Sponsored Swaps with Turnkey
Fixed-rate swaps let you cover the market difference between supported USD stablecoins. Swap fee sponsorship lets you cover the cost of the swap. Together, they give users a 1:1 swap with no swap fee.
Today, Turnkey is introducing Sponsored Swaps, two new controls for Turnkey Swaps that make stablecoins work like digital cash: fixed-rate swaps for supported USD stablecoin pairs and swap fee sponsorship.
Users expect stablecoins to behave like dollars. However, stablecoins don't always trade exactly one to one on the open market and on a typical swap, fees come out of the output. So, 100 USDT can arrive as slightly less than 100 USDC. Sponsored Swaps adds another layer of abstraction for building great user experiences: your app can move between stablecoins and chains on the backend while users see one dollar balance, and Turnkey handles the cost management behind it.
Sponsored Swaps runs on the same Swaps API as every Turnkey swap, with the same policy engine and audit trail as every other action on Turnkey, the infrastructure that has powered over $200 billion in stablecoin transaction volume. The Swaps API connects your wallets to independent third-party swap providers, and those providers carry out each swap.
What does Sponsored Swaps add to a stablecoin swap?
Sponsored Swaps adds two controls that change who covers the costs of a stablecoin swap. Each works on its own, and you can choose which swaps to turn them on for.
How fixed-rate swaps convert USDT to USDC at 1:1
With fixed rate, a swap between two supported stablecoins delivers the quoted output at a fixed 1:1 rate before fees, instead of the market rate at settlement. A user converting 100 USDT receives 100 USDC before fees, on the same chain or across chains.
When your app requests a quote, the user sees the 1:1 amount up front. When the market rate is below the fixed rate, your business covers the difference. And when the market moves in your favor, the difference is credited against your transaction management charges at the end of the billing period.
Covering swap fees for your users
With swap fee sponsorship, swap fees are covered by your business instead of coming out of the user's output. Sponsorship is set on each swap request, so your app can use its own logic to decide which swaps to cover, for example during a campaign or for a segment of qualifying users.
Your own client-set fee is separate and can still apply. Sponsored swap fees are charged to your business separately from that fee, so you can cover the provider's swap fees while keeping your own fee enabled.
Swap fee sponsorship is separate from gas sponsorship. One covers the swap's fees, the other covers gas, the network fee for sending a transaction, and both can be used on the same swap.
Combine both controls for a 1:1 stablecoin swap with no swap fee
Fixed-rate swaps cover the difference from the market rate, and swap fee sponsorship covers swap fees. For a user to pay no swap fee on a 1:1 swap, turn on both and leave your own client fee off:
| Setup | What your business covers | What the user receives |
|---|---|---|
| Fixed rate only | The difference from the market rate | A 1:1 conversion, minus swap fees and your own fee if set |
| Swap fee sponsorship only | Swap fees | A market-rate conversion, minus your own fee if set |
| Both, with your client fee off | The rate difference and swap fees | A 1:1 conversion with no swap fee |
How spend limits keep covered costs predictable
You decide who pays, and how much. Each feature enables you to set your own rolling spend limits: one shared limit across your organization and its sub-organizations, plus one limit specific to each sub-organization.
A swap set up for a fixed rate or sponsorship never quietly falls back to the market rate or an unsponsored quote. If the swap would cause you to exceed your limit, the request fails instead.
Who we built Sponsored Swaps for: payments, treasury, trading and consumer apps
Swap fee sponsorship fits any trading product that wants to remove friction at the moment of the trade. Fixed-rate swaps matter most to teams whose core flow is stablecoin conversion:
- Payments and payout platforms: Deliver exact 1:1 conversions so payouts land at the amount expected.
- B2B treasury products: Settle at par when payments arrive in one stablecoin and obligations are due in another.
- Merchant and payment processors: Convert deposits that arrive in different stablecoins into one target stablecoin.
- Exchanges and trading apps: Cover swap fees on deposits so new users can start trading without friction.
- Consumer and rewards apps: Cover swap fees on the swaps that keep users coming back.
- Neobanks: Keep balances in dollars, with conversions happening in the background.
Use Sponsored Swaps with swap fees, gas sponsorship and Earn
Sponsored Swaps works with the rest of the money flow in your product. One API brings it all together: monetize on every trade, give users a seamless stablecoin experience, and earn a share of yield on deposits, all within your product.
For example, in a payments app:
- Accept the deposit: A user deposits USDT into their wallet in the app.
- Convert at 1:1: The app converts the USDT to USDC with both fixed rate and swap fee sponsorship on and its own client fee off, so the user pays no swap fee.
- Put the balance to work: The user can earn yield on the USDC through Turnkey Earn, with access to lending vaults from providers such as Morpho and Aave, and the app can earn a share of the yield.
Getting started with Sponsored Swaps
Sponsored Swaps is available to Enterprise customers only. To enable it, contact the Turnkey team. The Swaps overview explains how quotes and fees work.
Learn more about swap fee sponsorship and fixed-rate swaps in the Turnkey docs.
