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Protocol Architecture

Protocol Architecture

The SoulPeg protocol consists of a modular smart contract system designed to maximize yield generation while maintaining security and simplicity. It issues and manages a soul-bound, yield-bearing token (sUSDC) that generates returns through integration with Venus Protocol.

Core Design Principles

  • Modularity: Separate contracts for staking logic, yield routing, and strategy implementation.
  • On-chain enforcement: All critical constraints—such as transfer restrictions and lock timers—are enforced on-chain.
  • Permissioned operations: Critical functions require owner or operator roles (ideally a multisig).
  • State transparency: All relevant protocol and user states can be accessed via public view functions.
  • Yield optimization: Automated routing of deposits to yield-generating strategies.

Contract Architecture

The protocol consists of three main contracts:

1. StakeableAssetImpl (sUSDC Token)

Extends OpenZeppelin modules:

  • ERC20Upgradeable: Standard token interface with upgradeability.
  • ERC20PermitUpgradeable: EIP-2612 gasless approvals.
  • Ownable2StepUpgradeable: Secure two-step ownership transfers.
  • ReentrancyGuardUpgradeable: Blocks reentrancy attacks.
  • PausableUpgradeable: Emergency pause functionality.

2. StrategyRouter

  • Routes USDC deposits to yield-generating strategies
  • Manages strategy weights and allocations
  • Handles withdrawals from strategies
  • Owner-controlled strategy management

3. VenusUSDCVault

  • ERC-4626 compliant vault for Venus Protocol integration
  • Deposits USDC into Venus to earn yield
  • Manages vUSDC tokens and yield accrual
  • Provides standardized interface for the router

Functional Modules

Core Token Functions

  • Deposit & Minting: Converts USDC → sUSDC at 1:1 with user-defined lock period.
  • Reward Distribution: Issues additional sUSDC from generated yields.
  • Unlocking: Manual unlock after lock expiry.
  • Early Redemption: Operator-controlled burn of sUSDC in exchange for USDC.
  • Transfer Restrictions: Locked tokens cannot be transferred or approved.

Yield Generation

  • Automated Routing: Deposits are automatically routed to Venus Protocol.
  • Yield Collection: Generated yields are collected and distributed to stakers.
  • Protocol Fee: 7% of Venus yields retained as protocol revenue.
  • Transparent APY: Users receive 93% of Venus Protocol's yield.

Security Controls

  • Role-based Access: Owner and operator roles for different functions.
  • Pause Mechanism: Emergency pause for critical operations.
  • Daily Limits: Configurable limits on deposits and mints.
  • Two-step Transfers: Secure ownership transfer process.

Yield Flow Diagram

User USDC → StakeableAsset → StrategyRouter → VenusUSDCVault → Venus Protocol
                                                                       ↓
User sUSDC ← Reward Distribution ← Protocol (93%) ← Yield Generation

Operational Boundaries

SoulPeg maintains security by avoiding:

  • Auto-compounding logic within the token contract.
  • Default transferability for locked positions.
  • Inflation-based yield mechanisms.
  • Direct dependency on external oracles.

Summary

The protocol architecture is purposefully constrained: it avoids unnecessary complexity to reduce the attack surface and improve auditability. With a single, compact contract structure and strict enforcement of lock/transfer logic, SoulPeg is designed for long-term reliability in adversarial environments.