Peg Stability

The bedrock of $SUSD's usefulness in DeFi is its unwavering stability as a USD-pegged stablecoin. Unlike fiat-backed stablecoins (which depend on external reserves) or overcollateralized models (which need extra capital), $SUSD keeps its $1 peg using a delta-neutral hedging strategy. This method ensures that the USD value of its backing assets stays constant, no matter how volatile the underlying cryptocurrencies (like SOL, BTC, ETH) become. The result is a highly scalable and efficient stablecoin. Here’s a closer look at how it works.

Core Concept of Delta-Neutral Hedging

Delta-neutral hedging removes the risk of price direction. It does this by balancing a portfolio's exposure to an asset's price movements. "Delta" measures how much an asset's value changes compared to its underlying price. For example, a delta of +1 means a $1 gain for every $1 increase, while -1 means a $1 loss. A delta-neutral position aims for a total delta of 0, where gains and losses perfectly cancel out. For $SUSD, we achieve this by matching every long position (holding the actual spot asset) with an equal short position (using perpetual futures). This completely neutralizes volatility.

Mechanism in Action

Let's see it in practice: When you deposit 1 SOL worth $100 to mint 100 $SUSD, Solidus holds that 1 SOL as a spot asset (with a delta of +1). At the very same moment, it opens a $100 short perpetual futures position (with a delta of -1) on a centralized exchange like Binance. The total delta becomes 0, fixing your portfolio's total USD value at $100.

• If the Price Rises: Suppose SOL jumps to $200. Your spot asset gains $100 (1 SOL is now worth $200). However, your short perpetual loses $100 (as it pays out the price difference). Your net value remains $100, and each $SUSD is still worth $1.

• If the Price Drops: What if SOL falls to $10? Your spot asset loses $90 (1 SOL is now worth $10). But your short perpetual gains $90 (profiting from the fall). Again, your net value remains $100, and the $SUSD peg stays at $1.

This offsetting dynamic ensures stability without requiring any extra collateral beyond the initial 1:1 backing.

Execution on Solana

Solidus uses Solana-based smart contracts for instant, automated hedging. This process takes advantage of Solana's lightning-fast finality (under a second) and high capacity (over 65,000 TPS). These real-time adjustments prevent delays that could threaten the peg. Plus, Solana's incredibly low gas fees (just fractions of a cent) keep costs minimal, especially compared to Ethereum, where high fees can significantly reduce efficiency.

Scalability and Market Integration

Our delta-neutral hedging strategy benefits from the vast liquidity of perpetual futures markets, with over $65 billion in open interest across SOL, BTC, and ETH (as of 2025). This deep market allows Solidus to scale $SUSD issuance into the billions without any liquidity problems. Previous synthetic dollars struggled with illiquid decentralized exchanges, but we avoid that. The strategy also doesn't use leverage, which cuts down on liquidation risks and makes us more resilient through all market conditions.

Robustness and Risk Management

While very effective, the peg's stability depends on spot and futures prices staying in sync. Brief market disruptions (like extreme volatility) or exchange outages could put pressure on this balance. Solidus tackles these risks by:

• Diversifying Hedges: Spreading our hedging across several reputable exchanges to prevent any single point of failure.

• Maintaining a Reserve Fund: Keeping a 5% reserve fund to cover potential short-term losses or periods of negative funding rates, protecting $SUSD’s integrity.

• Utilizing OES Custody: Using Off-Exchange Settlement (OES) for backing assets. This avoids custodial risks tied to specific exchanges.

By using delta-neutral hedging, Solidus guarantees that $SUSD stays a reliable $1 stablecoin. It avoids the custodial risks of fiat-backed models and the inefficiency of overcollateralized designs. This mechanism does more than just stabilize $SUSD; it also powers its yield-generating potential. Short perpetuals collect funding rates (historically 7-13% annually), further enhancing $SUSD's value proposition within the Solana DeFi ecosystem.