The pool sets the token’s real price
Holders judge a stablecoin by the price they can actually convert at, and integrators underwrite the same number. A pool that clears large sells at 0.995 sets the token’s real price at 0.995, regardless of what the reserves say.| Who reads the pool | What they read |
|---|---|
| Lending markets | The depth they can liquidate through, when sizing collateral parameters |
| Aggregators and routers | Price impact at size, which decides where flow routes |
| Holders and treasuries | Whether size clears at the reference, on demand |
Different stablecoins track different references
A stablecoin pool has to hold depth at the right price, and what “right” means depends on the type of stablecoin.| Stablecoin type | The pool must track | How the strategy tracks it |
|---|---|---|
| USD stablecoins | Parity with USDC or USDT | Concentrated liquidity around parity, with Dynamic Fees |
| Non-USD (FX) stablecoins | The live FX rate against the quote asset | Price Convergence realigns the pool to a forex feed on each rebalance |
| Yield-bearing stablecoins | An exchange rate that drifts up as yield accrues | Yield-Bearing Asset Strategy repositions along the yield curve |
Pool inventory is working capital, not reserves
The capital in the pool is not the reserve that backs outstanding supply. A fiat-backed reserve sits in cash and short-term instruments, and regulated issuers often cannot deploy it into an AMM pool at all.| Reserves | Pool inventory | |
|---|---|---|
| Job | Back outstanding supply at par | Hold conversion depth onchain |
| Sized to | Outstanding supply | Target depth and expected flow |
| Deployed | Cash and short-term instruments | Onchain, in the issuer’s vault |
Inventory recycles through mint and redeem
Flow in a young stablecoin pool is usually one-sided: recipients sell the stablecoin for the quote asset, the position accumulates stablecoin, and quote-side depth drains. Directional Dynamic Fees slow the drain by pricing against the imbalance, but they do not reverse it. Without a replenishment loop, exit depth stops. The strategy manages inventory within configured bands, and accumulated stablecoin recycles through the primary market: redeem the stablecoin, convert the proceeds to the quote asset, redeploy onchain. The issuer runs the loop through its own mint and redeem. Where an onchain redemption path exists (a PSM for a crypto-backed design, an ERC-4626 vault for a yield-bearing one, or a canonical bridge), the loop stays onchain and runs faster.Considerations
Tracking is as tight as the feed and the cadence.
A non-USD pool tracks the configured forex feed at each rebalance, so tracking quality is set by the feed and the rebalance schedule. Forex feeds typically update on a deviation threshold and a heartbeat rather than tick by tick. Tighter tracking takes a faster feed and more frequent rebalances. A reference feed has to exist for the currency pair, and confirming coverage for less-traded currencies is part of discovery.
Price Convergence and Dynamic Fees require Uniswap v4.
Both run as v4 hooks on the chains where Arrakis operates Uniswap v4 vaults, listed on Price Convergence. Pools on other venues run an active strategy with a static fee.
The quote leg is a currency position.
A non-USD pool holds part of its inventory in USDC or USDT, an open FX exposure for a treasury that accounts in the token’s currency. Whether and how to hedge it is a treasury decision made alongside sizing.
The pool makes the peg tradable, not credible.
Depth at the reference rate gives holders an exit at fair value. It is not what makes the token worth that value: solvency comes from reserves and redemption. Under extreme one-way flow the position can exhaust quote-side inventory and sit one-sided until recycling restores it.
Recycling runs at the speed of the issuer's rails.
If redemption settles in days over fiat rails, the pool needs enough standing depth to absorb flow across that window, and sizing accounts for it.
Getting started
Discovery
Currencies, chains, and venues, target depth and spread, expected flow, and funding. Arrakis analyzes any existing pools and simulates the improvement.
Reference setup
Quote assets confirmed, typically USDC or USDT. Non-USD stablecoins get a forex feed configured for Price Convergence, and yield-bearing stablecoins get the ERC-4626 interface confirmed for the Yield-Bearing Asset Strategy.
Integrate Arrakis
Talk to the Arrakis team about your stablecoin.
FAQ
We are a regulated issuer and cannot deploy capital into DeFi. Can we still have onchain liquidity?
We are a regulated issuer and cannot deploy capital into DeFi. Can we still have onchain liquidity?
The constraint is common among licensed e-money and bank-affiliated issuers. Pool inventory is never the reserve, and setups for constrained issuers are scoped with the Arrakis team during discovery.
Which pools should we launch first?
Which pools should we launch first?
The quote asset is typically USDC or USDT, with the first pool on the chain where the token’s distribution is strongest and additional pairs or chains added as flow justifies them. Each additional pool splits the same inventory, so depth per pool falls as the count rises.
What happens during a depeg or redemption stress?
What happens during a depeg or redemption stress?
Depeg behavior depends on the strategy. The Yield-Bearing Asset Strategy, for example, stops repositioning when the pool price diverges far from its tracked exchange rate, so it does not rebalance through a stressed price, and the position can sit out of range until the gap closes. Across all configurations the pool does not buy without limit to defend a price: conversion depth is the pool’s job, and solvency is the reserve’s.
We also have a governance or utility token. Is that the same setup?
We also have a governance or utility token. Is that the same setup?
No. A governance or utility token trades like any project token: Bootstrap for the launch, Flagship for ongoing management, covered on Token Issuers. Both can run alongside the stablecoin vaults under the same issuer.