Skymoney first steps: USDC to USDS in Sky
Sky Protocol’s Peg Stability Module (PSM) exchanges USDC for USDS, the protocol’s dollar-pegged stablecoin. Its direct 1:1 conversion is separate from supplying USDS for a savings or rewards position.
updatedBefore converting USDC
A supported interface can handle the interaction with the PSM smart contract. The conversion draws on liquidity already inside Sky Protocol, so it doesn’t depend on finding another trader to take the other side.
The conversion mechanism determines which pricing and fee terms apply. USDS also trades in other markets, and a swap involving USDC and USDS doesn’t necessarily use the PSM. Establish the route before relying on the PSM’s zero protocol swap fees and zero slippage.
Which route gets the PSM terms?
| Conversion path | Pricing | Swap fees and slippage | Where these terms apply |
|---|---|---|---|
| Direct PSM conversion | 1 USDC exchanges for 1 USDS, with the same ratio in reverse. | Zero Sky Protocol swap fees and zero PSM slippage under the described settings. | The direct USDC-USDS conversion using available PSM liquidity. |
| Uniswap route that includes LitePSM | The USDC-USDS PSM segment uses 1:1 pricing. Other pool segments use their market prices. | Zero PSM fees and zero PSM slippage apply only to the PSM segment. Other segments retain the fees and execution conditions of their pools. | Eligible routes that actually include LitePSM, including routes that reach USDC through another pool before converting to USDS. |
| The 1:1 ratio describes an exchange between USDC and USDS. USDS targets $1, while its price on other markets can move above or below that target. | |||
Skymoney first steps: USDC to USDS in Sky
- Before converting USDC
- Which route gets the PSM terms?
- What receiving USDS changes
What receiving USDS changes
A USDS balance alone doesn’t accrue the Sky Savings Rate. Eligible participants access that variable rate by supplying USDS to receive sUSDS. Receiving USDS from a PSM conversion doesn’t create that savings position.
Sky Ecosystem Rewards also requires a separate supply operation. Participants supply USDS into a rewards product to receive governance tokens or points distributed by participating Agents and partners. The rewards are variable; they don’t arise simply from holding USDS in a wallet.
USDS that you already hold can serve as the input to these supply operations. Converting from USDC is an entry path, rather than a prerequisite for an existing USDS balance.
Returning to USDC
The reverse PSM path takes USDS as its input. Using that direct path from an sUSDS position requires redeeming sUSDS for USDS before the PSM conversion. sUSDS has no fixed maturity date or lockup period, though redemption remains subject to the applicable smart contracts and network costs.
