees deliver through sideways markets because they are generated from natural volatility. Fees generated by lending only deliver high yields in "up-only" markets.
Spot features a "bend don't break" design. That is to say, when faced with extreme market conditions, the system becomes temporarily more volatile rather than triggering bank-runs, death-spiral-minting, insolvency, or cascading liquidations.
Spot becomes temporarily more volatile in extreme market conditions, "bending" rather than "breaking"
Spot has been live for ~2 years and has functioned properly through heavy market conditions including 1) the unprecedented flash crash triggered by Trump's tariff announcements and 2) the period of persistant collateral asset selling through FTX's bankrupcy liquidations in 2024.
SPOT is a low-volatility commodity-money. It's durable, decentralized, and inflation resistant, like a commodity money, only more stable. Spot can be used as a store of value and collateral asset. To learn how SPOT works see the SPOT primer.
SPOT is not a stablecoin, it does not have a peg and does not track the price of any fiat currency. SPOT is a low-volatility commodity money. SPOT is more volatile than a traditional stablecoin, but less volatile than a traditional cryptocurrency. Most notably, unlike today's stablecoins SPOT is scalable, durable, and inflation-resistant.
Flatcoin is a general term of art used to describe a new generation of stable assets that do not track the US dollar. SPOT is sometimes referred to as a decentralized flatcoin. More precisely, SPOT is a low volatility commodity money.
The SPOT token is extremely durable. Its protocol has no peg and no catastrophic breaking conditions. In extreme market scenarios the token simply becomes temporarily more volatile, bending rather than breaking.
Instead of a peg, SPOT has a bounded range of volatilies. In its typical state, where all the tranches in SPOT’s collateral set are fresh, the token is stable. But in the most extreme condition, where all the tranches in SPOT’s collateral set have matured, SPOT is precisely as volatile as AMPL.
For more context, read: The SPOT Flatcoin — A Low Volatility Derivative.
Please refer to Spot Mean Reversion Cycle.
Please refer to Spot Mean Reversion Cycle.
Please refer to Spot Mean Reversion Cycle.
SPOT integrates some of the best qualities of fiat monies like the dollar and commodity-monies like gold or Bitcoin. SPOT is:
To understand why low volatility commodity monies are important and how SPOT fits into this new asset class check out:
AMPL is the underlying collateral asset that enables SPOT protocol. It is a price stable, but supply volatile cryptocurrency. AMPL's unit of account function greatly simplifies the creation of on-chain derivatives through tranching. To learn about tranching see the SPOT primer.
Any holder of AMPL benefits from SPOT's network growth.
SPOT and Ethena use very different approaches. Ethena creates stability and yield through delta neutral positions across centralized exchanges. The SPOT protocol uses tranching to reorganize the volatility of a medium volatiltiy asset (AMPL) into high and low volatility perpetual derviatives. The most notable differences are:
SPOT and DAI use very different approaches. DAI creates stability through liquidation markets. The SPOT protocol uses tranching to reorganize the volatility of a medium volatiltiy asset (AMPL) into high and low volatility perpetual derviatives. The most notable differences are:
Note: Liquidation market based approaches are vulnerable to cascading liquidations and are difficult to scale in general — hence their use of centralized collateral (like USDC).
SPOT is a low volatility derivative. It is a one-directional claim on a basket of collateral that has no peg and no death-spiral minting mechanics.
Instead of a peg, SPOT has a bounded range of volatilies. In its typical state, where all the tranches in SPOT’s collateral set are fresh, the token is stable. But in the most extreme condition, where all the tranches in SPOT’s collateral set have matured, SPOT is precisely as volatile as AMPL.
For more context, read: The SPOT Flatcoin — A Low Volatility Derivative.
Rebasing is the process of automatically adjusting the quantity of units in user wallets based on demand. AMPL rebases, but SPOT does not.
To learn more see the official website.
For an overview of the system read the SPOT primer.