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Sky Protocol Docs

LitePSM

  • Level: Beginner
  • Estimated Time: 15 minutes
  • Last Updated : 2025-07-15

LitePSMs stabilize the USDS and DAI stablecoins against their pegged value by enabling users to trade USDS or DAI with other stablecoins like USDC (referred to as “gems”) at fixed exchange ratios and fees. LitePSM’s primary goal is to minimize gas costs for users. To achieve this, Sky Ecosystem and its keeper ecosystem will absorb some of the gas expenses for all swaps by performing background bookkeeping tasks. This reduction in total gas costs benefits users swapping between USDS or DAI and USDC, whether directly or through DEX aggregators like CoWSwap, 1inch, or Uniswap.

Learning objectives

Section titled “Learning objectives”
  • Using the LitePSM
  • Migrate your integration from PSM to LitePSM

Pre-requisites

Section titled “Pre-requisites”

Familiarity with USDS, DAI, and USDC ERC20 tokens.

Guide

Section titled “Guide”

LitePSM Deployments

Section titled “LitePSM Deployments”

Ethereum Mainnet

Available PSMs

Section titled “Available PSMs”

LitePSMWrapper-USDS-USDC is designed as a wrapper which routes all USDS to USDC and USDC to USDS swaps to the LitePSM-DAI-USDC by converting USDS to DAI internally. This allows Sky Protocol to share USDC liquidity among both USDS and DAI and avoid fragmentation.

LitePSMWrapper-USDS-USDC Usage

Section titled “LitePSMWrapper-USDS-USDC Usage”

Public

All users will have access to the following functions:

  • sellGem : Sell USDC and receive USDS
  • buyGem : Buy USDC with USDS

sellGem function accepts two inputs:

  • usr: Address of the USDS recipient
  • gemAmt: Amount of USDC being sold

The gemAmt is denominated in 6 decimals because “Gem” refers to USDC in a LitePSMWrapper-USDS-USDC deployment, which uses 6 decimals instead of the more common 18 decimals. After a successful swap, this amount of USDC is transferred from msg.sender to the LitePSMWrapper-USDS-USDC. The function returns a value denominated in 18 decimals, representing the USDS amount the user receives. The usr address then receives the USDS ERC20 balance from the LitePSMWrapper-USDS-USDC.

buyGem function accepts two inputs:

  • usr: Address of the USDC recipient
  • gemAmt: Amount of USDC being bought

The gemAmt is denominated in 6 decimals because “Gem” refers to USDC in a LitePSMWrapper-USDS-USDC deployment, which uses 6 decimals instead of the more common 18 decimals. After a successful swap, this amount of USDC is transferred to the usr address. The function returns a value denominated in 18 decimals, representing the USDS amount that msg.sender transfers from their address to the LitePSMWrapper-USDS-USDC. The usr address then receives the USDC balance from the LitePSMWrapper-USDS-USDC.

LitePSM-DAI-USDC Usage

Section titled “LitePSM-DAI-USDC Usage”

Public

All users will have access to the following functions:

  • sellGem : Sell USDC and receive DAI
  • buyGem : Buy USDC with DAI

sellGem function accepts two inputs:

  • usr: Address of the DAI recipient
  • gemAmt: Amount of USDC being sold

The gemAmt is denominated in 6 decimals because “Gem” refers to USDC in a LitePSM-DAI-USDC deployment, which uses 6 decimals instead of the more common 18 decimals. After a successful swap, this amount of USDC is transferred from msg.sender to the LitePSM-DAI-USDC. The function returns a value denominated in 18 decimals, representing the DAI amount the user receives. The usr address then receives the DAI ERC20 balance from the LitePSM-DAI-USDC.

buyGem function accepts two inputs:

  • usr: Address of the USDC recipient
  • gemAmt: Amount of USDC being bought

The gemAmt is denominated in 6 decimals because “Gem” refers to USDC in a LitePSM-DAI-USDC deployment, which uses 6 decimals instead of the more common 18 decimals. After a successful swap, this amount of USDC is transferred to the usr address. The function returns a value denominated in 18 decimals, representing the DAI amount that msg.sender transfers from their address to the LitePSM-DAI-USDC. The usr address then receives the USDC balance from the LitePSM-DAI-USDC.

Authorized Users

Authorized users have access to two additional functions: sellGemNoFee and buyGemNoFee, which allow them to execute swaps without paying additional PSM fees. Authorized users will still need to pay the gas fees for their transactions. Governance must add an authorized user to an access list on the LitePSM-DAI-USDC to allow them access to these additional functions.

sellGemNoFee and buyGemNoFee accept the same inputs and return the same values as sellGem and buyGem, respectively.

Maximum Swap Size

All users, both public and authorized, can only swap up to the DAI and USDC balances held by LitePSM-DAI-USDC. DAI balance is held by LitePSM-DAI-USDC in its own contract address. USDC balance is held in a separate Pocket contract whose address can be read from litepsm.pocket(). Please note that other LitePSM-DAI-USDC swap transactions included in a block could affect the available DAI and USDC amounts.

The USDC balance held by LitePSM-DAI-USDC is determined by external usage and periodic liquidity management by Sky Ecosystem actors.

The DAI balance held by LitePSM-DAI-USDC is determined by internal protocol bookkeeping activities. The maximum DAI balance held by LitePSM-DAI-USDC at any time is dictated by the buf value set by Sky Ecosystem governance. Sky Ecosystem keepers periodically execute a set of public functions: fill, trim, and chug to keep the DAI balance of the LitePSM-DAI-USDC in line with the buf parameter. These functions are not restricted, and any address can execute them.

The Maximum Swap Size limit restricts a single sellGem transaction. As integrators, you can handle swaps beyond this limit by constructing an atomic batch of transactions. This batch can interleave any number of psm.sellGem() transactions to swap up to the currently available DAI balance with psm.fill() transactions to refill the DAI balance in the LitePSM. This approach allows you to complete a large USDC to DAI swap transaction atomically for your users.

Fees

Section titled “Fees”

Public

The tin fee is assessed on all sellGem transactions, and the tout fee is assessed on all buyGem transactions. Both tin and tout values are set by Sky Ecosystem governance.

Governance can set either tin or tout to the value of type(uint256).max, halting sellGem and buyGem transactions respectively on the LitePSM. Transactions would be halted for both public and authorized users.

Fees are represented as fixed decimal-point numbers with 18 decimals. Fee values will always be equal to or less than a WAD, which is (10^{ 18 }). Some examples are:

  • A tin value of 1, represented as a WAD, would assess a 100% fee on a sellGem transaction. This should never happen in practice.
  • A tin value of 0.01, represented as WAD/100, would assess a fee of 1% (100 basis points) on a sellGem transaction.
  • A tout value of 0.001, represented as WAD/10000, would assess a fee of 0.01% (^1 basis point) on a buyGem transaction.

Authorized Users

Authorized users are not assessed the tin and tout fees when they execute the sellGemNoFee and buyGemNoFee functions. However, they will be assessed fees like public users when they execute the regular sellGem and buyGem functions instead of the NoFee variants.

Authorized users can check their authorization status with the bud() function.

The bud function accepts the address of the authorized user. It returns a value of 1 when the address is authorized to execute both sellGemNoFee and buyGemNoFee, and a value of 0 when the address is not authorized to execute these functions.

Gas Costs

Section titled “Gas Costs”
Transaction TypeGas Limit
BuyGem (DAI to USDC) - LitePSM (Public User)78,867
BuyGem (DAI to USDC) - LitePSM (Authorized User)_
SellGem (USDC to DAI) - LitePSM (Public User)93,742
SellGem (USDC to DAI) - LitePSM (Authorized User)_

Stats

Section titled “Stats”

Please refer to LitePSM Dashboard for current LitePSM-DAI-USDC stats after launch.

Troubleshooting

Section titled “Troubleshooting”

Potential Issues

Section titled “Potential Issues”
  • Swaps will fail if the LitePSM has zero DAI balance.
  • Swaps will fail if other transactions have consumed the DAI balance of the LitePSM in the same block before your transaction.
  • LitePSM offers no slippage protection, and fees could change within the same block if a pending governance action goes live in a transaction before yours.

Refill Dai Buffer

Section titled “Refill Dai Buffer”

Steps to refill the DAI Balance of LitePSM-DAI-USDC:

  1. Call the rush function to check whether the DAI balance of LitePSM-DAI-USDC can be increased.
  2. If rush returns a value greater than zero, you can execute fill to increase the DAI balance of LitePSM-DAI-USDC up to the limit set by the buf parameter.

LitePSM Halt Status

Section titled “LitePSM Halt Status”
  • You can check whether sellGem and sellGemNoFee are halted by verifying if the tin value is set to uint.max.
  • You can check whether buyGem and buyGemNoFee are halted by verifying if the tout value is set to uint.max.

Next steps

Section titled “Next steps”

N/A

Resources

Section titled “Resources”

Released into the public domain (CC0 1.0 Universal) – trademarks remain with their owners; no warranty. See full license.