There's a stablecoin project building on MegaETH that has just as much of my attention now as Plasma.

Cap.

No cap, that's literally the name.

Here's a quick intro.

This post covers:
- A summary of Type-1 and Type-2 stablecoins
- Where does the yield come from? (a type-3 introduction)
- Yeah, No Cap.
- CAP SUQs

TLDR of Type-1 and Type-2 yield bearing stablecoins.

The key differentiator between these types of stablecoins, is who makes the decision of where to get yield from.

With Type-1 stablecoins, decisions are made solely by the team behind the protocol.

Where to invest, the kinds of assets to invest in, all lie in the hands of the team.

HGHR.fdn ↑   ||  Yapper of onchain thingies || Food and Security Researcher in a hyperbolic time chamber

With type-2, these decisions lies in the hands of a DAO (Decentralized Autonomous Organization) and by now we all know why this is annoying.

Where does the yield come from?

Typically low-risk bond, treasury bases strategies.

Cap is a Type-3 Stablecoin protocol that makes a promise of safety and minimum yield for users.

Promises and assurances made by cap are backed by smart contracts logic built on Ethereum, leveraging its robust security and tools built by other DeFi giants like EigenLayer and Farcaster sweetheart @morpho

Earn, Borrow, Build on Morpho 
/morpho and app.morpho.org

At a high level, "CAP is the first stablecoin protocol to outsource yield generation in a programmatically and fully covered manner." 

What this means is, yield is generated by, and only by, institution-grade yield generators (known as Operators) backed by large restakers.

Operators are allowed to borrow cUSD (redeemable at 1:1 for USDT/USDC), explore proprietary yield generating strategies from which minters can secure yield.

This flow has mechanisms to ensure minimum yield pegged to AAVE's yield rate and user safety

Cap is a first of its kind in stablecoins and you should be paying attention.