Silk is a new kind of stablecoin — one that doesn't pretend $1.00 = stability.

Instead of anchoring to a single, inflationary currency like the U.S. dollar, Silk is pegged to a basket of global assets, currencies, and commodities. That means its value is designed to preserve purchasing power over time. Silk has quietly appreciated by 30% since its launch in October 2023. 

If that price appreciation seems confusing for a stablecoin, we get it. But what if price appreciation relative to fiat currencies like USD is actually a more honest representation of true stability since… well, you know… do we have to say it? Inflationisreallybad. 

So if you want to learn more about why Silk is truly a next generation stablecoin let’s dig in. If you just want to skim, that's ok too. 

Why Silk instead of USD stablecoins?

Stablecoins promised us a more usable form of money for crypto. But in practice, most of them just reinvent fiat — with all of fiat’s baggage. USD-pegged stablecoins are a lot like skateboarding on sand. 

Nearly every major stablecoin is:

* Pegged to the US dollar (which loses ~5–7% of its purchasing power annually)

* Fully transparent (every transaction and balance is visible on-chain)

* Centrally issued (meaning users must trust a third party to maintain solvency and peg)

Silk breaks with this model. It upgrades the stablecoin playbook by being 

*Inflation-resisting

*Privacy-preserving (when held on a data secure chain)

*Decentralized and open source (so you can’t get frozen or blacklisted like with the big stablecoins)

How is Silk minted? 

New Silk is created by depositing collateral into one of the minting vaults. 

Silk’s current collateral make-up (May 22,2025) 

Vaults only exist for high-quality assets such as wETH, stETH, wBTC, ATOM, etc. Silk is minted against this collateral within a limited range of acceptable risk for that particular asset. This is known as the loan-to-value (LTV) ratio. 

If the price of wBTC - or another asset - were to crash below the acceptable loan-to-value ratio, the protocol has multiple mechanisms to resolve that bad debt. 

One of these is the Silk Earn pool. Users who deposit in the Earn pool help the protocol resolve Silk debt from liquidated collateral. Collateralized debt positions are routinely managed and liquidated as needed (both by partial protocol liquidations and liquidations made available on Earn).   

This APR is variable based on market conditions and the size of the pool but, historically, has been as high as 30%. 

How does Silk stay on peg? 

Silk doesn’t target $1.00. Instead, it tracks a basket of real-world assets including global currencies, commodities (like gold), and digital store-of-value assets like Bitcoin. This peg floats over time, gradually appreciating versus fiat so that purchase power is preserved.

Silk’s peg has already been battle tested over the last few years. The protocol has five distinct mechanisms to help ensure price stability and some of these have also been tested. 

Of course, the first and most desirable solution to deviation from the target peg is for the open market to resolve this price discrepancy. When Silk is trading under its target price, the market is incentivized to buy back debt (in the form of Silk) at a discount. This has worked powerfully in the past. Simply put, users who understand Silk are incentivized to take particular actions when the price is low or high.

The protocol also has a redemption system that can convert collateral directly into SILK, reinforcing the peg and protecting minters even during extreme price dislocations.

For any stablecoin, the most critical variable for solvency is the architecture of redemptions. When people want to swap that stablecoin into another asset, are they able to do that? How about if the market is crashing – are they still able to redeem it?

The major pieces that impact Silk’s reliability for redemptions are the parameters around minting vaults, the assets accepted as Silk collateral, and the Silk Earn pool. Gaining a basic understanding of those and how they work together is important. 

Suffice to say, many DEXs and/or stablecoins have burned to the ground through unsustainable architecture, poor contract security, risky liquidity behaviors, and the foolishness of endogenous collateral… Shade has watched all of this and learned from it. Silk is stronger from all of these lessons.

If you'd like to do a deep dive into additional stability mechanisms for Silk, check out this video: <link>

What makes Silk unique?

✅ Purchasing Power Stability – Designed to retain value, not mimic an inflating currency.

✅ Open-Source Analytics – No shadow books. Everything is verifiable with a smooth analytics page.

✅ Data Privacy – Keep your balances and activity private by default when used natively on Secret Network or any other privacy-preserving chain.

✅ Fully Integrated in DeFi – Shade Protocol is The world’s most robust private DeFi playground. It makes a lot of sense to use Silk in the Shade App (borrow, lend, swap, LP) but, you can also enjoy it elsewhere if you like. 

✅ Antifragile Design – Did we mention the peg composition can adapt? Well, it can. With flexible governance-controlled dynamics, Silk is built to adapt to whatever macro throws at it in the years and decades to come.

What can I do with Silk? 

You can use Silk throughout Shade Protocol’s gigantic DeFi suite:

>> Hold Silk as a long-term inflation-resistant savings vehicle

>> Stake Silk to mint dSILK and earn staking yield

>> Lend Silk and get xSILK (an interest-bearing form of Silk)

>> Provide liquidity with Silk pairs to earn yield

>> Deposit in the Silk Earn pool and earn variable yield

>> Borrow Silk as part of creative DeFi strategies 

See Silk

Did we blow your mind yet? There’s a fun moment when someone first “sees Silk” and understands what an upgrade this is to stablecoins. If you've read this far – you probably get it. 

We'd love to answer any questions you have and be a friendly guide as you dive down this rabbit hole into an asset that finally behaves as we hope money would. 

In a world of data surveillance, centralized controls, inflation, and volatility — you deserve a stable asset that respects your privacy, preserves your wealth, and adapts to the future.

You don’t have to wait. It’s already here.