Solana developers are proposing a native stablecoin model that redirects USDC yield into the Solana ecosystem via a USDH-style issuer; the change would mint a SOL-aligned stablecoin whose reserve yield partly funds SOL buybacks and ecosystem growth, potentially reducing USDC’s dominance on Solana.
Solana stablecoin proposal: redirect USDC-like yield to Solana via a USDH-style issuer.
Proposal suggests a large share of reserve yield be used for SOL buybacks and ecosystem funding.
USDC currently holds ~70% of Solana stablecoin supply (~$8.5B); at 4% yield that equates to >$340M annualized.
Meta description: Solana stablecoin proposal aims to replace USDC yield with a SOL-aligned USDH model, redirecting reserve interest to SOL buybacks and ecosystem growth — read the implications.
What is the Solana stablecoin proposal and why does it matter?
The Solana stablecoin proposal would create a SOL-aligned stablecoin (USDH-style) whose reserve yield funds ecosystem value accrual, such as SOL buybacks and protocol incentives. This aims to capture interest revenue currently earned on USDC in Solana liquidity pools and direct it to Solana stakeholders.
How would a Solana-aligned stablecoin work in practice?
The proposal calls for a stablecoin issuer to allocate a defined portion of interest generated by reserves toward ecosystem support. Hyperliquid’s USDH model, which routes over 90% of yield to value accrual (including token buybacks), is the template referenced by supporters.
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Under a Solana version, suggested mechanics include: short-term reserve deployments that earn yield, periodic conversion of yield to SOL for burns or treasury, and governance-set parameters for the yield split.
Source: X
Why is USDC at a crossroads on Solana?
USDC currently dominates Solana’s stablecoin supply, representing roughly 70% of supply (~$8.5 billion) per DeFiLlama data. That market share generates meaningful reserve yield — at a 4% yield rate, that equates to over $340 million annually — and most interest revenue benefits Circle and Coinbase, not Solana.
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Notable supporters include Solana figures and some institutional investors who argue a native stablecoin would increase SOL buy pressure and on-chain revenue capture. Skeptics warn it could increase fragmentation across Layer-1s and prompt protocols to favor their own DATs to retain yield.
Market participants including Multicoin Capital and some Solana founders have publicly supported exploring models that redirect stablecoin yield back into L1 treasuries or token buybacks. Critics point to coordination, legal, and technical hurdles.
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