What is Superposition?

Superposition is a decentralized finance (DeFi) protocol that uses Concordia’s adaptive risk model to enhance security, efficiency, and transparency for borrowing and lending. By dynamically managing risk, Superposition mitigates systemic vulnerabilities that are found in static risk models, protecting user funds and fostering confidence in the DeFi ecosystem. It also offers capital-efficient borrowing and optimized leverage, allowing users to maximize returns while maintaining robust safeguards. 

What is Stylus?

Stylus allows developers to write smart contracts in languages that compile to WASM—such as Rust, C, and C++—while remaining fully interoperable with the EVM. Introduced to Arbitrum mainnet on September 3rd, the Stylus Rust SDK and CLI allow developers to start building today.

Case Study

The opportunity

Superposition was founded by Fluidity Labs, the team behind Fluidity, a blockchain incentive layer that rewards users for using their cryptocurrencies. The purpose of Superposition was to address the ever-evolving utility problem of tokens and its need for greater engagement incentives within and across ecosystems. 

In Fluidity, transactions with Fluid USDC introduced a randomized, gamified yield mechanism that rewarded participants at varying scales. With Superposition, the team wanted to go further, establishing these rewards as a native layer onchain and enabling developers to benefit directly.

The Solution

Before Stylus, Superposition experimented with building their idea on Ethereum and Solana. While Ethereum provided robust security, it had significant drawbacks due to high fees, which proved unsuitable for Superposition’s yield-bearing stablecoin model. Solana, on the other hand, offered faster transactions but limited composability options. With Solana’s comparatively closed-loop ecosystem, Superposition found it challenging to develop cross-platform solutions.

Superposition’s team eventually turned to Arbitrum, where they found an efficient ecosystem that aligned well with their product-market fit and technical goals. However, they continued to look for a toolset that offered Ethereum's composability with the performance efficiency seen in Solana. Stylus on Arbitrum addressed these needs, enabling Superposition to build efficiently within an open ecosystem while benefiting from low fees and enhanced scalability.

With Stylus, Superposition developed mechanisms to broaden user incentives and ecosystem utility. Key highlights of this suite include:

1. Yield and Reward Mechanisms: Building on their experience with Fluidity, Superposition created a system where rewards are split between the transaction initiator and counterparty, incentivizing broader ecosystem participation. Stylus allowed Superposition to quickly develop complex yield models that integrate seamlessly within the Arbitrum ecosystem.
2. Payment for Order Flow (PFOF): Superposition leveraged Stylus to implement a native PFOF model. This feature enables the protocol to capture MEV (Maximal Extractable Value) opportunities and redirect them as rewards to users. Stylus provided the flexibility and performance to deploy this mechanism at scale, enhancing liquidity and encouraging consistent ecosystem engagement.
3. Liquidity Mining Infrastructure and Prediction Markets: Stylus enabled the development of a sophisticated liquidity mining framework and a prediction market, both of which aim to enhance user engagement and liquidity. These products are part of Superposition’s larger mission to create an interconnected, reward-driven ecosystem, with Stylus providing the technical foundation for scalable and efficient on-chain implementations.
4. Composability and Developer Tools:The Superposition team appreciated the robustness of Stylus’s Rust SDK, which supported complex automated testing and seamlessly integrated with various cryptographic libraries. Rust's expressiveness and type safety allowed for easy integration with their backend code, streamlining the development process. This enabled the team to efficiently develop, test, and deploy new reward and incentive mechanisms, facilitating quicker iterations and deployments.

Pushing the boundaries of yield-bearing incentives

Since adopting Stylus, Superposition has significantly expanded its user base and ecosystem activity. By creating a multi-layered incentive structure, Superposition has effectively enhanced liquidity while rewarding users for active participation. The integration of Stylus has allowed Superposition to push the boundaries of yield-bearing incentives, paving the way for innovative new features like account abstraction and social logins.

Looking ahead, Superposition plans to further capitalize on Stylus’s flexibility, focusing on deepening its liquidity and reward mechanisms suite. With Stylus as a foundational tool, Superposition envisions a vibrant, interconnected blockchain ecosystem where users and builders are incentivized to contribute actively, creating a sustainable cycle of growth and utility across the Arbitrum ecosystem.