Overview of Major Interest-bearing Stablecoins

Author: Stacy Muur, Web3 researcher; Translated by: Jinse Finance xiaozou

Ethena SUSDE and sUSDS together account for about 77% of the liquidity in yield-bearing stablecoins (YBS, interest-generating stablecoins), with cumulative actual yield payments exceeding $603 million. Will yield-bearing stablecoins become the next killer application for widespread adoption by Web2 users?

Currently: The total market capitalization of Yield-bearing Stablecoins (YBS) is $7.19 billion; the 24-hour trading volume is $56.18 million (liquidity is sufficient for the treasury but still appears thin compared to USDT/USDC); a monopoly pattern has formed among the three giants, with Ethena’s SUSDE and sUSDS controlling about 77% of YBS liquidity; a total of $603 million in actual yield payments have been made (cash earnings paid directly to holders, excluding token incentives).

1**, Core Features of Yield-Generating Stablecoins**

YBS continuously generates passive income while being pegged to the US dollar. Currently, the four major income engines dominate the market:

Delta****Neutral Hedging: Holding spot collateral while capturing futures funding rates (such as SUSDE, sUSDS).

Short-term national bonds (RWA wrapped): Tokenized national bonds/repo agreements (such as USDY, USDO).

DeFi Lending Vault: Cycle idle collateral into Aave, Morpho, or Pendle PT yield ladder (such as SyrupUSDC, sDOLA).

Validator Staking Packaging: Wrap Ethereum or SOL staking rewards into dollar-denominated assets (such as SFRXUSD, SLVLUSD).

The result is that while maintaining the stability of the US dollar, it provides a net annual return of 3% to 15%, without the need for active yield farming.

2**, Current Market Leaders**

3**, Macro Trend Insights**

Basis Trading Gamble

The dual products of Ethena (SUSDE/sUSDS) have surged from less than 500 million to over 5.5 billion this year. This concentration makes the YBS sector extremely sensitive to the funding rates of perpetual contracts.

RWAContinuous Penetration**

USDY and USDO have verified that short-term government bonds remain the simplest and most regulated source of stable returns. It is expected that more fund products under the Investment Advisers Act of 1940 framework will emerge.

L2****Ecosystem Fragmentation

Fraxtal, Mode, and other Rollup chains have each deployed “customized” SUSDE to attract Total Value Locked (TVL) — although this has created liquidity islands, it has accelerated the adoption process.

Yield Compression Risk

As U.S. interest rates peak, the APY of government bond products may decline; the delta-neutral model relies on sustained positive futures premiums. After hedging, the yield may contract to below 3-4%.

The attack surface of smart contracts is expanding

The complex layers of re-staking and hedging have increased the protocol risk (oracle failure, cascading liquidations). Auditing and insurance coverage have become standard requirements for entry.

(1) Ethena sUSDe

Market Position: sUSDe is currently the largest yield-bearing stablecoin (YBS), with a market capitalization ranging between approximately $2.66 billion and $4.3 billion, firmly maintaining its dominant position in the yield-bearing stablecoin market.

Operating Mechanism: As a synthetic stablecoin that adopts a Delta-neutral hedging strategy, its yield comes from Ethereum staking rewards (via stETH) and the funding rate of perpetual contracts for short positions in ETH.

Yield: The latest data shows that the annualized yield ranges from 4.5% to 10%, depending on market conditions and the integrated ecosystem.

Ecological Integration: Has landed on Telegram and TON, covering over 1 billion users, and recently expanded to the decentralized perpetual contract exchange Hyperliquid.

Transparency: The custody verification report for May 2025 shows a collateralization rate of 101.31%, ensuring full and sufficient collateral.

Risk: Highly dependent on a continuously positive perpetual funding rate. If a negative funding rate occurs, it may impact profitability and peg stability.

Recent Progress: Expanded to Hyperliquid and integrated with TON, further broadening coverage in the DeFi ecosystem.

(2)sUSDS

Market Position: The second largest YBS with a market value of approximately $2.39 billion, is a core component of the Sky ecosystem (formerly MakerDAO).

Operational Mechanism: The USDS deposited in the Sky Savings Rate System (SSR) maintains the dollar peg through staking and generates returns.

Liquidity: Active trading on Curve, Aerodrome, and Uniswap V3, with an average daily trading volume of approximately 27.8 million USD, supported by the Sky ecosystem’s 6.2 billion USD liquidity layer.

Risk: There are risks of smart contract vulnerabilities and market volatility, but hedging is done through over-collateralized loans and investments in real-world assets (RWA).

Horizontal Comparison: Due to its yield attributes and integration design with RWA, it is often discussed in conjunction with USDY, USDM, and other YBS.

(3) Ondo USDY

Market Position: The RWA-backed YBS, with a market capitalization of approximately $580 million, primarily targets non-US investors.

Operating Mechanism: Supported by short-term U.S. Treasury bonds and bank deposits, allowing for daily minting/redemption (with a transfer delay of 40-50 days for compliance).

Yield: Provides an annualized return of approximately 5% after fees, sourced from U.S. Treasury returns.

Accessibility: Launched on Ethereum, Aptos, and Stellar chains, open only to non-U.S. users due to regulatory restrictions.

Compliance: Registered with the SEC and meets institutional-grade standards.

Application Scenarios: Suitable for vault management, DeFi collateral, and cross-border payments.

Recent Developments: Log in to the Aptos chain to broaden usage channels for non-U.S. residents.

(4) SyrupUSDC

Market Position: Market capitalization of approximately $550 million, focusing on DeFi lending through Maple Finance.

Operating Mechanism: Provides fixed-rate, over-collateralized loans for institutional borrowers, and automatically reinvests USDC into protocols such as Aave, Morpho, and Pendle.

Liquidity**: **Listed on Coinbase and integrated with Balancer and Uniswap to ensure ample market liquidity.

Risk**: **Facing the risk of loan defaults and potential vulnerability risks of integrated DeFi protocols such as Aave and Morpho.

Application Scenarios**:** Introduce traditional financial returns into DeFi to attract institutional and retail investors to participate.

(5) OpenEden USDO

Market Position: Launched in February 2025, as a regulated RWA-backed YBS, with a market capitalization of approximately $240 million.

Operating Mechanism: Fully collateralized by tokenized US Treasury bonds, maintaining a 1:1 dollar peg, issued through a Bermuda-based Special Account Company (SAC).

Yield: Provides an annualized return of approximately 4% to 5%, linked to the performance of U.S. Treasury bonds.

Compliance: Obtained a license under the Bermuda Digital Asset Business Act (DABA).

Ecosystem Integration: Utilize Chainlink’s CCIP to achieve cross-chain functionality between Ethereum and Base chains.

Transparency: Ensuring credibility and accountability through on-chain real-time reserve proof.

Recent Progress: As the first regulated YBS fully collateralized by tokenized U.S. Treasury bonds, it is a milestone.

(6) YPO — Actual Yield Payment Snapshot

Core Value: YPO is a tracker for on-chain income distribution. High yield only makes sense with actual payments. With a cumulative payment amount of $286 million, SUSDE leads the way, while $117 million for sDAI demonstrates the durability of the Maker protocol.

4**, Why Yield-bearing Stablecoins (YBS) are the “Killer Application” for Cash Management**

Idle funds turn into productivity: Delta neutral synthetic assets (such as SUSDE) offer an annualized return of 7-8%, while government bond packaged products (such as USDY, USDO) provide a return of 4-5%, far exceeding most bank savings rates.

TVL increased 4 times in 12 months: the total locked value in the industry skyrocketed from 1.7 billion dollars to 7.1 billion dollars, in sync with the Federal Reserve’s interest rate hike cycle.

Lower friction costs: Through quality entry points such as Circle, Coinbase, and Hashnote, retail investors can achieve second-level minting/redeeming.

Significant differences in transparency: The standards for collateral audits are inconsistent, and the standards for on-chain reserve proof are still being developed.

5**, Transparency and Risk Considerations

The upcoming “Yield-Generating Stablecoin Transparency Framework” aims to establish a standardized assessment system through the following dimensions:

Collateral Transparency: Asset holding details and third-party audit reports.

Redemption Convenience: Assess the frequency of redemptions, potential slippage, lock-up periods, and KYC requirements.

Source of income: Clearly state that the income comes from fixed income assets, funding rate arbitrage, validator rewards, or combination strategies.

Risk Disclosure: Comprehensive coverage of oracle dependence, counterparty risks, smart contract vulnerabilities, and regulatory considerations.

Main Risks**:**

Regulatory Reclassification: Some jurisdictions may view profits as securities dividends.

Smart contract attacks: reentrancy attacks, oracle failures, or cascading liquidation risks.

Liquidity restrictions: Some tokens have low daily trading volumes, making large redemptions difficult.

Macroeconomic shocks: The Federal Reserve’s interest rate cuts or the inversion of funding rates may simultaneously impact multiple yield mechanisms.

Market Capitalization Classification Overview

Market (>$500 million): SUSDE, sUSDS, USDY, SyrupUSDC

Mid-range (100 million to 500 million USD): USDO, SDEUSD, SLVLUSD

Small Market Cap (<$100M): SFRXUSD, sDOLA, Solayer SUSD, DUSD, SUSDE-Fraxtal, YTRYB

6**, Conclusion**

Yield-bearing stablecoins are transforming idle digital dollars into income-generating assets, but this sector is still in its early stages, characterized by high market concentration and sensitivity to volatility. It is recommended to diversify yield engines, monitor funding rate spreads, and continuously demand improvements in transparency.

This article is for educational purposes only and does not constitute financial advice. Please be sure to do your own research (DYOR).