When Stablecoins Start "Yielding": A Billion-Dollar Market's New Crypto Income Stream, Who's Truly Helping You Earn Passive Income?

Original Title: Stablecoin Update  May 2025

Source: Artemis

Translated by: Bitpush

In the crypto market, stablecoins are no longer just about "stability"—they’re quietly making you money. From U.S. Treasury yield to perpetual contract arbitrage, yield-bearing stablecoins are emerging as a new income engine for crypto investors. Currently, there are dozens of such projects exceeding the $20 million market cap threshold, with a total value surpassing $10 billion. This article breaks down the yield sources of mainstream yield-bearing stablecoins and highlights the most representative projects in the market to see who is truly "making your money work for you."

What Are Yield-Bearing Stablecoins?

Unlike regular stablecoins (like USDT or USDC), which merely serve as a store of value, yield-bearing stablecoins allow users to earn passive income while holding them. Their core value lies in maintaining price peg stability while generating additional returns for holders through underlying strategies.

How Are Returns Generated?

The sources of yield for yield-bearing stablecoins are diverse and can primarily be categorized into the following:

· Real-World Asset (RWA) Investments: Protocols invest funds in low-risk real-world assets such as U.S. Treasury bills (T-bills), money market funds, or corporate bonds, and return the generated income back to holders.

· DeFi Strategies: Protocols deposit stablecoins into decentralized finance (DeFi) liquidity pools, participate in liquidity farming, or employ "delta-neutral" strategies to extract returns from market inefficiencies.

· Lending: Deposits are loaned to borrowers, and the interest paid by borrowers becomes the yield for holders.

· Collateralized Debt: Protocols allow users to lock crypto assets as collateral to borrow stablecoins. Returns are mainly derived from stability fees or the interest generated by non-stablecoin collaterals.

· Mixed Sources: Income is generated from a combination of tokenized RWAs, DeFi protocols, centralized finance (CeFi) platforms, and other strategies, ensuring diversified returns.

Overview of the Yield-Bearing Stablecoin Market (Projects with Total Supply of Approximately $20 Million or More)

Below is a list of some of the currently leading yield-bearing stablecoin projects, categorized by their primary yield generation strategies. Please note that the data reflects total supply, and the list mainly includes yield-bearing stablecoins with a total supply of $20 million or above.

1. RWA-backed (Primarily via U.S. Treasury Bonds, Corporate Bonds, or Commercial Papers, etc.)

This category of stablecoins generates returns by investing funds in real-world, low-risk, income-generating assets.

· Ethena Labs (USDtb – $1.3B): Backed by BlackRock’s BUIDL fund.

· Usual (USD0 – $619M): Liquidity deposit token of the Usual protocol, 1:1 backed by ultra-short-term RWAs, particularly aggregated U.S. Treasury tokens.

· BUIDL ($570M): Tokenized fund by BlackRock, holding U.S. Treasuries and cash equivalents.

· Ondo Finance (USDY – $560M): Fully backed by U.S. Treasuries.

· OpenEden (USDO – $280M): Yield is derived from reserves backed by U.S. Treasuries and repurchase agreements.

· Anzen (USDz – $122.8M): Fully backed by a diversified portfolio of tokenized RWAs, primarily including private credit assets.

· Noble (USDN – $106.9M): A composable yield-bearing stablecoin, 103% backed by U.S. Treasuries, leveraging the M0 infrastructure.

· Lift Dollar (USDL – $94M): Issued by Paxos, fully backed by U.S. Treasuries and cash equivalents with automatic daily compounding.

· Agora (AUSD – $89M): Backed by Agora reserves, including dollars and cash equivalents, such as overnight reverse repos and short-term U.S. Treasuries.

· Cygnus (cgUSD – $70.9M): Backed by short-term Treasury bonds, operates on Base chain as a rebase-style ERC-20 token, with daily balance adjustments to reflect earnings.

· Frax (frxUSD – $62.9M): Upgraded from Frax Finance's stablecoin FRAX, it is a multi-chain stablecoin supported by BlackRock's BUIDL and Superstate.

2. Basis Trading/Arbitrage Strategy-Based

These stablecoins generate returns through market-neutral strategies, such as perpetual contract funding rate arbitrage and cross-exchange arbitrage.

· Ethena Labs (USDe – $6B): Backed by a diversified asset pool, it maintains its peg through delta hedging with spot collateral.

· Stables Labs (USDX – $671M): Generates returns through delta-neutral arbitrage strategies across multiple cryptocurrencies.

· Falcon Stable (USDf – $573M): Supported by a portfolio of cryptocurrencies, it generates returns through Falcon's market-neutral strategies, including funding rate arbitrage, cross-exchange trading, native staking, and liquidity provision.

· Resolv Labs (USR – $216M): Fully backed by an ETH collateral pool, with ETH price risk hedged using perpetual futures, and assets managed by off-chain custodians.

· Elixir (deUSD – $172M): Uses stETH and sDAI as collateral to create delta-neutral positions by shorting ETH and capturing positive funding rates.

· Aster (USDF – $110M): Backed by crypto assets and corresponding short futures on AsterDEX.

· Nultipli.fi (xUSD/xUSDT – $65M): Earns yields through market-neutral arbitrage on centralized exchanges (CEXs), including Contango arbitrage and funding rate arbitrage.

· YieldFi (yUSD – $23M): Supported by USDC and other stablecoins, with returns generated via delta-neutral strategies, lending platforms, and yield trading protocols.

· Hermetica (USDh – $5.5M): Backed by delta-hedged Bitcoin, earning funding fees by shorting perpetual futures on major centralized exchanges.

3. Lending/Debt-Backed

This category of stablecoins generates returns by lending deposits to accrue interest or through stability fees and liquidation proceeds via Collateralized Debt Positions (CDPs).

· Sky (DAI – $5.3B): Based on CDP (Collateralized Debt Positions). Minted by collateralizing ETH (LSTs), BTC LSTs, and sUSDS on @sparkdotfi. USDS serves as an upgraded version of DAI, enabling yield generation through the Sky Savings Rate and SKY rewards.

· Curve Finance (crvUSD – $840M): An over-collateralized stablecoin backed by ETH and managed via LLAMMA. Its peg is maintained through Curve’s liquidity pools and DeFi integrations.

· Syrup (syrupUSDC – $631M): Backed by fixed-rate collateralized loans provided to crypto institutions, with yields managed through credit underwriting and lending infrastructure by @maplefinance.

· MIM_Spell (MIM – $241M): An over-collateralized stablecoin minted by locking yield-bearing crypto assets into Cauldrons. Yields are derived from interest and liquidation fees.

· Aave (GHO – $251M): Minted by collateralizing assets within the Aave v3 lending markets.

· Inverse (DOLA – $200M): A debt-backed stablecoin minted via collateralized borrowing on FiRM. Yields are generated by staking into sDOLA, which earns income derived from lending revenue.

· Level (lvlUSD – $184M): Backed by USDC or USDT deposited into DeFi lending protocols like Aave to generate yield.

· Beraborrow (NECT – $169M): A native CDP stablecoin of Berachain, backed by iBGT. Yields are generated via leveraged returns from liquidity stability pools, liquidation proceeds, and PoL incentive boosts.

· Avalon Labs (USDa – $193M): A cross-chain stablecoin minted through the CeDeFi CDP model using assets like BTC, offering fixed-rate borrowing and generating yields by staking in the Avalon Vault.

· Liquity Protocol (BOLD – $95M): Backed by overcollateralized ETH (LSTs), it provides sustainable yield through borrower interest payments and liquidation gains in its Stability Pools.

· Lista Dao (lisUSD – $62.9M): An overcollateralized stablecoin on BNB Chain, minted via a CDP model using BNB, ETH (LSTs), and stablecoins as collateral.

· f(x) Protocol (fxUSD – $65M): Minted via leveraged xPOSITIONs backed by stETH or WBTC, with yields generated from stETH staking, position opening fees, and Stability Pool incentives.

· Bucket Protocol (BUCK – $72M): A stablecoin backed by an overcollateralized CDP on @SuiNetwork, minted using SUI as collateral.

· Felix (feUSD – $71M): A Fork of Liquity CDP on @HyperliquidX. feUSD is an overcollateralized CDP-based stablecoin minted using HYPE or UBTC as collateral.

· Superform Labs (superUSDC – $51M): A USDC-backed vault automatically rebalancing across top lending protocols (Aave, Fluid, Morpho, Euler) on Ethereum and Base, powered by Yearn v3.

· Reserve (USD3 – $49M): Backed 1:1 by a basket of blue-chip yield-bearing tokens (pyUSD, sDAI, and cUSDC).

4. Mixed Revenue Source Model (Combining DeFi, Traditional Finance, and CeFi Yields)

· Reservoir (rUSD – $230.5M): An over-collateralized stablecoin backed by a mix of RWA (Real-World Assets) and USD-based capital allocators as well as lending vaults.

· Coinshift (csUSDL – $126.6M): Supported by T-Bills and DeFi lending via Morpho, offering low-risk, regulated returns through vaults curated by @SteakhouseFi.

· Midas (mEGDE, mTBILL, mMEV, mBASIS, mRe7YIELD – $110M): A compliant institutional-grade stablecoin strategy. LYTs represent claims to actively managed yield-generating RWA and DeFi strategies.

· Upshift (upUSDC – $32.8M): Yield-generating and partially supported by lending strategies, but revenue also comes from LP (Liquidity Provider) and staking yields.

· Perena (USD*- $19.9M): A Solana-native yield-bearing stablecoin that is central to the Perena AMM. It generates returns through swap fees and IBT-driven liquidity pools.

Summary

The above highlights interest-bearing stablecoins with a total supply of around $20M or more. However, remember that all yield-bearing stablecoins come with risks. Yields are not risk-free and may be exposed to smart contract risks, protocol risks, market risks, or collateral risks.

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