Yield Overview

Parity Dollar is a reserve-backed stablecoin that is also over-collateralized. This means that for every Parity Dollar issued, there is more than $1 of stable and liquid reserves, which can be used to redeem Parity Dollar for $1 at any time.

Where does the Yield come from?

The yield, which Parity pays out to customers via the Parity Deposit Token, sPUSD, is generated sustainably from Parity Dollar’s reserves. While leading stablecoin providers like Tether and Circle keep a significant portion of their reserves invested in TradFi bonds, Parity takes a different approach. Parity invests in crypto-native instruments that ensure reserve stability and maintain the $-peg.

The key difference: while Tether and Circle typically generate a 3-4% yield from their reserves and keep it for themselves, Parity generates a yield of around 20% in neutral market conditions and returns the majority of it to holders of the Parity Deposit Token (sPUSD).

Parity Dollar is at the forefront of the synthetic dollar space—a new class of stablecoins backed by crypto-native strategies that offer an alternative to TradFi-backed options like Tether and Circle. The risks facing Synthetic Dollars are different from TradFi backed stablecoins and we strongly encourage users to thoroughly study our risk discussion before engaging with the protocol.

Synthetic Dollars are one of the major successes of 2024, and Parity is driving this momentum by offering a synthetic dollar that is both higher yielding and safer.

TradFi Stablecoins:

• Generates yield of 3-4% from reserves

• None of the yield goes back to users

• Backed by TradFi bonds and other instruments

• Typically not over-collateralized

Parity Dollar, a Crypto-Native Stablecoin:

• Generates yield of ~20% from reserves in a neutral market

• Most of the yield goes back to users

• Backed by crypto-native instruments

• Overcollateralized

Two Reserve Management Strategies

Parity manages its reserves by deploying funds into two simple crypto-native reserve management strategies:

1. Hedged JLP (Jupiter Liquidity Provider pool)

2. Solana Staking & Funding Fee arbitrage