Interest-bearing stablecoins are on the rise:
Currently, it accounts for only 1.5% of the total market capitalization of Ethereum stablecoins.
The most popular interest-bearing stablecoins include MakerDAO’s sDAI and LybraFinance’s eUSD/peUSD:
- sDAI: $1.05B
- eUSD: $24.62 million
- peUSD: 11.49 million US dollars
Their revenue streams are very different:
- sDAI: Income generated from stability fees on Maker Vaults and RWA investments (e.g. U.S. Treasuries)
- eUSD/peUSD: LST from stETH, WBETH, rETH, etc.
Benefits of interest-bearing stablecoins:
- Preserve liquidity while opting for a higher yield (similar to LST)
- Stablecoins such as R, USDC, and FRAX also have savings account products. However, users will lose liquidity once they deposit
In addition to yield, success factors for stablecoins:
- Liquidity: CurveFinance is a key battleground for stablecoin liquidity
- DeFi integration: The largest holders of sDAI are AaveAave (13%) and spark_protocol (9%). DeFi integration helps increase the utility of stablecoins
- Hooks: From a user experience perspective, maintaining hooks is important. One of the main uses of stablecoins is to act as dry powder without the need for market risk. PSM/AMO model helps keep the hook
What to expect in the future:
My view is that the dominance of interest-bearing stablecoins will continue to rise. Exciting projects with different mechanics are about to be launched. For example:
- sFRAX (Treasury Bond Yield, FRAX AMO) by fraxfinance
- USDM (Short-term Treasury Bond Yield) MountainUSDM
- USDe (yield on stETH and underlying arbitrage) by ethena_labs
To monitor the growth of the interest-bearing stablecoin industry, feel free to check out the DuneAnalytics dashboard:
dune.com/21co/stablecoin-monitor
Currently, it accounts for only 1.5% of the total market capitalization of Ethereum stablecoins.
The most popular interest-bearing stablecoins include MakerDAO’s sDAI and LybraFinance’s eUSD/peUSD:
- sDAI: $1.05B
- eUSD: $24.62 million
- peUSD: 11.49 million US dollars
Their revenue streams are very different:
- sDAI: Income generated from stability fees on Maker Vaults and RWA investments (e.g. U.S. Treasuries)
- eUSD/peUSD: LST from stETH, WBETH, rETH, etc.
Benefits of interest-bearing stablecoins:
- Preserve liquidity while opting for a higher yield (similar to LST)
- Stablecoins such as R, USDC, and FRAX also have savings account products. However, users will lose liquidity once they deposit
In addition to yield, success factors for stablecoins:
- Liquidity: CurveFinance is a key battleground for stablecoin liquidity
- DeFi integration: The largest holders of sDAI are AaveAave (13%) and spark_protocol (9%). DeFi integration helps increase the utility of stablecoins
- Hooks: From a user experience perspective, maintaining hooks is important. One of the main uses of stablecoins is to act as dry powder without the need for market risk. PSM/AMO model helps keep the hook
What to expect in the future:
My view is that the dominance of interest-bearing stablecoins will continue to rise. Exciting projects with different mechanics are about to be launched. For example:
- sFRAX (Treasury Bond Yield, FRAX AMO) by fraxfinance
- USDM (Short-term Treasury Bond Yield) MountainUSDM
- USDe (yield on stETH and underlying arbitrage) by ethena_labs
To monitor the growth of the interest-bearing stablecoin industry, feel free to check out the DuneAnalytics dashboard:
dune.com/21co/stablecoin-monitor