Yield-bearing stablecoins: Reshaping the value logic of stablecoins

Recently, some platforms have launched USDC savings products with annualized returns of up to 12%, and this is not just a gimmick. In the past, stablecoin holders were typically "interest-free depositors", while issuers invested the deposited funds in safe assets like U.S. Treasury bonds to earn substantial returns. Now, these exclusive dividends are being redistributed. An increasing number of new generation yield-bearing stablecoin projects are breaking the "yield wall", allowing coin holders to directly share the interest returns of the underlying assets. This not only changes the value logic of stablecoins but may also become a new growth engine in the RWA and Web3 sectors.

1. Definition of Yield-Generating Stablecoins

Yield-bearing stablecoins refer to stablecoins whose underlying assets can generate returns, and these returns (usually from U.S. Treasury bonds, RWA, or on-chain yields) are directly distributed to the coin holders. This is significantly different from traditional stablecoins, as the returns of traditional stablecoins go to the issuer, and holders only enjoy the benefits of being pegged to the U.S. dollar without any interest income.

Yield-generating stablecoins turn holding coins into a passive investment tool, essentially distributing the interest income from government bonds that is typically monopolized by traditional stablecoin issuers to a wide range of stablecoin holders.

According to a certain classification method, income-generating stablecoins mainly include two categories:

1. Native interest-bearing stablecoin: Users only need to hold this type of stablecoin to automatically earn returns, similar to a bank's savings account.
2. Provide stablecoins with an official yield mechanism: Users need to perform specific actions, such as depositing into designated saving protocols, staking, or exchanging for specific yield certificates, to start earning interest.

If the period from 2020 to 2024 is the "expansion period for stablecoins," then 2025 will be the "dividend period for stablecoins." Balancing compliance, yield, and liquidity, yield-bearing stablecoins may become the next trillion-dollar sub-sector of stablecoins.

2. Overview of Leading Yield-bearing Stablecoin Projects

From the perspective of specific implementation paths, most yield-bearing stablecoins are closely related to the tokenization of U.S. Treasury bonds. The on-chain tokens held by users are essentially anchored to the U.S. Treasury assets held by custodial institutions, which retains the low-risk attributes and yield capabilities of Treasury bonds, while also possessing the high liquidity of on-chain assets, and can be combined with DeFi components to derive financial activities such as leverage and lending.

In the current market, in addition to some established protocols continuing to increase their investments, the development of new players like Ethena (USDe) and Ondo Finance is also rapidly accelerating, forming a diverse landscape ranging from protocol-based to CeDeFi hybrid models.

Ethena's USDe

As a key player in this round of yield-generating stablecoin craze, the supply of USDe has exceeded 10 billion. Its annualized yield once maintained above 30%, and it currently remains around 9%. The high yield primarily comes from ETH's LSD staking returns and the funding rate income from Delta hedging positions.

Ondo Finance USDY

USDY is a tokenized note backed by short-term U.S. Treasury securities and bank demand deposits, essentially classified as a bearer bond. It offers on-chain funds exposure to risk levels close to Treasury bonds while providing token composability, allowing for integration with DeFi lending, staking, and other modules to amplify returns.

PayPal's PYUSD

PYUSD was initially positioned as a compliant payment stablecoin. After 2025, it will attempt to implement a yield distribution mechanism, returning part of the underlying interest income to coin holders, aiming to integrate the dual attributes of payment and yield.

USDS of a certain decentralized protocol

The USDS launched by this protocol allows users to directly deposit tokens into the protocol and automatically earn interest linked to US Treasury yields, without incurring additional operational costs. Currently, the savings rate is 4.75%, and the deposit scale is close to 2 billion coins.

sFRAX of a certain DeFi project

The project has been actively aligning with the Federal Reserve, and its launched sFRAX can track the Federal Reserve's interest rates to maintain relevance by collaborating with a certain bank to open brokerage accounts for purchasing U.S. Treasury bonds. Currently, the total amount staked in sFRAX has exceeded 60 million coins, with an annualized interest rate of about 4.8%.

It is worth noting that not all yield-generating stablecoins can operate stably, as some projects have announced liquidation. Overall, most yield-generating stablecoins currently have their underlying configurations concentrated in short-term government bonds and reverse repos, with interest rates offered externally mostly falling within the 4%-5% range, in line with the current yield levels of U.S. Treasuries.

3. How to view the yield enhancement of stablecoins?

The reason why yield-bearing stablecoins can provide sustainable interest returns lies in the robust allocation of underlying assets. The vast majority of the returns from such stablecoins come from low-risk, stable-return assets like U.S. Treasury bonds and other RWA assets.

From a risk structure perspective, holding U.S. Treasuries and holding U.S. dollars carry almost the same risk, but U.S. Treasuries generate an additional annualized interest of 4% or even higher. During periods of high interest rates on U.S. Treasuries, these agreements generate returns by investing in these assets, and after deducting operating costs, distribute part of the interest to coin holders, forming a perfect "U.S. Treasury interest - stablecoin promotion" closed loop.

This "holding generates interest" model is inherently attractive. Ordinary users can let idle funds automatically generate interest, while DeFi protocols can use it as high-quality collateral to further derive financial products such as lending, leverage, and perpetuals. Institutional funds can enter the blockchain under a compliant and transparent framework, reducing operational and compliance costs.

Therefore, yield-bearing stablecoins are expected to become one of the most understandable and practical application forms in the RWA track. Currently, RWA fixed-income products based on U.S. Treasury bonds and stablecoins are rapidly emerging in the crypto market, from on-chain native protocols to payment giants and new entrants with Wall Street backgrounds, and the competitive landscape is beginning to take shape.

Regardless of how U.S. Treasury interest rates change in the future, the wave of yield-bearing stablecoins driven by the high interest rate cycle has already shifted the value logic of stablecoins from "anchoring" to "dividends." In the future, perhaps when we look back at this time point, we will find that it is not only a watershed moment in the narrative of stablecoins but also another historical turning point in the integration of crypto and traditional finance.