Overview
dTRINITY S (dS) is a decentralized stablecoin deployed natively on Sonic Chain. It is fully backed by a non-custodial reserve of Sonic (S) and S-based LSTs. Built on the ERC-20 standard, each dS token is soft-pegged to 1 S—backed by at least 1 S worth of collateral. dS can be minted permissionlessly via smart contracts with no fees (excluding gas). A fee-based redemption mechanism is currently in development and will be released in Q2 ‘25.
For user instructions, please refer to our User Guide.
User Benefits
Similar to dUSD, dS redirects reserve earnings as interest rebates to its borrowers on the demand side—effectively subsidizing their borrowing costs. This creates a higher supply-demand equilibrium vs. vanilla S, unlocking greater yields and capital efficiency for Sonic users.
dS lenders and LPs are also rewarded with 
TRIN tokens on top of enhanced lending yields and pool fees (initially through the 
Points Program), giving them a stake in the protocol based on liquidity contribution. They may earn additional points and incentives from ecosystem partners as well, such as network rewards and protocol emissions.
TRIN tokens on top of enhanced lending yields and pool fees (initially through the Points Program), giving them a stake in the protocol based on liquidity contribution. They may earn additional points and incentives from ecosystem partners as well, such as network rewards and protocol emissions. For more information, please refer to Yields & Rewards.
Collateral Reserves
dS reserves initially consist of S and stS. As dTRINITY evolves on Sonic, governance shall evaluate opportunities to diversify the reserve with new assets or remove those that no longer meet the protocol's standards.
Below are the addresses for dS and it reserve on Sonic:
Network | dS Token Address | Reserve Address |
Sonic |
The following reserve assets are currently whitelisted for minting/redeeming dS:
Reserve Asset | Type | Network | Mint & Redeem Ratio |
☑️ S | Crypto | ☑️ Sonic | 1 S = 1 dS |
☑️ stS | LST | ☑️ Sonic | 1 S of stS = 1 dS |
⏳ Others (TBD) | LST | ☑️ Sonic | 1 S of ____ = 1 dS |
Reserve assets may also include LP positions in the following designated liquidity pools (via algorithmic market operations):
Reserve Asset | Type | DEX | Network |
☑️ dS/stS | Crypto/LST | SwapX | ☑️ Sonic |
⏳ Others (TBD) | Crypto/Crypto
Crypto/LST | TBD | TBD |
Price Oracles
The dS reserve's NAV (net asset value) and mint ratio per reserve asset are determined based on each asset's USD price feed via RedStone. More oracles will be incorporated in the future to enhance the reliability of price feeds.
To protect against de-pegging events caused by temporary market liquidity issues, oracle price feeds for LSTs are based on the unit NAV of their underlying holdings rather than market-traded prices. For example, Redstone provides a feed for stS/S (how much S is staked per stS) and S/USD (how much S is trading for). The final price of stS is then determined by multiplying stS/S with S/USD.
If an LST reserve asset devalues significantly and does not recover within a 24-hour period, governance can assess the situation and take action to de-risk the reserve by swapping the devalued LST out for an uncorrelated LST. Additionally, governance can temporarily or permanently suspend minting with the devalued LST. These measures help the protocol manage risks and mitigate impacts from sudden market shocks.
Note: The price of dS is hard-coded to 1 S on lending protocols. Additionally, dS is disabled as a borrowing collateral by default to prevent subsidy arbitrage from users who may loop dS against itself.
Stability Mechanisms
1. Stability Market Operations (SMO)
Similar to dUSD, SMOs for dS are designed to maintain price stability during credit expansion cycles by contracting its reserve and circulating supply.
When dS trades below 1 S, the protocol may use its full-reserve backing to strategically buy back and redeem dS from DEX pools. This stabilizes the peg and strengthens the reserve through arbitrage profits from buying dS at a discount.
SMOs typically take place during periods of high selling pressure—for example, when borrowers swap dS for other assets to loop or increase leverage.
2. Algorithmic Market Operations (AMO)
Similar to dUSD, AMOs for dS are designed to maintain price stability during credit contraction cycles by expanding its reserves and circulating supply.
dS AMOs complement its SMOs by expanding the money supply with pre-minted tokens. These unallocated tokens sit on both sides of the reserve’s balance sheet. When dS trades above 1 S, the protocol can allocate or sell these tokens to designated dS pools, obtaining new reserves in the process. This also stabilizes the peg and strengthens the dS reserve through arbitrage profits from selling tokens at a premium.
AMOs enable faster protocol response to increased dS buying pressure on DEXs, such as when borrowers unloop or deleverage.
3. Borrower Arbitrage
When dS trades below 1 S, existing borrowers have a natural incentive to buy it back at a discount and repay their dS-denominated debt at face value. Conversely, when dS trades above 1 S, borrowers can supply collateral in dLEND or partnered lending protocols, borrow dS at face value, and sell it at a premium to capture arbitrage profits. These processes also help reinforce dS’s soft peg to 1 S.
4. Market Maker Arbitrage
Like borrowers, market makers are naturally incentivized to buy dS when it trades at a discount to front-run SMOs/borrowers and capture arbitrage profits for themselves. Conversely, they can mint new dS tokens at par to sell when it's trading at a premium. As market makers add more liquidity, dS’s soft peg to 1 S would gradually improve, decreasing its reliance on SMOs and AMOs to maintain stability.
5. Growing Collateral Ratio
Over time, a portion of protocol revenue—from SMO/AMO profits and reserve earnings—accumulates as excess reserves, pushing dS above a 100% Collateral Ratio. This helps strengthen market confidence and price stability while creating a buffer against potential reserve devaluation. When the Collateral Ratio exceeds a certain threshold, protocol governance can determine how to allocate the excess reserves, such as funding extra subsidies or acquiring other strategic reserve assets.
Dynamic Interest Rebates
dTRINITY has a mandate to allocate at least 90% of dS's reserve holdings in LSTs to generate subsidy funding. These holdings shall be optimized to target Sonic yield benchmarks (e.g., Beets stS), ensuring the protocol generates sufficient reserve earnings to incentivize users competitively.
The protocol mints new dS periodically using at least 90% of reserve earnings during that period to subsidize dS interest expenses on lending protocols. These freshly minted tokens are distributed to dS borrowers as interest rebates. The remainder of reserve earnings is retained as protocol revenue.
The “Rebate APY” displayed in dS lending markets shows the current net rebate rate that borrowers can earn based on their active dS debt. This rate is variable and depends on the reserve’s intrinsic yield as well as the ratio between dS's circulating supply vs. its TDL (Total Debt Locked).
Recursive Lending (Re-Lending)
When borrowers exchange dS for other assets, it flows into liquidity pools where other users may acquire and re-lend it. Users may also borrow dS and re-lend it to take advantage of carry trade opportunities when dS’s Supply APY is higher than its net Borrow APY (post-rebates). As dS gets re-lent multiple times, it creates a money supply and debt multiplier effect similar to the traditional banking system. This means the aggregate value of dS deposits and debt on lending protocols may exceed its total circulating supply (i.e., the base money supply).
Rebate APY vs. Debt Ratio
When dS’s TDL is the same as its total circulating supply, the net Rebate APY is the same as the reserve’s intrinsic yield. When TDL exceeds the circulating supply due to re-lending, the net Rebate APY becomes diluted and decreases below the intrinsic yield because there are fewer yield-bearing reserves and more debt to subsidize. On the contrary, when TDL is less than the circulating supply, the Rebate APY becomes concentrated and increases above the intrinsic yield because there are more reserves and less debt to subsidize. Therefore, the Debt Ratio as well as the net Rebate APY will fluctuate over time and can be calculated as follows:
- Debt Ratio = Total Debt Locked / Circulating Supply
- Net Rebate APY = (Reserve Intrinsic Yield * 90%) / Debt Ratio
Below is an example of rebate calculations, assuming that the reserve’s intrinsic yield is 5% APY:
Total Debt Locked | Circulating Supply | Debt Ratio | Rebate APY |
10,000 dS | 100,000 dS | 0.10 | 45.00% |
25,000 dS | 100,000 dS | 0.25 | 18.00% |
50,000 dS | 100,000 dS | 0.50 | 9.00% |
100,000 dS | 100,000 dS | 1.00 | 4.50% |
200,000 dS | 100,000 dS | 2.00 | 2.25% |
500,000 dS | 100,000 dS | 5.00 | 0.90% |
1,000,000 dS | 100,000 dS | 10.00 | 0.45% |
Since there are yield-bearing reserves constantly backing dS, even as the Debt Ratio increases, the net Rebate APY always remains above zero. Therefore, interest rebates help lower the effective equilibrium of dS borrowing costs vs. vanilla S. When the Debt Ratio and utilization are high, interest rebates may be marginal, but when they are low, rebates may become quite substantial—potentially producing negative borrowing rates (i.e., getting paid to borrow, net of rebates). This makes dS a super cost-effective S-denominated debt instrument, ensuring constant credit demand and utilization on integrated lending protocols.
Note: dTRINITY may boost the Rebate APY with its available marketing budget during promotional periods.