Can Web3 stablecoin investment become a new world for trillions of dollars?

Introduction: Asset Anxiety in the Low-Interest Rate Era

On September 17th, Eastern Time, Federal Reserve Chairman Powell announced a 25 basis point cut in the target range for the federal funds rate to 4.00%-4.25%. This decision not only confirmed the expectations of a rate cut that had been building since the end of last year, but also reinforced the market consensus that the path for rate cuts will remain open: the market generally predicts that there is room for two more rate cuts totaling 50 basis points this year.

Each Fed rate decision is based on a comprehensive assessment of the US job market and economic growth prospects, and its impact ripples through global capital markets. The start of this round of rate cuts officially marks the beginning of a "low-interest era" for global investment. Whether it's bank savings, government bonds, or money market funds, the yield ceilings of traditional stable investments are being pushed down again and again, and investors' anxiety about an "asset shortage" is growing. While traditional finance's yield curve continues to decline, Web3 stablecoin investment products have captured public attention with their exceptionally high yields. These USD-backed stablecoin investment products, whether within decentralized finance (DeFi) protocols or on centralized digital asset platforms, often offer annualized returns of 5% or even as high as 20%. This raises questions: Where does the interest on assets strictly pegged to the US dollar come from? Are these astonishingly high returns a fleeting market bubble or the rise of a disruptive financial model? In this article, the Bitget Wallet Research Institute will analyze these phenomena, uncovering the operating logic behind these high returns and objectively assessing the opportunities and potential risks of this "new game." 1. "Current Savings" in the Digital World: Three Main Models of Stablecoin Investment Management Before exploring these mainstream models, it's necessary to clarify the definition of "stablecoin investment management." Simply put, "stablecoin investment" is a digital equivalent to a "bank deposit." Investors deposit their stablecoins (such as USDC and USDT), which are pegged 1:1 to the US dollar, into specific platforms or protocols to earn interest. Its core goal is to provide holders with a relatively substantial and predictable annualized return through on-chain or platform-based yield strategies, while ensuring the stability of the principal. This typically maintains the high liquidity of demand deposits. Current stablecoin investment products on the market can be categorized into three main models based on their underlying operating logic and asset custody methods: DeFi-native, CeFi-custodial, and hybrid models combining DeFi and CeFi. Comparison of Mainstream Stablecoin Investment Models DeFi Native Model: Creating a fully transparent "on-chain bank." Users manage their own wallet private keys and interact directly with decentralized lending protocols like Aave and Compound, depositing stablecoins into on-chain pools and earning floating interest based on real-time market demand. This model offers the advantage of full user control over their assets, with all capital flows transparent and open. However, it requires high operational skills and blockchain knowledge. CeFi Custody Model: More similar to traditional financial products. Users deposit stablecoins on centralized platforms (such as Coinbase and Binance), which manage their assets and distribute interest. The experience is similar to that of a mobile banking app. While this offers convenience and ease of use, the trade-off is that users relinquish direct control over their assets. Funds operate in a "black box" fashion, relying on the platform's creditworthiness. The Ce-DeFi hybrid model attempts to combine the advantages of both aforementioned models. Through technical packaging, the platform directs user assets to selective underlying DeFi protocols for interest generation, while potentially providing additional income subsidies. While users enjoy the convenience of CeFi, their assets remain in their own wallets (non-custodial), offering both high returns and self-sustainability. However, the risks also come with the added risk of the underlying DeFi protocols and the platform itself. II. Exploring the Source of Return: How Do DeFi Lending Protocols Support the Interest Rate Foundation of Stablecoin Investment? After reviewing the three mainstream models, a clear conclusion emerges: if we put aside the short-lived marketing campaigns of centralized platforms, stablecoin investment can provide a sustainable, high-return interest rate foundation, built entirely on on-chain DeFi protocols. Source: DefiLlama, as of September 17, 2025 According to data from DefiLlama (as of September 17, 2025), the on-chain protocol ecosystem is already very diverse, including categories such as staking, lending, re-staking, and decentralized exchanges. While their mechanisms vary, the mainstream protocols underlying stablecoin wealth management products generally employ a fundamental financial logic: earning interest on the difference between lending and borrowing. This is very similar to the core of traditional commercial banking. Therefore, this section will use Aave, the leading DeFi lending protocol, as an example to analyze this typical interest-earning model. Founded in 2017 by Finnish entrepreneur Stani Kulechov, Aave evolved from ETHLend, which later pivoted and changed its name to Aave (meaning "ghost" in Finnish). Data from DefiLlama shows that Aave's total value locked (TVL) has exceeded $40 billion, ranking first among all DeFi protocols. Its official website also states that Aave operates across 14 major networks, with net deposits exceeding $70 billion and a 30-day trading volume reaching $270 billion, making it a giant "on-chain bank."

Source: Aave official website

Aave's core business model is an efficient and transparent "peer-to-peer" lending market. Its stable operation and ability to continuously provide high interest rates mainly rely on three core mechanisms:

• Overcollateralization: This is the cornerstone and safety cushion of all on-chain lending. Anyone who wants to borrow money must first deposit crypto assets with a value far higher than the amount of their loan as collateral (for example, pledging $150 worth of Ethereum to borrow $100 of stablecoins). This barrier greatly protects depositors' funds and prevents bad debts from borrower defaults. Pool-to-Peer: Unlike the traditional model of matching individual borrowers with depositors, Aave pools all depositors' stablecoins into a single, large liquidity pool. Borrowers borrow directly from the pool, and interest is paid to the entire pool. This design significantly improves fund matching efficiency and liquidity, allowing users to deposit and withdraw funds instantly without waiting for a counterparty. Dynamic Interest Rates: This is the direct source of high returns. The interest rate on the pool is not fixed; it is adjusted in real time by an algorithm based on "fund utilization" (the proportion of funds in the pool that are lent out). When market demand for borrowing crypto assets (such as BTC and ETH) is strong (for example, during a bull market, when traders want to leverage long positions), large amounts of funds are lent out, increasing fund utilization. The algorithm automatically increases deposit rates to attract more stablecoin deposits, which in turn increases borrowing rates. Therefore, the high interest rates earned by stablecoin depositors are essentially paid to the strong demand of crypto asset borrowers. For example, on the actively traded Base chain, Aave's stablecoin deposit rate has long remained around 5%, a true reflection of market supply and demand. Source: Aave Official Documentation This shows that the high returns of stablecoin investment are not imaginary; they are rooted in the unique "non-stablecoin" lending activities of the crypto market, which are driven by high volatility and high trading demand. DeFi protocols like Aave essentially act as decentralized financial intermediaries driven by code and algorithms.

  III. Two Ends of the Scale: Opportunities and Practical Considerations for Stablecoin Investment

  After clarifying its underlying logic, the market positioning of stablecoin investment becomes increasingly clear. It precisely addresses the core pain points of investors in the current low-interest rate environment. By investing in stablecoins pegged to the US dollar, holders can effectively hedge against the volatile prices of mainstream assets like Bitcoin and Ethereum while also earning stable returns far exceeding those from traditional channels.

  As shown in the table below, stablecoin investment demonstrates unique appeal compared to mainstream stable dollar investment products. Its risk profile is comparable to that of government bonds and money market funds, aiming for principal stability, yet its yield potential is more than double that of the latter. Furthermore, it combines the liquidity of demand deposits, extremely low barriers to entry, and the high transparency of an on-chain model. This combination of high returns, high flexibility, and high transparency constitutes its core competitiveness in the current market environment. Comparison of mainstream stable USD wealth management products: Source: Public information However, with opportunity comes risk. As Aave's official documentation states, "Decentralized access to liquidity is not without risk, but it can be mitigated and managed." While investors are attracted by high returns, they must remain aware of the following potential risks: First, protocol security risk. This is an inherent technical risk in the blockchain world. Potential code vulnerabilities in smart contracts, oracle attacks, and the security of cross-chain bridges can all become avenues for hacker attacks. While multiple code audits and community oversight can mitigate risks, they cannot eradicate them. Secondly, there's the risk of extreme market fluctuations. While stablecoin wealth management products themselves invest in stablecoins, their returns derive from lending demand for mainstream crypto assets (such as Bitcoin and Ethereum). A systemic collapse in the crypto market could trigger large-scale cascading liquidations, placing immense liquidity pressure on the underlying protocol's funding pool. Such "black swan" events would severely test the protocol's risk management mechanisms. Finally, there's the risk of depegging from the stablecoin itself. History has proven that stablecoins are not absolutely stable. Even mainstream stablecoins can temporarily deviate from their pegs due to market panic or a credit crisis at the issuer. If a systemic credit collapse similar to the "Lehman Brothers" collapse in traditional finance were to occur, the ripple effect on the entire ecosystem would be immeasurable. IV. Conclusion: Embracing DeFi Innovation in the New Normal of Interest Rate Cuts Returning to the original question posed in this article: As the Federal Reserve slowly opens the door to rate cuts, forcing global investors to seek new sources of income growth, DeFi innovations, exemplified by stablecoin wealth management, undoubtedly offer a highly attractive option. It's no longer just an experiment for a few geeks, but has gradually evolved into a financial ecosystem capable of handling large amounts of capital, operating with self-consistent logic and efficiency. It cleverly transforms the exuberant capital demand within the Web3 world into a product similar to "high-interest dollar savings" that external investors can understand and participate in, building a bridge connecting traditional investors with decentralized finance. Of course, we must face the reality that this "new world" is still under construction, with both opportunities and risks. For ordinary investors, the right approach isn't to blindly rush in, nor to throw the baby out with the bathwater. Instead, it's to fully understand its sources of returns and potential risks, and adopt a rational approach to consider it as a worthy new option in diversified asset allocation. Only by facing and learning to manage these risks embedded in technology and the market can this emerging financial sector truly thrive and the light of DeFi's innovation reach ordinary people.