Somnia Launches Ecosystem Stablecoin with Over-Collateralization Model

Somnia, a Layer 1 public chain, has announced the launch of USDso, its ecosystem stablecoin. This new stablecoin is designed to serve high-frequency trading, DeFi, and on-chain protocol scenarios.

USDso is issued by Frax Finance based on the frxUSD architecture, which uses an over-collateralization model for stability. In this model, assets such as US Treasury bonds serve as reserve backing, providing a secure foundation for the stablecoin's value.

The profit distribution mechanism of USDso channels reserve income back into the ecosystem. Specifically, 90% of the income is allocated to DeFi protocols and 10% is used to fund an insurance program.