Author: Mars_DeFi, Crypto KOL; Compiler: Felix, PANews
If users want to maximize profits, they can maximize the value of stablecoins through yield-based stablecoins.
Yield-based stablecoins are assets that generate income through DeFi activities, derivative strategies, or RWA investments. Currently, such stablecoins account for 6% of the $240 billion market value of stablecoins. As demand grows, JPMorgan believes that a 50% share is not out of reach.
Yield-based stablecoins are minted by depositing collateral into the protocol. The deposited funds are used to invest in yield strategies, and the returns are shared by the holders. This is like a traditional bank lending out deposited funds and sharing the interest with depositors, except that the interest on yield-based stablecoins is higher.
This article aims to review 20 stablecoins that can generate income.
Ethena maintains the value of its stablecoins and generates income through delta neutral hedging.
USDe is minted by depositing staked ETH (stETH) into the Ethena protocol. After that, the ETH position is hedged by shorting.
In addition to the income from stETH (currently 2.76% annual interest rate), the positive funding rate of shorting will also generate income, which Ethena will distribute to users who stake USDe in exchange for sUSDe (5% annual interest rate).
sDAI is generated by depositing DAI into Maker's DAI Savings Rate (DSR) contract. The current annualized yield is 3.25%.
Income is accumulated through interest on DSR (the interest rate is determined by MakerDAO). sDAI can also be traded or used in DeFi like other stablecoins.
Ondo issues USDY with USDC deposits. The deposited assets are used to purchase low-risk assets such as treasury bills (about 4-5% annual interest rate), and most of the interest is shared by USDY holders.
The yield of USDY is set once a month and remains stable throughout the month. The annualized yield this month is 4.25%.
Note: USDY's yield is reflected in the token price, not the quantity. This is why USDY is always above $1.
BUIDL stablecoin represents ownership of the tokenized money market fund (MMF) managed by BlackRock.
The fund invests in cash and other instruments, such as short-term treasury bills and repurchase agreements, and distributes interest to BUIDL holders.
The fund's yield is calculated daily, but distributed monthly to BUIDL holders.
YLDS is the first yield-generating stablecoin registered as a public security with the U.S. SEC.
Figure Markets earns income by investing in the same securities held by high-quality money market funds (MMFs), which are riskier than tokenized government-backed money market funds (MMFs).
YLDS offers an annual interest rate of 3.79%. Interest accrues daily and is paid monthly in U.S. dollars or YLDS tokens.
USDS is a renamed version of DAI and can be minted by depositing eligible assets through Sky Protocol.
It can be used in DeFi and can also earn income from Sky Protocol through the Sky Savings Rate (SSR) contract. sUSDS is issued based on USDS deposits with an annual interest rate of 4.5%.
USD0 is fully backed by real-world assets (RWAs) such as treasury bonds, and is minted by depositing USDC or eligible RWAs as collateral on the Usual platform.
Users can also pledge USD0 on Curve to get USD0++ (annual interest rate of 0.08%). USD0++ can be used in DeFi, and the income is issued in the form of USUAL tokens (13% annual interest rate).
Note: To obtain USD0++ income, a 4-year pledge is required.
Mountain Protocol generates income by investing in short-term US Treasuries, but USDM is specifically for non-US users.
The returns from these US Treasuries are distributed to USDM holders through a daily adjustment system, so balances automatically reflect the earned returns.
USDM currently offers an annualized yield of 3.8%.
OUSD is minted by depositing stablecoins such as USDC, USDT, and DAI on the Origin Protocol.
Origin deploys collateral into low-risk DeFi strategies, generating returns through lending, liquidity provision, and transaction fees. These returns are distributed to OUSD holders through an automatic rebase.
OUSD is backed by stablecoins and has an annual interest rate of 3.67%.
mkUSD is supported by liquid pledge derivatives. The income is generated through the rewards of the underlying pledged assets (2.5% - 7% variable annual interest rate) and distributed among mkUSD holders.
mkUSD can be used for liquidity mining through platforms such as Curve, or it can be staked in Prisma's stable pool to obtain PRISMA and ETH rewards from liquidation.
USDN is backed by short-term government bonds. The income comes from the interest on short-term government securities and is distributed to USDN holders (4.2% annual interest rate).
Users can earn basic income by depositing USDN in a flexible vault, or earn Noble points by depositing it in a USDN lock vault (up to 4 months lock).
frxUSD is backed by the assets of BUIDL, a subsidiary of BlackRock, and generates income by leveraging its underlying assets (such as treasury bonds) and participating in DeFi.
The yield strategy is managed by the Benchmark Yield Strategy (BYS), which dynamically allocates the staked frxUSD to the highest yield sources, allowing sfrxUSD holders to obtain the highest yield.
lvlUSD is minted by depositing and staking USDC or USDT. These collaterals are deployed in blue-chip lending protocols such as Aave and Morpho.
Users can stake IvIUSD in exchange for sIvIUSD to enjoy the benefits of DeFi strategies.
The annual interest rate is 9.28%.
DUSD is a cross-chain stablecoin that can be minted with sDAI and other liquid collateral. It generates income through re-pledged derivatives and distributes the income of the underlying assets to DUSD holders.
DUSD can be deposited in a liquidity pool or a value-added vault, or it can be pledged on Davos to obtain an annual interest rate of 7-9% and lending interest income.
USD3 is minted by depositing PYUSD on Aave v3, DAI on Spark Finance, or USDC on Compound v3.
The income generated by distributing collateral to the top DeFi lending platform will be distributed to USD3 holders (annual interest rate is about 5%).
Reserve Protocol provides over-collateralization for USD3 to prevent decoupling.
USDA is minted by depositing USDC. USDA's income is generated through DeFi lending, treasury bonds, and tokenized securities trading.
USDA can be deposited in Angle's savings solution to obtain stUSD. stUSD holders can obtain the income generated by USDA (6.38% annual interest rate).
USDL is the first stablecoin to provide daily returns under a regulatory framework. Its income comes from short-term US securities held in Paxos reserves, with a yield of about 5%. USDL holders can automatically obtain the income of USDL.
yUSD is backed by stablecoins and can be minted by depositing USDC or USDT on YieldFi (11.34% annual interest rate).
YieldFi generates yield by deploying collateral through delta-neutral strategies, while yUSD can be used for DeFi strategies such as lending and providing liquidity on protocols such as Origin Protocol.
USDO is backed by tokenized U.S. Treasuries and money market funds such as OpenEden's TBILL.
Its underlying assets are invested through on-chain and off-chain strategies to generate returns. The returns are distributed to USDO holders through a daily rebase mechanism.
The underlying assets are invested through on-chain and off-chain strategies to generate returns. This income is distributed daily to USDO holders.
Similar to Ethena's USDe, deUSD's income comes from its investment in traditional assets such as US Treasuries, as well as the funding rate generated by lending within the Elixir protocol.
Users who pledge deUSD for sdeUSD can receive an annualized return of 4.39% and 2x potion rewards.
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