Yield Stablecoin: The New Income Engine of the Crypto Market

In the crypto market, stablecoins are quietly undergoing a transformation. They are no longer just tools for preserving value, but are gradually evolving into new channels for investors to generate returns. From government bond yields to perpetual contract arbitrage, yield-bearing stablecoins are becoming a new source of income for crypto investors. Currently, there are dozens of related projects with a market capitalization of over $20 million, with a total value exceeding $10 billion. This article will delve into the yield mechanisms of mainstream yield-bearing stablecoins and review the most representative projects in the market.

Definition and Characteristics of Yield Stablecoins

Yield stablecoins are an innovative type of crypto asset that not only maintain price stability but also provide additional income for holders. Unlike traditional stablecoins, yield stablecoins create passive income for users through various underlying strategies while ensuring price peg.

Diversification of Income Sources

The sources of income for yield stablecoins can be summarized into the following categories:

1. Real World Asset (RWA) Investment: Investing funds in low-risk assets such as U.S. Treasury bonds, money market funds, or corporate bonds.

2. DeFi Strategy: Utilize decentralized finance platforms for liquidity mining, participate in liquidity pools, or adopt a "delta neutral" strategy.

3. Lending: Lending deposits to users in need, earning interest income from it.

4. Debt Support: Allows users to mortgage encryption assets to borrow stablecoins, with returns coming from stability fees or interest generated by the collateral.

5. Hybrid Strategy: Combine various channels such as tokenized RWA, DeFi protocols, and centralized financial platforms to achieve diversification of income sources.

Overview of Mainstream Yield-Generating Stablecoin Projects

RWA-supported

These types of projects mainly generate returns by investing in tangible assets such as U.S. Treasury bonds, corporate bonds, or commercial paper.

• Ethena Labs (USDtb): Total supply reaches 1.3 billion USD, supported by a well-known asset management company.
• Usual (USD0): Total supply of $619 million, fully backed by short-term RWA.
• BUIDL: Total supply of 570 million USD, holding US Treasury bonds and cash equivalents.
• Ondo Finance (USDY): Total supply of 560 million USD, fully backed by U.S. Treasury bonds.
• OpenEden (USDO): Total supply of 280 million USD, with returns coming from US Treasury bonds and repurchase agreements.

basis trading/arbitrage strategy type

These types of projects generate profits through market-neutral strategies, such as perpetual contract funding rate arbitrage and cross-platform arbitrage.

• Ethena Labs (USDe): Total supply of 6 billion USD, maintained pegging through a diversified asset pool and spot collateral hedging.
• Stables Labs (USDX): Total supply of 671 million USD, employing a delta-neutral arbitrage strategy among various cryptocurrencies.
• Falcon Stable (USDf): Total supply of $573 million, generating returns through a market-neutral strategy.
• Resolv Labs (USR): Total supply of $216 million, fully backed by an ETH collateral pool, hedging risks through perpetual futures.

Lending/Debt Supported

Such projects generate returns through lending interest, stability fees for collateralized debt positions, and liquidation profits:

• Sky (DAI): Total supply of $5.3 billion, operating based on a collateral debt position model.
• Curve Finance (crvUSD): Total supply of 840 million USD, backed by ETH and managed through specific mechanisms.
• Syrup (syrupUSDC): Total supply of $631 million, supported by fixed-rate collateral loans provided to crypto institutions.
• MIM_Spell (MIM): Total supply of $241 million, minted through locking interest-bearing encryption.
• Aave (GHO): Total supply of 251 million USD, minted through collateral in the Aave v3 lending market.

mixed income source type

These projects diversify risk and optimize returns by combining various strategies:

• Reservoir (rUSD): Total supply of $230.5 million, supported by RWA and dollar-based capital allocators and lending vaults.
• Coinshift (csUSDL): Total supply of 126.6 million USD, combining T-Bills and DeFi lending strategies.
• Midas: Total supply of $110 million, providing institutional-grade stablecoin strategies that cover actively managed yield RWA and DeFi strategies.
• Upshift (upUSDC): Total supply of 32.8 million USD, with sources of income including lending, liquidity provision, and staking.

Risk Warning

Although earning stablecoin brings new profit opportunities for investors, it is also accompanied by various risks. These risks may include smart contract vulnerabilities, protocol security issues, market volatility, and collateral-related risks. Investors should fully understand the relevant risks when participating and make informed decisions based on their own risk tolerance.

Yield stablecoins, as innovative products in the crypto market, are redefining the functionality and value of stablecoins. As the market continues to evolve, we can expect to see more innovative projects emerging, providing investors with more diversified and optimized yield strategies.