Exploring Stablecoin Yield Strategies: Analysis of 8 Major Models

Recently, the cryptocurrency market has been performing mediocrely, and stable returns have once again become a market demand. This article will explore the classic yet evergreen topic of stablecoin yields, combining the author's years of investment experience and research achievements in the field of stablecoins.

The main categories of stablecoins in the current crypto market include:

• USDT: widely used in various applications, with the highest market share
• Compliant anchored stablecoins: such as USDC, PayPal USD, etc.
• Over-collateralized stablecoins: such as DAI, LUSD, etc.
• Synthetic asset stablecoin: such as USDe
• US Treasury-backed RWA stablecoins: such as USD0, USDY
• Algorithmic stablecoin: UST has basically been abandoned by the market after its collapse.
• Non-US Dollar stablecoins: currently limited impact

The current main revenue models for stablecoins include:

1. Stablecoin Lending

Lending is the most traditional financial profit model, with earnings coming from the interest paid by borrowers. It mainly includes:

• Centralized exchange current wealth management products
• Decentralized lending protocols such as Aave, Sky Protocol, etc.

When the market rises, borrowing demand is strong, and returns can reach over 20%; during calm periods, it remains at 2%-4%. In addition, there are innovative models such as fixed-rate lending, tiered interest rates, and leveraged lending.

2. Liquidity Mining Rewards

Mainly represented by Curve, the revenue comes from AMM trading fees and token rewards. As a benchmark for stablecoin DEX, the pool support of Curve is an important indicator of the adoption of new stablecoins. However, the mining yield of Curve is relatively low, (0-2%), which lacks attractiveness.

3. Market Neutral Arbitrage Returns

Mainly includes:

• Funding Rate Arbitrage: Utilizing the price difference between perpetual contracts and spot
• Arbitrage: Utilizing the price difference between spot and futures
• Cross-exchange arbitrage: exploiting price differences between different exchanges

Ethena brings the funding rate arbitrage model on-chain, allowing ordinary users to participate. Users deposit stETH to obtain USDe, while short hedging on centralized exchanges to earn positive funding rates.

4. US Treasury RWA Project Returns

Utilize the high yield of US Treasury bonds over 4% ( while balancing safety and returns. Representative projects include:

• Ondo's USDY and OUSG
• Usual's USD0 and USD0++

USD0++ provides liquidity for locked-term U.S. Treasury bonds, similar to Lido for Ethereum staking. However, yields may decline slowly over time.

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5. Structured Options Products

Mainly based on the "selling options to earn premiums" strategy, such as Sell Put to obtain stable USDT returns. However, attention should be paid to the risk of a significant drop in coin price. The Shark Fin strategy on platforms like OKX achieves principal protection through options combinations. On-chain options products are still not mature.

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6. Tokenization of Earnings

The Pendle protocol splits yield-bearing assets into two parts: principal ) PT ( and yield ) YT (.

• PT: 1:1 redemption of the underlying asset at expiration
• YT: Represents future earnings, decreasing over time

Users can choose different strategies based on their risk preferences. The Pendle stablecoin pool offers considerable returns, but has a shorter duration requiring frequent operations.

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7. A Basket of Stablecoin Yield Products

Ether.Fi launched a stablecoin Market-Neutral USD pool, combining various stablecoin yield strategies:

• Lending ) Syrup, Morpho, etc. (
• Liquidity Mining ) Curve (
• Funding Rate Arbitrage ) Ethena (
• Yield Tokenization ) Pendle (

Suitable for users who seek stable on-chain returns but do not wish to operate frequently.

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8. Stablecoin Staking Rewards

If the AO network accepts DAI staking to earn AO token rewards, there are risks of uncertainty in project development.

In summary, understanding the sources of various stablecoin yields and allocating them reasonably can help to respond more calmly to the risks of the cryptocurrency market on the basis of financial stability.

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