Daylight, a decentralized energy startup backed by a16z crypto and Framework Ventures, launched a new protocol on Ethereum on Tuesday that aims to turn electricity into a yield-generating crypto asset.
The protocol, called DayFi, aims to create “capital markets for decentralized energy,” Daylight founder Jason Badeaux told CoinDesk in an interview.
The rise of data centers, robotics, electric vehicles and autonomous fleets is expected to significantly increase energy demand, while installing new capacity the old-fashioned way is now too slow and cumbersome, Badeaux said.
“Energy is becoming a bottleneck to progress,” he said. “Distributed energy today offers the fastest and cheapest route to increasing energy production and storage on electricity grids.”
DayFi’s model aims to connect DeFi capital with the growing need for distributed and resilient energy systems.
Putting RWAs on chain
The move is part of a broader trend of tokenization of real-world assets (RWA) like U.S. Treasuries, funds and now solar energy, creating new capital markets on the blockchain rails through decentralized finance (DeFi) protocols and stablecoins.
Distributed energy systems face their own challenges, including high soft costs and complex, training-intensive sales cycles, Badeaux noted. According to Daylight, about 60 percent of the cost of a typical residential solar installation comes not from the hardware, but from customer acquisition and other inefficiencies.
To solve this problem, DayFi uses crypto-native tools such as token incentives and permissionless vaults to coordinate capital and scale infrastructure.
Badeaux said Daylight’s model brings together incentives, financing and standardization on a single network, making distributed solar energy more accessible to users and more usable by grid operators and power traders.
“It’s about creating a new type of financial instrument that you can only access in traditional markets if you are one of the few big banks underwriting huge securitizations of distributed energy portfolios,” Badeaux said.
How DayFi Works
At the heart of DayFi is the use of two tokens: GRID and sGRID.
GRID is a stablecoin built on the M0 technology stack and is fully collateralized by US Treasuries and cash. This does not bring returns.
sGRID, the yield, is a derivative that combines Treasury interest with actual revenues generated by Daylight’s solar installations. Deposits are locked for two months using vault infrastructure provided by Upshift and managed with K3 retention policies. The capital deployed by investors is loaned against nominal rights to energy infrastructure cash flows.
From an investor perspective, they can deposit stablecoins into smart contract vaults. These funds are used to finance rooftop solar systems and batteries. Revenue from these energy systems – generated through long-term electricity contracts, grid incentives and participation in virtual power plants – is tokenized and returned to depositors in the form of a yield token.
Daylight currently operates in Illinois and Massachusetts, with plans to expand to more regional markets in the United States, including California.
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