Yielding Stablecoins: A New Trend in the Crypto Assets Field

Stablecoins are becoming a market consensus. Recently, various new stablecoin projects have emerged in the market, such as a payment company acquiring Bridge and Huma using stablecoins to replace the position of bank intermediaries. At the same time, some well-known projects have also begun to transition to yield-bearing stablecoins, such as MakerDAO rebranding to Sky and shifting to yield-bearing stablecoins, while certain DEXs and lending platforms are also rapidly laying out yield-bearing stablecoin businesses.

Currently, the yield-bearing stablecoin ( YBS ) still falls under the category of stablecoins, and many people find it difficult to understand the fundamental differences between it and traditional stablecoins. In fact, the YBS project attracts users through yield generation, distributing a portion of asset returns to users, and continues to earn asset returns after completing the capital accumulation. This is quite different from the issuance model of traditional stablecoins.

YBS follows the on-chain banking logic of deposit-taking and lending, deconstructing the power of asset issuance. Compared to traditional stablecoins that require government-business cooperation and exchange support, YBS has shown explosive growth. The history of the crypto industry is one of innovation in asset issuance models, but this time it is more moderate under the name of stability.

Yielding stablecoins require a yield mechanism and a stablecoin mechanism. The sources of yielding assets mainly fall into two categories: on-chain use of staked assets and off-chain use of income-generating assets such as U.S. Treasury bonds. Both can be used in combination. Currently, there are nearly a hundred active yielding stablecoin projects in the market.

From the perspective of the protocol, a complete tokenomics of a yield-generating stablecoin protocol should include: stablecoins and their staked versions, the main protocol token and its staked version. Focusing on the protocol can also better reflect the relationship of "the protocol shares profits, and the stablecoin is a profit-sharing certificate."

Among the many interest-bearing stablecoin projects, only a few are likely to stand out. In addition to some mainstream DeFi protocols strengthening their own ecosystems, emerging specialized interest-bearing stablecoin projects are competing for the remaining market space. From the dimensions of underlying assets, core mechanisms, and TVL, there are currently a dozen or so projects worth paying attention to.

The development of interest-bearing stablecoins in the future faces many challenges. The ongoing profitability of the protocol is crucial, requiring a balance between user returns and protocol profits. The price of the protocol token will also impact the stability of the interest-bearing stablecoin. Additionally, how to establish credibility and capital reserves is key. As a new type of currency, the recognition of interest-bearing stablecoins is no less than that of early Bitcoin and Ethereum.

Overall, interest-bearing stablecoins represent another innovation in the asset issuance model of the Crypto Assets field, and their development deserves continued attention.