As we launched Stable Jack around two months ago, we saw significant interest and demand from our community and the broader ecosystem. Thousands of people have used the product and provided feedback, while we have been constantly improving it and working on our roadmap.

Some of the major milestones and achievements for Stable Jack in the first two months can be summarized as:

• $xAVAX has been offering 1.4-1.5x leverage without liquidation risk since the beginning. It has performed as expected, protecting investors from downside market volatility.

• We reached $6 million in TVL and over 220,000 deposits in $AVAX.

• We partnered with major protocols like Trader Joe, BENQI, Yield Yak, and Pharaoh Exchange.

• The product successfully underwent stress tests, demonstrating its resilience and value proposition during major price drops without affecting its working mechanism.

• Stable Jack has been offering an 18-20% yield, paid in $sAVAX, making $aUSD the best yield product in the ecosystem.

During this period, we engaged in several discussions with our community and ecosystem partners on how to improve the existing model. Before launching Stable Jack v1, we had a vision for Stable Jack v2. However, based on the feedback and our experiences with the model, we made some important changes to our v2 vision.

In this article, we will explain the reasoning behind v2 and the main features we are bringing to the protocol. These will outline the vision we have for the future of Stable Jack!

Lessons from Stable Jack v1

The $USDC depeg was the main trigger for us to launch a decentralized, yield-bearing stablecoin. As we observed limitations in the existing CDP models, we decided to develop a different model that requires a second product, a leveraged token that absorbs all the volatility of the collateral asset so that the stablecoin remains stable.

At its current stage, Stable Jack offers a platform that allows investors to exchange the volatility and yield of $sAVAX, thus offering two products:

• $aUSD: A stablecoin that generates yield when staked in the Rebalance Pool.

• $xAVAX: A leveraged token that reflects the $sAVAX price action with variable leverage.

As we launched the product, we made some observations that helped us conceptualize v2:

• The demand for $aUSD is lower compared to $xAVAX because investors aren’t interested in holding another stablecoin for daily or trading purposes. $USDC and $USDT are already viable solutions for these needs, and it is difficult to challenge their dominance.

• Since the Yield Token ($aUSD) is tokenized and branded as a stablecoin, some concerns about the viability of the stablecoin have been raised due to the $UST experience, which discourages adoption.

• The overwhelming majority of $aUSD minted by users has been deposited into the Rebalance Pool, showing that people are seeking competitive yields rather than a new stablecoin.

• Due to the low demand for $aUSD compared to $xAVAX, $xAVAX leverage remains below 1.5x, making it less appealing to investors who want to increase their leverage exposure.

• With the leverage for $xAVAX remaining low, it is unable to achieve its full potential.

• Although there is demand for $xAVAX, its limited use cases restrict users to simply holding it.

• Leverage without liquidation risk is a compelling value proposition for investors.

• In v1, we can only offer variable yield and leverage. Even though the results have been attractive, investors would prefer fixed yield and leverage over variable returns.

• Integration with major protocols is key for adoption, which can help us scale into the billions.

We realized that yield and leverage are the two main drivers of liquidity in the ecosystem. Therefore, instead of focusing on being a decentralized stablecoin—an approach that is challenging due to adoption problems and lack of demand—we prefer to concentrate on the intersection of what we are good at and what people are seeking. These are:

• Competitive and predictable yield.

• Leverage exposure without liquidation or funding fee risks.

What to expect in v2?

With v2, Stable Jack won’t be branded as a stablecoin. Instead, Stable Jack will become a yield, volatility, and points trading marketplace for any asset by utilizing the existing codebase. This marketplace will allow users to collateralize new assets to access fixed or variable leverage exposure without liquidation risk or earn a fixed and competitive yield.

• New Collaterals: Currently, we only accept $sAVAX as collateral. In v2, we'll accept a broader range of assets, such as $BTC and $BTC LSTs/LRTs, $ETH LSTs/LRTs, $ggAVAX, yield-bearing stablecoins, and LP tokens. With these assets, we will launch YT (Yield Token) and VT (Volatility Token) pairs.

• Introducing the Yield Token: In Stable Jack v1, users had to deposit $aUSD into the Rebalance Pool to earn yield. In v2, we will tokenize the Rebalance Pool and create the Yield Token, allowing the token to accumulate as a yield-bearing asset.

• Fixed Yield: In v1, we offered a competitive yield ranging from 18-20%, but this was variable, not fixed. In v2, apart from the variable yield option, a fixed yield will be offered, differentiating Stable Jack from its competitors. This will allow investors to access predictable and competitive returns to build sophisticated trading strategies.

• Fixed Leverage: Since v1 only allowed variable leverage, users had to rely on favorable market conditions to benefit, limiting their ability to foresee potential returns. However, with v2, users can choose fixed leverage, such as 5x or 10x, instead of only relying on variable leverage.

• Points Trading: Incentive trading is the new meta and is here to stay. Crypto thrives on speculation, and Stable Jack v2 will enable investors to access leveraged points exposure without risking their principal. This model is similar to Pendle’s points trading.

• Curated Pairs: In v1, only the Stable Jack team could open pairs. However, inspired by Morpho, in v2, we will allow new market participants, such as market makers, lending markets, DEXs, fintech companies, or risk management protocols, to launch pairs. This will enable our community to access sophisticated trading strategies with one click and achieve above-market returns.

• Index Tokens: Stable Jack v2 will launch index tokens with various themes, including a Major Coins Index (e.g., $BTC, $ETH) and a Commodity Index (e.g., Gold, Oil, Silver). More index tokens can be launched in the future.

• RWAs: As the RWA ecosystem matures, we will accept tokenized bonds and equities as collateral.

The Future Vision and Timeline

At its core, our vision is to establish Stable Jack as the leading marketplace for trading yield, volatility, and points for any asset. This will position Stable Jack between Pendle and Hyperliquid/GMX.

Pendle is a protocol that splits the yield and points of collateral assets to serve different types of users. Stable Jack operates similarly but offers more products and advantages:

• In addition to yield and points, Stable Jack separates the volatility from the collateral asset and offers it as a separate product.

• On Stable Jack, investors will be able to access leveraged points exposure without giving up their principal, whereas, on Pendle, the trade-off for having leveraged points exposure is giving up the principal asset for the YT holder.

• All pairs on Pendle have maturity dates, while on Stable Jack, there will be perpetual pairs, so users are not required to redeem or close their positions at specific times, avoiding constant management.

• With v2, Stable Jack will allow third-party protocols to launch their curated pairs, which is not possible on Pendle.

• With Curated Pairs, Stable Jack will offer more flexibility by enabling the collateral asset to be used in DeFi strategies to provide higher returns for investors. This feature is not available on Pendle, where investors can only benefit from the native yield embedded in the asset.

GMX and Hyperliquid are two of the most well-known products in the derivatives market. Stable Jack's volatile token competes directly with both of them:

• On GMX and Hyperliquid, there is a risk of liquidation; however, the volatile tokens of Stable Jack do not carry any liquidation risk.

• GMX and Hyperliquid require users to pay substantial funding fees, which is not the case with Stable Jack.

The leveraged positions on GMX and Hyperliquid are not tokenized, meaning they aren’t DeFi-composable. In contrast, on Stable Jack, your leveraged position is tokenized, allowing it to be used as collateral in other DeFi protocols, thus increasing capital efficiency.

As a result of these factors, we believe that Stable Jack will become one of the most innovative and robust products in the ecosystem. DeFi has seen several innovations, and we are introducing a new one that can challenge the existing competitors.

At this moment, most of the foundational codebase has been written. We are focusing on important details to complete the product. It’s possible that not all features will go live simultaneously, but the majority of updates are expected to launch around early November.

2025 will be a BIG year for Stable Jack!

We will continue to share more details about the product's working mechanism, possible use cases, value proposition, and roadmap soon!

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