ACP-67: Framework for Aligned Stablecoin Asset with Yield Sharing and Ecosystem Growth Targets

[nobsfudreal]

Abstract

This ACP establishes a formal framework to designate one or more major regulated stablecoins (USDC and/or USDT) as Aligned Quote Assets on the Avalanche network.

The proposal introduces a yield-sharing mechanism in which 80–90% of the net reserve interest earned on the aligned stablecoin(s) held on Avalanche is recycled back into the ecosystem. The recycled yield shall be primarily directed toward AVAX buybacks and validator staking incentives, with a secondary portion allocated to ecosystem growth.

The primary objective of this alignment is to grow the supply of the chosen aligned stablecoin on Avalanche to $5 billion within 36-48 months, while strengthening network security and AVAX token economics.

Motivation

Avalanche currently hosts significant stablecoin liquidity (hundreds of millions in both USDC and USDT) but does not directly capture economic value from this activity. Other high-performance platforms have successfully established aligned stablecoin relationships that drive mutual growth between the chain and the stablecoin.

By creating a clear, governed framework for stablecoin alignment with meaningful yield recycling, Avalanche can achieve the following:

• Significantly increase stablecoin liquidity and on-chain usage.

• Create a direct economic flywheel that benefits AVAX through buybacks and improved staking incentives.

• Strengthen long-term network security via higher validator participation.

• Improve Avalanche’s positioning as a high-performance, institution-friendly Layer 1 for dollar-denominated activity and tokenized assets.

• Provide the community with flexibility to align with USDC, USDT, or both, depending on which offers the most favorable terms.

Specification

1. Aligned Stablecoin Framework

• Avalanche shall establish a process to designate major stablecoins as Aligned Quote Assets.

• Initial eligible stablecoins include USDC (issued by Circle) and USDT (issued by Tether).

• The community may approve alignment with one or both stablecoins through governance.

• Once designated, an aligned stablecoin shall receive preferential treatment in protocol design, incentives, and ecosystem support where appropriate.

2. Yield Sharing Mechanism

• 80–90% of the net reserve interest earned on the aligned stablecoin held on Avalanche shall be directed back to the Avalanche ecosystem.

• The exact percentage within this range shall be negotiated with the stablecoin issuer and approved by governance.

• Yield shall be calculated based on attested reserve data provided by the issuer, with on-chain verification where feasible.

3. Yield Distribution Priorities

Recycled yield shall be allocated as follows (subject to governance approval):

Allocation	Percentage	Purpose	Rationale
AVAX Buybacks	50-75%	Open market purchases and burn	Creates deflationary pressure and supports AVAX value
Validator Incentives	15-25%	Additional staking rewards	Improves network security and validator participation
Ecosystem Growth	15-25%	Grants, liquidity incentives, L1 support	Drives adoption and usage

4. Growth Target

• The primary success metric of this alignment shall be growing the supply of the aligned stablecoin(s) on Avalanche to $5 billion within 36-48 months of implementation.

• Progress toward this target shall be tracked and reported publicly on a quarterly basis.

5. Technical and Operational Requirements

• Enhanced native support and optimized cross-chain transfer infrastructure (CCTP/Gateway) for the aligned stablecoin.

• Direct institutional mint/redeem pathways where applicable.

• Optional fast settlement paths between the C-Chain and high-activity L1s.

Rationale

This ACP draws from successful models of stablecoin alignment on other platforms while being tailored to Avalanche’s unique architecture (Primary Network + L1s).

By recycling a large portion of stablecoin reserve yield primarily into AVAX buybacks and validator incentives, this proposal creates a sustainable link between dollar liquidity and Avalanche’s native security and token economics.

Setting an explicit $5 billion growth target provides a clear, ambitious, and measurable objective that benefits both Avalanche and the stablecoin issuer through increased adoption and distribution.

Implementation

Implementation would require the following steps:

1. Governance Approval - Passage of this ACP by the Avalanche community.

2. Issuer Engagement - Formal discussions with Circle and/or Tether to negotiate yield share percentage, distribution mechanics, and alignment terms.

3. Technical Integration - Development and deployment of necessary smart contracts and infrastructure for yield tracking and distribution.

4. Treasury & Distribution System - Establishment of a governed mechanism (treasury + smart contracts) to receive and allocate recycled yield.

5. Phased Rollout - Initial implementation on the C-Chain, followed by expansion to key L1s and new markets.

Security Considerations

This proposal does not modify Avalanche’s core consensus mechanism or staking requirements. Network security continues to rely on AVAX staking.

The yield-sharing mechanism is designed to enhance economic security by increasing demand for AVAX and improving validator incentives. All yield distribution mechanisms shall be transparent and subject to community governance.

Backwards Compatibility

Existing USDC and USDT on Avalanche remain fully functional and unaffected. This ACP adds an optional alignment framework with associated incentives rather than mandating changes to existing tokens or protocols.

Success Metrics

Success shall be evaluated based on:

• Growth of the aligned stablecoin supply toward the $5 billion target.

• Volume of AVAX purchased and burned through recycled yield.

• Increase in AVAX staking participation and effective staking rewards.

• Growth in on-chain usage and TVL of protocols using the aligned stablecoin.

• Number of new L1s and institutional use cases adopting the aligned stablecoin.

References

• Hyperliquid USDC Aligned Quote Asset framework (2026)

• Circle’s existing native USDC deployment on Avalanche

• Avalanche ACP governance process and standards

[Locnload-1]

Lets go! Great opportunity here.

[wakandawarrior1]

This is the necessity of this time

[Aihansu]

MAKE C-CHAIN GREAT AGAIN

[dckdckkk]

MAKE C-CHAIN GREAT AGAIN

[Cryptoquine]

Well thought out proposal

Make C-Chain geat again

[Mtsurve]

Sounds interesting !!! Can be explored more in detail over a community call .

[0xSmitty]

Love this proposal, NobsFud, and think this could be a great way to bring value back to the token.

Would also like to investigate launching our own stablecoin and capturing 100% of that yield

[cryptoseif]

That was my thought reading this too. Our own stablecoin will be easier to work with (at least for now)

[xiatianesky]

Love this. Hopefully it helps bring AVAX back to its former glory.

[cameldick]

HOPEFULLY WE'LL MAKE C-CHAIN GREAT AGAIN WITH THIS!

[doru82]

great proposal! but this buyback amout will work only if we'll have apps people use enough to give us these numbers

[bedeea]

very thoughtful input on making c chain great again

[CryptoGearHot]

MAKE C-CHAIN GREAT AGAIN!

[jp9n2wfz5n-star]

Nice proposal!👏🏼 Not sure why AvaxFDN didnt think about this kind of stuff before. What are the incentives for them?

[Studleemore]

I can't read but looks good.

[lickmywhisky]

Make C CHAIN great again.

[avaxjesus]

make c-chain great again

[vicrivera]

Make C-Chain Great Again

[jim4web3]

Well, it's a good and rational idea to discuss about if we want to make the $AVAX token valuable and at least be the reflect of the value stored on chain.

[tayfuni]

ACP-67 is exactly what $AVAX needs. It’s not just about stablecoin liquidity; it’s about merging deep institutional RWA power with high-velocity retail trading. 5B USDC/USDT supply + 100x leverage on synthetic RWAs will create unmatched flywheel. Let’s burn AVAX! 🔥

[ccontrabandd]

Keep it coming Nobs

We rise

excellent ACP

[dlocos]

Maybe we need fundation issued stablecoin

[0xprobability]

Ok I've read this and than some other comments regarding Avalanche's own stable coin. I have another idea. The L1 cost is too cheap rn because of the avax price. What if there was a set mininum price for an L1 validator(1.33 Avax) that would be paid with a stable coin, let's say 30USD, and the excess amount of that 30 usd as long as 1.33 avax is under 30, would be used for Avax buybacks/burns - profit taking - eco growth (30% , 30%, 40% in respective order or whatever works). If 1.33 Avax worth more than 30USD, current price applies. So maybe we would achieve a somehow manageable floor for the token itself. I don't have very detail knowledge if this can be done or not or even make a great difference, did not study any metrics, just throwing it out there for bigger brains.
*All numbers and percentages are random.

[PooMuerte1]

totally agree
Make c chain stablecoins great again

[0xlve]

I agree in that we need to vet this idea and cross reference it with other sources. It's a wise proposal given the Genius Act passage and in alignment with broader institutional adoption of stable coin. I think we should have this on the next ACP meeting.

[kraven69]

MAKE C-CHAIN GREAT AGAIN