USYC is a yield generating ERC-20 token on the Ethereum network. USYC stands for US Yield Coin, and is the on-chain representation of the Hashnote International Short Duration Yield Fund Ltd. (“SDYF”). The yield is generated by investing in overnight repo and treasuries. This allocation is designed to minimise the duration risk, and allow for quick liquidity when holders wish to redeem back into USDC or PYUSD.
While it’s not pegged to the value of a US dollar like several stablecoins (e.g. USDT, USDC), the value of USYC should remain relatively stable, and increase slowly over time, at least while the value of the assets backing it continue to pay a yield and remain stable.
How is the yield returned to holders?
90% of the returns from the overnight repo and T-bills are returned to the holders of USYC via the increase in the price of the USYC token. Hashnote takes 10% of the generated yield as a fee.
The following chart shows the price of UYSC from July 2023 to October 2024.
A live version of this chart, as well as more details on USYC can be found here.
Why would a trader want to hold USYC on Deribit?
USYC is a cross collateral currency on Deribit. This means it can be used as collateral to trade derivative instruments regardless of the settlement currency of those instruments. For example USYC could be used as collateral to trade derivative instruments that are settled in BTC, ETH, or USDC.
Even while being used as collateral, the USYC will continue to earn a yield, giving greater capital efficiency for traders.
USYC will have a haircut applied in the cross collateral system. At launch, this haircut will be set at 10%, but this is subject to future change by the risk department. To view the current haircut percentage and further cross collateral details, navigate to the margin page in your account. You can navigate to this page by clicking on the letters next to your margin requirements at the top of the page.
Alternatively you can navigate to the top right account menu, and then click either ‘Portfolio Margin’ or ‘Standard Margin’, depending on which type of margin system your account is set to use.
Where can USYC be held?
USYC can only be transferred on-chain to addresses that have been whitelisted with Hashnote. All Deribit traders will be able to buy, sell, and hold USYC in their Deribit accounts, or hold it off the exchange in Fireblocks.
However, if traders wish to withdraw USYC to their own private wallets, they would first need to whitelist the address with Hashnote. The whitelisting process for private addresses is something that would be done directly with Hashnote, not on the Deribit website.
There will be USYC spot markets on Deribit so traders can get in and out of any USYC holdings easily. All spot markets on Deribit have zero fees.
Hashnote and USYC
For more detail on Hashnote and USYC, including the official documentation, visit Hashnote here.
