sUSDX (Arbitrum) Asset Assessment

1

Summary

Type: Asset Assessment

Timeline: From 2025-08-01 To 2025-08-04

Overview

sUSDX is the staked, yield-bearing version of USDX, a delta-neutral synthetic USD stablecoin developed by Stables Labs. The sUSDX token has been implemented as an ERC-4626 vault and accrues yield via an appreciating exchange rate relative to USDX instead of increasing the token balance. When a user deposits USDX into the StakedUSDX contract, they receive a fixed amount of sUSDX shares. These shares can later be redeemed for a greater amount of underlying USDX, reflecting the accrued yield.

This asset assessment was conducted to evaluate the suitability of the sUSDX token as a collateral asset for the USDC and USDT markets on Arbitrum within the Compound ecosystem.

Materials Reviewed

Material Version/Date Source
Proposal Discussion As of 2025-08-01 Compound Community Forum
Technical Documentation As of 2025-08-04 USDX Documentation
Smart Contract Code As of 2025-08-01 sUSDX Contract (Arbiscan)

Summary of Findings

Key Concerns

  • Withdrawals are subject to a cooldown period that is currently set to 1 day. However, the owner can set this period to be up to 90 days, introducing delayed access to liquidity.
  • The StakedUSDX contract includes pauseDeposit and pauseWithdraw functions controlled by the owner. If these functions are invoked during market stress, it could impair collateral liquidity and increase liquidation risk.
  • A blacklist/allowlist mechanism exists via roles such as FULL_RESTRICTED_STAKER_ROLE, allowing the owner to restrict transfers for certain addresses.
  • Centralization risks are present: The top 10 token holders collectively own nearly 98.5% of the total supply. A single EOA holds ~10% of the total supply, and a Silo Finance vault contract holds ~50%.
  • Repeated calls to cooldownAssets without unstaking back the cooldown timer, potentially delaying redemptions and affecting liquidation dynamics.
  • The StakedUSDX contract uses draft-ERC20Permit.sol, which is deprecated.
  • The StakedUSDX contract’s multisig (owner), which operates with a 3-of-5 threshold (where all the signers are EOAs), has full control over multiple sensitive functions via the onlyOwner modifier. This raises the risks associated with centralization and private key compromise.
  • There is an inconsistent use of msg.sender and _msgSender() in the cooldownAssets and unstake functions. This could lead to unexpected behaviors in upgradeable or meta-transaction environments.
  • The insurance fund has declined significantly (from $3.88M on July 20, 2025 to ~$1.51M on August 04, 2025), suggesting that its size fluctuates with surplus collateral.
  • The convertToAssets function is being recommended to be used as a price oracle even though an on-chain sUSDX price feed is available (e.g., RedStone feed).

Positive Observations

The smart contracts developed by the Stables Labs team have undergone three audits to ensure the technical soundness of the protocol.

Asset Information

Asset Name: sUSDX
Asset Type: Yield-Bearing Stablecoin
Created Date: March 18, 2024
Blockchain: Arbitrum
Contract Address: 0x7788A3538C5fc7F9c7C8A74EAC4c898fC8d87d92
Contract Verification: Verified
Asset Standard: ERC-4626

Key Metrics (As of August 4, 2025)

The data below was verified on August 4, 2025:

Metric Value Source Verification
Total Supply ~23M Arbiscan Verified
Holders 685 Arbiscan Verified
sUSDX-to-USDX Rate $1.10 Arbiscan Verified
USDX Market Cap ~$676M Arbiscan Verified

Token Economics

sUSDX is a staked wrapper over USDX. It accrues yield from delta-neutral derivatives positions that are part of the USDX minting and backing strategy. The exchange rate of sUSDX relative to USDX increases over time, reflecting protocol-generated yield.

Supply Mechanics

  • sUSDX is minted by depositing USDX into the StakedUSDX ERC-4626 vault.
  • Yield is distributed by transferring additional USDX tokens into the vault. These rewards are vested linearly over 8 hours to prevent manipulation.
  • No minimum staking period exists, and users are eligible for yield based on the sUSDX-to-USDX ratio.
  • In case of negative yield events, the protocol’s insurance fund (surplus collateral held by the protocol) absorbs the losses, safeguarding the interests of the stakers.
  • The vault enforces a cooldown period on withdrawals (during which the redeemed USDX remains locked in the USDXSilo contract). This period is configurable up to 90 days and the current duration is 1 day.

Yield Generation

  • Yield is derived from USDX’s delta-neutral hedging strategies using funding and basis spread.
  • USDX is backed by CeFi-perpetual positions: spot assets are hedged by inverse/linear perpetual contracts.
  • Hedging is facilitated via off-exchange settlement providers, maintaining non-custodial exposure.
  • The strategy targets a neutral delta, such that the protocol’s net USD exposure remains constant despite the underlying asset price movements.
  • If the hedging yield is negative for a period, the insurance fund (~$1.5M as of August 04, 2025) covers staking obligations.

Distribution

Holder Category Percentage Notes
Top 5 Holders 86.43% The 1st and 4th largest holders are the Silo Finance Vault contract and the Camelot V3 sUSDX/USDX liquidity pool, respectively. The 2nd largest holder is an EOA. All other holders outside the top 5 each hold less than 4% of the total supply.
Top 10 Holders 98.58% N/A

Access Control

Role Capabilities Controlled by
Owner setCooldownDuration, configPoolLimit, pauseDeposit, unpauseDeposit, pauseWithdraw, unpauseWithdraw, addRewarder, removeRewarder, addBlacklistManager, removeBlacklistManager, rescueTokens, redistributeLockedAmount 3-of-5 multisig, where all 5 signers are EOAs
Rewarder Role transferInRewards Designated role by the Owner
Blacklist Manager Role addToBlacklist, removeFromBlacklist Designated role by the Owner

Asset Checklist

Token Standard Compliance

Requirement Status Notes
ERC-20 COMPLIANT N/A
ERC-4626 COMPLIANT N/A

Token Security

Feature Implementation Notes
Audited COMPLIANT Three audits have been conducted.
No Fee on Transfer COMPLIANT N/A
No Blocklist NON-COMPLIANT Transfer restrictions can be imposed via Blacklist Manager Role.
No Delay on Transfer COMPLIANT N/A
No Unstaking Delay NON-COMPLIANT A cooldown period of up to 90 days is allowed (currently 1 day).

Risk Assessment

Risk Category Level Notes
Technical Risk LOW The token contract follows ERC-20 and ERC-4626 standards and has undergone audits.
Economic Risk MEDIUM Yield depends on derivatives funding rates. The insurance fund can shrink since it fluctuates with surplus collateral held by the protocol.
Price Feed Risk MEDIUM Gauntlet advocates convertToAssets(), but the RedStone price feed exists for sUSDX.
Centralization Risk HIGH The top 10 holders of the token collectively own nearly 98.5% of the supply, and the contracts are governed by a 3-of-5 multisig with no available documentation.

Conclusion

The sUSDX token was reviewed for its viability as a collateral asset for the USDC and USDT Comet markets on Arbitrum within the Compound ecosystem.

Several concerns have been identified during the review, including economic and centralization risks, cooldown-related liquidity constraints, reliance on the multisig (owner) overseeing critical functions, and role-based control mechanisms. Consequently, we do not recommend adding sUSDX as a collateral token at this time.

Final Recommendations

  • If sUSDX were to be added to the Compound ecosystem as collateral, Gauntlet’s recommendations should guide its inclusion.
  • The community should continuously monitor the multisig’s (owner’s) activity and centralized governance roles to ensure the token’s integrity and security.
  • The community should continuously monitor the insurance fund levels and risk metrics (e.g., funding rate exposure).
  • The sUSDX cooldown period and the available exit liquidity should be monitored to ensure viable liquidation pathways at all times.