Yield-generating Stablecoins: A New Wave Reshaping the Value Logic of Stablecoins

Recently, some platforms have launched USDC flexible products with an annualized yield of up to 12%, and this is not just a gimmick. In the past, stablecoin holders were often "interest-free depositors," while issuers invested the deposited funds in safe assets like U.S. Treasury bonds to obtain considerable returns. Now, this exclusive dividend is being redistributed.

The new generation of yield-bearing stablecoin projects is breaking the "yield wall," allowing coin holders to directly share the interest income from underlying assets. This not only changes the value logic of stablecoins but may also become a new growth engine for physical assets (RWA) and the Web3 track.

1. Definition of Yield-Generating Stablecoin

Yield-generating stablecoins refer to stablecoins whose underlying assets can generate income, and this income (usually from U.S. Treasury bonds, RWA, or on-chain yields) is directly distributed to the coin holders. This is significantly different from traditional stablecoins, as the income from the latter belongs to the issuer, and holders only enjoy the advantage of being pegged to the U.S. dollar.

Yield-generating stablecoins turn the holding of coins into a passive investment tool, essentially distributing the interest income from government bonds, which is exclusively enjoyed by the issuer, to a wide range of holders. This model changes the traditional practice of stablecoin issuers obtaining user funds at zero cost.

According to the classification methods of some institutions for stablecoins, income-generating stablecoins are listed as a special subclass that can provide continuous returns to holders, mainly including two major categories:

1. Native interest-bearing stablecoin: Users only need to hold it to automatically earn income, similar to a bank's demand deposit.
2. Stablecoins with official yield mechanisms: Users need to perform specific actions, such as depositing into designated savings protocols or staking, to earn interest.

If 2020-2024 is the "expansion period for stablecoins," then 2025 will be the "dividend period for stablecoins." With a balance among compliance, yield, and liquidity, yield-generating stablecoins may become the next trillion-dollar segment of the stablecoin market.

2. Review of Leading Yield-Generating Stablecoin Projects

Most yield-generating stablecoins are closely related to the tokenization of U.S. Treasury bonds. The on-chain tokens held by users are essentially anchored to U.S. Treasury assets held by custodians, preserving the low-risk characteristics and income-generating ability of Treasury bonds, while also providing the high liquidity of on-chain assets, and can be combined with DeFi components to create leveraged lending and other financial strategies.

In the current market, in addition to some established protocols continuing to ramp up, the development of new players is also accelerating rapidly, forming a diverse pattern ranging from protocol-based to CeDeFi hybrid models. Below are several representative projects:

USDe

As a key player in the current wave of yield-generating stablecoins, the supply of USDe has surpassed 10 billion. Its annualized yield remains at a high level, mainly derived from the staking yields of ETH's LSD and the funding rate income from short positions in perpetual futures.

USDY

USDY is a tokenized note backed by short-term U.S. Treasury bonds and bank demand deposits, essentially classified as a bearer bond. It provides on-chain funds with risk exposure close to that of government bonds while granting token composability, allowing it to integrate with DeFi lending, staking, and other modules to amplify yields.

PYUSD

PYUSD was initially positioned as a compliant payment stablecoin, pegged 1:1 to USD deposits and short-term government bonds. After 2025, it began to explore integrating a yield distribution mechanism, returning part of the underlying interest income to coin holders, attempting to bridge the dual attributes of payment and yield.

USDS

USDS allows users to directly deposit tokens into the protocol and automatically earn interest linked to U.S. Treasury yields, without incurring additional operational costs. The current savings rate is 4.75%, with deposits nearing 2 billion coins. This also reflects the evolution of its issuer from a DeFi native stablecoin to a RWA yield distribution platform.

sFRAX

sFRAX tracks the Federal Reserve's interest rates by partnering with banks to open brokerage accounts for purchasing U.S. Treasury bonds. Currently, the total amount staked has exceeded 60 million coins, with an annualized interest rate of approximately 4.8%.

It is worth noting that not all yield-bearing stablecoins can operate stably, as some projects in the market have already announced liquidation. Overall, the underlying configuration of most yield-bearing stablecoins currently focuses on short-term government bonds and reverse repos, with interest rates offered generally falling within the 4%-5% range, in line with the current yield levels of U.S. Treasuries.

3. Analysis of the Prospects for Stablecoin Yield Enhancement

The reason why yield-generating stablecoins can provide sustainable interest returns lies in the robust allocation of underlying assets. From a risk structure perspective, holding U.S. Treasuries is almost equivalent in risk to holding U.S. dollars, but U.S. Treasuries can additionally generate an annualized interest of 4% or even higher.

This "hold and earn" model is inherently attractive:

• Ordinary users can allow idle funds to automatically generate interest.
• 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 chain 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. Regardless of how U.S. Treasury rates change in the future, this wave of yield-bearing stablecoin momentum driven by the high interest rate cycle has already shifted the value logic of stablecoins from "anchoring" to "dividends."

In the future, this time point may be regarded as a watershed moment in the narrative of stablecoins, as well as another historical turning point in the integration of cryptocurrency and traditional finance.