Solomon: Solana's Delta-Neutral Yield-Bearing Stablecoin Protocol
Solomon is a synthetic dollar protocol built on Solana that issues USDv, a stablecoin designed to maintain a $1.00 peg while generating yield through delta-neutral derivatives strategies. Launched in 2024, Solomon leverages Solana's high throughput and low transaction costs to create a scalable, yield-bearing stablecoin for DeFi and CeFi applications. The protocol maintains stability by delta-hedging spot collateral positions against equal-and-opposite perpetual futures, creating a market-neutral position that generates funding rate arbitrage yield for stakers.
Solomon addresses the challenge of generating sustainable yield on stablecoins without exposing holders to directional market risk. Traditional stablecoins offer no native yield, forcing users to take on additional smart contract risks through lending protocols or liquidity pools. Solomon's approach keeps the collateral base fully market-neutral while capturing yields from perpetual funding rates, which typically range from 5-20% annually depending on market conditions.
As of Q4 2025, Solomon operates as a Solana-native protocol with USDv available as an SPL token. The protocol uses off-exchange custody solutions for managing deposited assets and maintains automated hedging through derivatives positions. USDv can be acquired through permissionless liquidity pools on platforms like Meteora or minted directly by whitelisted market makers who deposit USDC, USDT, or SOL.
What are Solomon's main features?
USDv Stablecoin with Dollar Peg: The protocol's primary token maintains a $1.00 peg through a two-way arbitrage mechanism. When USDv trades below $1.00 on decentralized exchanges, whitelisted users can purchase it cheaply and redeem it with the protocol for $1.00, earning the spread. When it trades above $1.00, users mint new USDv for $1.00 and sell it on DEXs for profit. This continuous arbitrage keeps the peg stable.
sUSDv Staking with Auto-Compounding Yield: Users stake USDv to receive sUSDv, which accrues yield from the protocol's delta-neutral positions. The exchange rate between USDv and sUSDv starts at 1:1 but sUSDv continuously increases in value as rewards accumulate. Rewards are distributed multiple times per week to prevent front-running and maintain smooth yield accrual. Unstaking requires a 7-day cooldown period for security.
Delta-Neutral Funding Rate Arbitrage: The core yield generation mechanism involves holding long spot positions in assets like SOL, ETH, or wrapped BTC while simultaneously shorting equal amounts through perpetual futures contracts. This creates a market-neutral position that earns funding rates paid by one side of the perpetuals market to the other, typically generating modest but consistent returns regardless of market direction.
Whitelisted Minting and Redemption: Approved market makers can mint USDv by depositing USDC, USDT, or SOL with a 0.2% mint fee. The protocol then manages these assets through off-exchange custody and establishes hedged positions. Whitelisted users can also redeem USDv instantly through a reserve buffer maintained at 0.5% of total protocol assets, enabling rapid arbitrage operations.
Permissionless DEX Access: Non-whitelisted users can acquire USDv through decentralized exchanges like Meteora without KYC requirements. This provides universal access to the stablecoin while restricting direct minting to vetted participants who maintain proper hedging practices.
How does Solomon compare to traditional Solana stablecoins like USDC?
Solomon's USDv fundamentally differs from USDC by offering native yield generation through on-chain derivatives strategies rather than relying solely on dollar reserves. USDC on Solana provides stability and instant redeemability but generates no yield for holders unless deposited into lending protocols with additional risk. USDv holders who stake for sUSDv earn yields from funding rate arbitrage, potentially ranging from 5-15% APY depending on perpetuals market conditions.
USDC excels in liquidity and universal acceptance, with billions in trading volume across Solana DEXs and deep integration throughout DeFi. USDv is newer with smaller liquidity pools, making it more suitable for yield-focused users rather than high-volume traders. USDC offers instant redemption directly to US dollars through Circle, while USDv redemption requires either whitelisted status or selling on DEXs with potential slippage.
When to use which: Choose USDC for maximum liquidity, instant fiat off-ramping, and universal protocol support. Choose Solomon USDv when seeking stablecoin yield without lending risk, particularly if you're comfortable with a 7-day unstaking period and newer protocol smart contract risk.
How does Solomon work for everyday users?
Users begin by connecting a Solana-compatible wallet like Phantom or Solflare to the Solomon app. They can then acquire USDv by swapping other SPL tokens through the interface, which routes trades through integrated DEX liquidity pools. The swap executes at close to 1:1 USD value minus slippage and trading fees, typically 0.1-0.3% depending on pool depth.
Once holding USDv, users can either deploy it as liquidity in other Solana DeFi protocols or stake it to receive sUSDv. Staking is a one-click process that locks USDv into the staking contract and issues sUSDv tokens representing the user's claim on accumulated yield. Behind the scenes, the protocol maintains delta-neutral positions by automatically adjusting futures contracts as users mint or burn USDv.
The protocol operates through smart contracts deployed on Solana that handle token minting, burning, and reward distribution. When whitelisted market makers deposit collateral, the protocol's custody solution holds the assets off-exchange while the hedging system establishes matching short futures positions. This separation between custody and trading reduces exchange counterparty risk while maintaining the delta-neutral strategy. Yield accumulates continuously and distributes to sUSDv holders multiple times weekly, with users able to track their growing balance through the exchange rate between sUSDv and USDv.
What chains and networks does Solomon support?
Primary Chain: Solana - Solomon is built exclusively on Solana, leveraging the blockchain's sub-second finality and minimal transaction costs (typically $0.00025 per transaction) that make frequent rebalancing of derivatives positions economically viable. All protocol smart contracts, including USDv minting, sUSDv staking, and reward distribution mechanisms, operate on Solana mainnet. The choice of Solana enables the protocol to execute complex arbitrage operations and position adjustments without prohibitive gas costs that would erode yields on networks like Ethereum.
Collateral Assets: While Solomon operates only on Solana, the protocol accepts collateral in multiple forms including native SOL, wrapped Bitcoin (wBTC or equivalent Solana-wrapped versions), wrapped Ethereum, USDC, and USDT. These assets are held through off-exchange custody solutions and hedged using perpetual futures contracts across centralized derivatives exchanges.
Planned Networks: As of Q4 2025, Solomon has not announced expansion to additional blockchain networks. The protocol remains focused on optimizing its Solana-native implementation and building liquidity within the Solana DeFi ecosystem.
What does it cost to use Solomon?
Minting Fees: Whitelisted users pay a 0.2% fee when minting USDv by depositing USDC, USDT, or SOL. For example, depositing $10,000 USDC yields 9,980 USDv, with $20 retained as the protocol fee. This fee compensates the protocol for establishing and maintaining hedged positions.
DEX Trading Costs: Non-whitelisted users purchasing USDv through Meteora or other Solana DEXs pay standard trading fees of approximately 0.05-0.25% depending on the pool, plus minimal Solana network gas fees of $0.00025-$0.001 per swap. A $1,000 USDv purchase costs roughly $0.50-$2.50 in trading fees plus negligible gas.
Staking and Unstaking: Converting USDv to sUSDv (staking) incurs only Solana network gas fees of less than $0.001. Unstaking sUSDv back to USDv requires a mandatory 7-day cooldown period but no additional protocol fees beyond gas. Users receive all accumulated yield when unstaking.
No Performance Fees: Unlike many yield aggregators that charge 10-20% of earned yield, Solomon does not currently charge performance fees on staking rewards. The 0.2% mint fee serves as the protocol's revenue model.
Total Cost Example: A user purchasing $5,000 USDv through Meteora and staking it pays approximately $5-$12.50 in DEX fees (0.1-0.25%) plus $0.002 in Solana gas as of Q4 2025. This compares favorably to Ethereum-based stablecoin yield strategies where gas alone can exceed $50 during network congestion.
Is Solomon safe and has it been audited?
Solomon's documentation states that all contracts are on-chain and audited, though specific auditing firms and detailed audit reports were not publicly disclosed in available materials as of Q4 2025. Users should verify current audit status and review full audit reports on the protocol's official documentation before depositing significant funds. The lack of publicly prominent audit information represents a transparency gap compared to established DeFi protocols.
Security Architecture: Solomon employs off-exchange custody solutions for managing user deposits, reducing the risk of exchange hacks or insolvencies affecting protocol reserves. The smart contracts governing USDv minting, sUSDv staking, and reward distribution operate on-chain where they can be verified. The 7-day unstaking cooldown provides a safety buffer against flash-loan attacks and rapid liquidity drains.
Operational Risk: The protocol's reliance on maintaining delta-neutral positions through perpetual futures introduces operational complexity. Failures in hedging automation, extreme market volatility causing liquidations, or derivatives exchange counterparty failures could impact the protocol's ability to maintain the USDv peg or generate expected yields.
Track Record: As a protocol launched in 2024, Solomon has a limited operational history compared to established stablecoins like USDC or DAI that have weathered multiple market cycles. As of Q4 2025, no major exploits or peg failures have been publicly reported, but users should remain cautious with newer protocols regardless of clean track records.
Centralization Considerations: The whitelisted minting and redemption system creates dependencies on approved market makers for peg stability. If whitelisted participants fail to arbitrage effectively during market stress, USDv could experience prolonged depegging events.
Who should use Solomon?
Yield-Seeking Stablecoin Holders: Users wanting to earn returns on dollar-denominated assets without lending risk or directional market exposure benefit from Solomon's funding rate arbitrage strategy. If you hold $50,000+ in stablecoins and can accept a 7-day unstaking period, Solomon offers yields potentially ranging from 5-15% APY depending on perpetuals market conditions, compared to 3-5% from traditional lending protocols with liquidation risks.
Solana DeFi Users: Active participants in Solana's DeFi ecosystem who need yield-bearing stablecoin exposure can integrate USDv into their strategies while maintaining purchasing power. The SPL token standard ensures compatibility with Solana DEXs, lending platforms, and liquidity pools for composable yield strategies.
Long-Term Holders with Patience: The mandatory 7-day unstaking cooldown makes Solomon suitable for users with medium to long investment horizons (weeks to months) rather than traders needing instant liquidity. If you rarely need emergency access to your stablecoin holdings, the unstaking period is a minor inconvenience for accessing delta-neutral yield.
Not Ideal For: High-frequency traders, users needing instant fiat off-ramping, or those uncomfortable with newer protocols should consider established alternatives like USDC. The smaller liquidity pools mean large trades experience more slippage than mature stablecoins.
What risks should I consider with Solomon?
Smart Contract Risk: As with all DeFi protocols, vulnerabilities in Solomon's smart contracts governing minting, staking, or reward distribution could result in loss of funds. The protocol launched in 2024 with limited battle-testing compared to established protocols operating for 3+ years. While audited, new exploits emerge regularly in DeFi that bypass previous security reviews.
Delta-Neutral Strategy Failure: The protocol's yield depends on successfully maintaining hedged positions through perpetual futures. Extreme volatility, futures exchange outages, liquidation cascades, or failures in automated rebalancing could cause hedges to break, exposing collateral to directional price risk. If SOL drops 30% while short positions fail to execute, protocol reserves could decline, threatening the USDv peg.
Derivatives Counterparty Risk: Solomon's hedging strategy relies on centralized derivatives exchanges remaining solvent and accessible. Exchange insolvencies, regulatory actions freezing accounts, or trading halts during volatility could prevent the protocol from maintaining proper hedges or accessing collateral, similar to risks that materialized during the FTX collapse in 2022.
Peg Stability Risk: USDv maintains its dollar peg through arbitrage by whitelisted market makers. During extreme market stress or liquidity crunches, arbitrageurs may be unable or unwilling to stabilize the peg, causing USDv to trade at sustained discounts or premiums to $1.00. The 0.5% reserve buffer for instant redemptions may prove insufficient during bank runs.
Liquidity Risk: The 7-day unstaking cooldown creates exit friction during market panics. If you need to exit quickly, you must sell sUSDv or USDv on DEXs where shallow liquidity could force sales at significant discounts during stress periods, potentially losing more than accumulated yield.
Regulatory Risk: Stablecoin regulation is evolving globally. New requirements for reserve attestations, licensing, or operational restrictions could force protocol changes, limit access for certain users, or impact the viability of the delta-neutral strategy depending on derivatives market regulations.
