Sky Launches USDS and sUSDS Natively on Avalanche

Sky has launched USDS and sUSDS natively on Avalanche through Skylink, its purpose-built cross-chain bridge infrastructure, with a daily transfer cap of $5 million in either direction as of April 13, 2026.

The deployment was pioneered by Grove Finance, a long-term Avalanche ecosystem partner, which executed the first direct transfer from Ethereum Mainnet to Avalanche using Skylink. 

The bridge operates on a burn-and-mint model, meaning tokens are burned on the source chain and newly minted on the destination chain. No bridge liquidity pools are required or allocated at any point.

This marks the first time USDS and sUSDS have been natively available on Avalanche without wrappers or third-party bridge dependencies.

What Is Skylink and How Does It Work?

Skylink is cross-chain infrastructure built specifically within the Sky Ecosystem. It is enabled by LayerZero, a widely used interoperability protocol that allows blockchains to communicate and pass messages securely.

The burn-and-mint framework it uses is worth explaining for those less familiar. Traditional bridges often hold large reserves of tokens on both chains to facilitate transfers, which creates idle liquidity and potential security vulnerabilities if those reserves are exploited. Skylink removes that requirement entirely. When a user transfers USDS from Ethereum to Avalanche, the tokens are burned on Ethereum and an equivalent amount is minted natively on Avalanche.

Key characteristics of the Skylink deployment include:

• No wrapped tokens or synthetic versions of USDS or sUSDS
• No third-party bridge liquidity required
• All transfer limits and scaling timelines controlled by Sky governance
• Grove Finance pioneered the first Avalanche transfer

Sky governance, not a centralized team, controls the system-wide parameters. The current $5 million daily cap applies across all participants, protocols, and applications using the bridge combined.

What Is sUSDS, and Why Does It Matter?

USDS is Sky's stablecoin, designed to maintain a 1:1 peg with the US dollar. sUSDS is the savings version of USDS, essentially a yield-bearing wrapper that accrues value over time when USDS is deposited into Sky's savings module.

Having both assets available natively on Avalanche is significant because it allows DeFi protocols on the network to integrate interest-bearing stablecoin liquidity without routing through Ethereum. 

Previously, any stablecoin expansion into a new network required reliance on external bridges, each introducing its own risk profile and liquidity fragmentation. Skylink removes that dependency entirely for the Sky Ecosystem.

The Phased Rollout Timeline

The deployment is structured in three stages.

The first stage went live on April 13, 2026, when the Avalanche bridge became operational with a global daily transfer cap of $5 million in both directions. This cap is set by Sky governance.

The second stage is scheduled for April 27, 2026. Transfer limits are expected to be increased to their final capacity for the initial deployment phase in both directions.

The third stage, expected later in Q2 2026, involves new infrastructure that will enable native conversions between USDS and sUSDS directly on Avalanche, without needing to route back through Ethereum.

Does This Timing Align With Avalanche's Growing Institutional Presence?

The Skylink launch coincides with broader momentum around Avalanche as an institutional-grade network. Avalanche currently ranks 12th in total value locked (TVL) across the DeFi sector.

One day after the Skylink bridge went live, Bitwise Asset Management launched a spot Avalanche ETF on the New York Stock Exchange on April 15, 2026. The fund trades under the ticker BAVA, carries a sponsor fee of 0.34%, and includes a staking component built directly into its structure.

BAVA holds actual AVAX tokens rather than futures contracts, making it a spot ETF. What distinguishes it from a standard spot product is the staking layer: Bitwise will allocate the fund's AVAX through Bitwise Onchain Solutions, its in-house staking division, targeting average staking rewards of 5.4%. 

Staking on Avalanche means tokens are locked to help validate transactions on the network, with participants earning a share of network rewards in return. The fee is waived for the first month on the first $500 million in assets. Bitwise manages over $11 billion in client assets.

What This Means for Builders and Protocols on Avalanche

For developers building on Avalanche, native USDS and sUSDS simplify how stablecoin liquidity can be integrated into protocols. There are no wrapped asset complications, no dependence on third-party bridge security assumptions, and no idle liquidity sitting in pools waiting to be used or exploited.

The burn-and-mint model also means that the total supply of USDS remains consistent across chains, with no double-counting from bridged reserves. Every unit minted on Avalanche corresponds to a unit burned on Ethereum.

Avalanche noted the integration brings "native issuance and purpose-built cross-chain rails" to its ecosystem, describing it as another major asset class arriving onchain with fewer tradeoffs for builders.

Conclusion

Sky's deployment of USDS and sUSDS on Avalanche via Skylink introduces native stablecoin infrastructure to the network using a burn-and-mint transfer model that requires no bridge liquidity. Governed by Sky's decentralized governance system, the rollout began April 13 with a $5 million daily cap, with limits set to expand on April 27 and native USDS-to-sUSDS conversion expected on Avalanche later in Q2 2026. Grove Finance executed the first transfer, and LayerZero underpins the cross-chain communication layer.

Resources

1. Sky Ecosystem on X: Post on April 16

2. Avalanche on X: Posts (April, 2026)

3. Press release by Bitwise: Bitwise Launches Spot Avalanche ETP (BAVA); Includes In-House Staking To Maximize Staking Rewards and Oversight

4. Report by The Block: Bitwise launches Avalanche ETF with plans to stake AVAX held