Daylight, a decentralized energy startup supported by a16z crypto and Framework Ventures, introduced a new protocol on Ethereum on Tuesday aimed at transforming electricity into a yield-generating crypto asset.
The protocol, named DayFi, seeks to establish “capital markets for decentralized energy,” according to Jason Badeaux, founder of Daylight, in a conversation with CoinDesk.
With the rise of data centers, robotics, electric vehicles, and autonomous fleets, the demand for power is set to surge, while installing new capacity through traditional methods remains slow and cumbersome, Badeaux noted.
“Energy is turning into a bottleneck for progress,” he stated. “Distributed energy presents the quickest and most cost-effective pathway to enhance energy production and storage in today’s power grids.”
DayFi’s structure aims to connect DeFi capital with the increasing necessity for decentralized, reliable energy systems.
Integrating RWAs onchain
This initiative aligns with a broader movement to tokenize real-world assets (RWAs) like U.S. Treasuries, funds, and now solar energy, thus forging fresh capital markets on blockchain infrastructure via decentralized finance (DeFi) protocols and stablecoins.
Distributed energy systems encounter their own hurdles, such as high soft costs and intricate, education-intensive sales procedures, Badeaux mentioned. Daylight estimates that about 60% of the expenses for a standard residential solar installation are not from hardware, but from customer acquisition and other inefficiencies.
To address this, DayFi applies crypto-native mechanisms such as token incentives and permissionless vaults to coordinate capital and expand infrastructure.
Badeaux explained that Daylight’s framework consolidates incentives, financing, and standardization within a single network, enhancing accessibility for users and usability for grid operators and power traders.
“This is crafting a new financial instrument that traditional markets do not provide access to unless you are a large bank backing significant securitizations of distributed energy portfolios,” Badeaux noted.
Mechanics of DayFi
At the core of DayFi are two tokens: GRID and sGRID.
GRID is a stablecoin constructed on M0’s technology stack, fully collateralized by U.S. Treasuries and cash, without yielding any interest.
sGRID, the yieldcoin, merges Treasury interest with the actual income generated from Daylight’s solar installations. Deposits are locked for two months using vault infrastructure provided by Upshift, managed through curation strategies by K3. The capital invested is lent out against tokenized rights to the cash flows from energy infrastructure.
From the investors’ viewpoint, they can deposit stablecoins into smart contract vaults, which will be directed towards financing rooftop solar and battery systems. Revenues from these energy systems — generated via long-term power contracts, grid incentives, and participation in virtual power plants — are tokenized and distributed back to investors as yield tokens.
Currently, Daylight is operating in Illinois and Massachusetts, with intentions to broaden its reach to more regional markets across the U.S., including California.
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