Somnia’s new USDso stablecoin, issued by Frax Finance and backed by tokenized Treasuries, routes reserve yield back into Somnia’s high-throughput DeFi ecosystem.
How USDso is structured on Somnia
Somnia, a high-throughput L1 developed with Improbable and the Somnia Foundation, has announced the launch of USDso as its ecosystem stablecoin, stating that it is “issued and managed by Frax Finance based on the frxUSD architecture.”
Frax’s frxUSD design is a fully collateralized, fiat-redeemable stablecoin system in which each unit is backed 1:1 by cash equivalent reserves such as tokenized US Treasury funds, including vehicles such as BlackRock’s BUIDL, Superstate’s USTB, and similar money market instruments.
According to Frax documentation and Aave’s asset review, the architecture treats frxUSD (and, by extension, derivatives such as USDso) as “reserve-backed stablecoins” whose collateralization ratio is above 100% – most recently around 102.38% – with assets held by regulated partners and managed via government-approved smart contracts.
Somnia’s announcement states that USDso “adopts an over-collateralization model and is backed by assets such as US Treasuries,” and that users can earn USDso 1:1 on assets such as USDC, effectively tapping Frax’s off-chain reserve pile via on-chain mint and redeeming flows on the Somnia network.
Revenue routing back to the Somnia ecosystem
An important design choice is how the reserve income is distributed.
Somnia explains that USDso’s revenue sharing mechanism will “return the reserve revenue to the ecosystem,” with 90% of the proceeds allocated to DeFi protocols that build on Somnia – through metering, liquidity incentives and protocol rewards – and the remaining 10% flowing into an insurance fund intended to counter systemic risk.
That model mirrors the sfrxUSD interest layer, where a separate yield-bearing token captures interest from government bond-backed reserves and distributes it to holders, but here Somnia directs the bulk of that revenue to protocol-level incentives rather than purely to individual stablecoin holders.
Somnia is positioning USDso as infrastructure for “high-frequency trading, DeFi and on-chain protocol scenarios,” arguing that its L1 – which processed over 10 billion testnet transactions with a maximum daily throughput of 1.9 billion – can support low-latency, low-fee environments in which a native, yield-recycling stablecoin becomes the unit of account.
A recent crypto.news overview of frxUSD noted that the Frax design is explicitly intended to “bridge real asset returns to DeFi” via tokenized Treasuries and dynamic strategies, a blueprint that Somnia is now adopting at the L1 level via USDso.
Other analysis shows that reserve-backed models like frxUSD – and now USDso – are emerging as a preferred structure for institutional DeFi, as they combine 1:1 support, regulated custodians and transparent reserve reporting.
And one feature pointed out that as more RWA-backed stablecoins plug into powerful L1s like Somnia, they will likely become core clearing assets for both DeFi applications and, over time, tokenized traditional financial instruments.