Should Solana create its own stablecoin? Helius Labs CEO, Mert Mumtaz, thinks it’s a simple solution to a big problem.
The Yield Leakage Problem
Mumtaz argues that Solana is losing out on significant revenue. Currently, stablecoins on Solana generate yield, but that yield goes to the stablecoin issuers, some of which then invest that money into competing blockchains. He sees this as “yield leakage” and wants to redirect it back to Solana.
Mumtaz’s Solution: A Solana-Native Stablecoin
Mumtaz suggests two approaches:
- A built-in Solana stablecoin: This would be directly integrated into the Solana protocol, with a portion of the yield automatically used to buy and burn SOL tokens.
- Digital Asset Treasuries (DATs): Independent companies could create Solana-focused stablecoins, committing to using the yield to buy back SOL. This is Mumtaz’s preferred option.
He emphasizes that stablecoin issuers are aggressively competing for market share, and Solana shouldn’t let this opportunity slip away.
The Legal Landscape
The recent GENIUS Act in the US clarifies the regulatory status of stablecoins. While Mumtaz uses the term “commodity” to describe stablecoins, the Act treats payment stablecoins differently, impacting how interest earned on reserves can be used. The key point is that issuers control the yield and can choose how to spend it. This is the leverage Mumtaz wants to utilize.
A Quick Response
Following Mumtaz’s proposal, KAST, a company building payment solutions on Solana, immediately offered to buy back SOL using the interest earned from its USDK stablecoin. They plan to allocate 101-103% of the interest to this, with the extra percentage covering marketing.
The Bigger Picture
Mumtaz’s main concern is that Solana’s stablecoin activity is currently benefiting competitors, like Coinbase’s Base network. He believes that redirecting the yield back to Solana would significantly boost the ecosystem. Other prominent figures in the crypto space, like Tushar Jain from Multicoin Capital, agree, highlighting the potential benefits of this approach.
The Future of Solana Stablecoins
While there’s no official proposal yet, the idea of a Solana-focused stablecoin is gaining traction. Whether it’s through a built-in solution or market competition, the goal remains the same: stop the “yield leakage” and reinvest it in Solana. At the time of writing, SOL was trading at $228.