In the dynamic world of cryptocurrency, stablecoins are no longer just about stability—they are quietly generating income for their holders. From yields tied to U.S. Treasury bonds to profits from perpetual futures funding rate arbitrage, interest-bearing stablecoins are emerging as a powerful new engine for crypto investor returns. The market now features dozens of projects with individual market capitalizations exceeding $20 million, collectively representing a sector worth over $10 billion. This article breaks down the revenue sources behind major interest-bearing stablecoins and highlights key market players to help you understand who is truly generating passive income for you.
What Are Interest-Bearing Stablecoins?
Unlike conventional stablecoins such as USDT or USDC, which primarily act as stores of value, interest-bearing stablecoins allow users to earn passive income simply by holding them. Their core value proposition lies in delivering additional yield through underlying strategies while maintaining the stablecoin’s peg to a fiat currency like the U.S. dollar.
How Is Yield Generated?
There are several distinct revenue sources for interest-bearing stablecoins, which can be summarized into the following categories:
Real-World Asset (RWA) Investment: Protocols invest funds into low-risk real-world assets like U.S. Treasury bonds, money market funds, or corporate bonds, and then pass the earnings from these investments back to the token holders.
DeFi Strategies: Protocols deposit stablecoins into decentralized finance (DeFi) liquidity pools, engage in liquidity farming, or use "delta-neutral" strategies to capture profits from market inefficiencies.
Lending: Deposited funds are lent to borrowers, and the interest paid by these borrowers becomes income for the stablecoin holders.
Collateralized Debt Positions (CDPs): Protocols allow users to lock up crypto assets as collateral to mint stablecoins. Revenue primarily comes from stability fees or interest generated from the non-stablecoin collateral.
Hybrid Sources: Yield is generated through various combinations of the above, such as tokenized RWAs, DeFi protocols, and centralized finance (CeFi) platforms, to achieve diversified returns.
Market Overview: Major Interest-Bearing Stablecoin Projects (≥$20M Supply)
Below is a list of some prominent interest-bearing stablecoin projects, categorized by their primary yield-generation strategies. The data focuses on total supply and includes projects with a supply of $20 million or more.
1. RWA-Backed Stablecoins (Primarily via U.S. Treasuries, Corporate Bonds, or Commercial Paper)
These generate yield by investing funds into low-risk, yield-bearing assets.
- Ethena Labs (USDe – $6B): Backed by a diversified asset basket, it maintains its peg through delta hedging of spot collateral.
- Usual (0USD – $619M): A liquidity deposit token from the Usual protocol, backed 1:1 by ultra-short-term RWAs (specifically synthetic U.S. Treasury tokens).
- BlackRock BUIDL ($570M): BlackRock’s tokenized fund that holds U.S. Treasuries and cash equivalents.
- Ondo Finance (USDY – $560M): Fully backed by U.S. Treasury bills.
- OpenEden (USDO – $280M): Yield is sourced from U.S. Treasury bills and repo-backed reserves.
- Anzen (USDz – $122.8M): Fully backed by a diversified portfolio of tokenized RWAs, primarily consisting of private credit assets.
- Noble (USDN – $106.9M): A composable interest-bearing stablecoin, backed by 103% in U.S. Treasury bonds, leveraging the M0 infrastructure.
- Lift Dollar (USDL – $94M): Issued by Paxos, it is fully backed by U.S. Treasuries and cash equivalents and auto-compounds daily.
- Agora (AUSD – $89M): Backed by the Agora reserve, which includes USD and cash equivalents like overnight reverse repo and short-term U.S. Treasury bonds.
- Cygnus (cgUSD – $70.9M): Backed by short-term Treasury bonds, it operates on Base as an ERC-20 rebase token, with its balance automatically adjusting daily to reflect yield.
- Frax Finance (frxUSD – $62.9M): An upgrade from Frax Finance's FRAX stablecoin, it is a multi-chain stablecoin backed by BlackRock’s BUIDL and Superstate.
2. Basis Trading / Funding Rate Arbitrage Stablecoins
This category of stablecoins earns income through market-neutral strategies, such as capturing perpetual contract funding rate differentials or arbitrage across trading platforms.
- Ethena Labs (USDe – $6B): Backed by a diversified asset basket, it maintains its peg through delta hedging of spot collateral.
- Stables Labs (USDX – $671M): Generates yield through a market-neutral arbitrage strategy across various cryptocurrencies.
- Falcon Stable (USDF – $573M): Backed by a crypto portfolio, it delivers yield through Falcon’s market-neutral strategies (funding rate arbitrage, cross-exchange trading, native staking, and liquidity provision).
- Resolv Labs (USR – $216M): Fully backed by a staked ETH pool, with ETH price risk hedged through perpetual futures contracts and assets managed by off-chain custodians.
- Elixir (deUSD – $172M): Uses stETH and sDAI as collateral, creating a delta-neutral position by shorting ETH to capture positive funding rates.
- Aster (USDF – $110M): Backed by crypto assets and their corresponding short-term futures contracts on AsterDEX.
- Nultipli.fi (xUSD/xUSDT – $65M): Profits from market-neutral arbitrage (including Contango arbitrage and funding rate arbitrage) on centralized exchanges (CEXs).
- YieldFi (yUSD – $23M): Backed by USDC and other stablecoins, yield comes from delta-neutral strategies, lending platforms, and yield trading protocols.
- Hermetica (USDh – $5.5M): Backed by delta-hedged Bitcoin, it uses short positions in perpetual futures on major CEXs to earn funding.
3. Lending / CDP-Backed Stablecoins
These generate yield by lending out deposits, charging interest, or through stability fees and liquidation proceeds from Collateralized Debt Positions (CDPs).
- Maker (DAI – $5.3B): A CDP (Collateralized Debt Position) stablecoin. It is minted by staking ETH (LST), BTC LST, and sUSDS on Spark Protocol. USDS is an upgraded version of DAI used to earn yield through the Maker Savings Rate and SKY rewards.
- Curve Finance (crvUSD – $840M): An over-collateralized stablecoin, backed by ETH and managed by the Lending-Liquidating AMM Algorithm (LLAMMA), with its peg maintained through Curve’s liquidity pools and DeFi integrations.
- Syrup (syrupUSDC – $631M): Backed by fixed-interest loans provided to crypto institutions, with yield managed by Maple Finance’s lending and credit guarantee infrastructure.
- MIM_Spell (MIM – $241M): An over-collateralized stablecoin minted by locking interest-bearing crypto into "Cauldrons," with revenue from interest and liquidation fees.
- Aave (GHO - $251M): Minted through collateral supplied in the Aave v3 lending market.
- Inverse Finance (DOLA - $200M): A debt-backed stablecoin minted through over-collateralized lending on FiRM, with yield generated by staking sDOLA to earn income from self-lending.
- Level (lvlUSD – $184M): Backed by USDC or USDT deposited into DeFi lending protocols (like Aave) to generate yield.
- Beraborrow (NECT – $169M): The native CDP stablecoin of Berachain, backed by iBGT. Yield is generated through liquidity stability pools, liquidation returns, and leveraged incentives for Proof-of-Liquidity (PoL).
- Avalon Labs (USDa – $193M): A full-chain stablecoin minted using assets like BTC through a CeDeFi CDP model, offering fixed-rate lending and generating yield by staking in the Avalon vault.
- Liquity Protocol (BOLD – $95M): Backed by over-collateralized ETH (LST), it generates sustainable yield through borrower interest payments and ETH earned from liquidations via its Stability Pool.
- Lista Dao (lisUSD – $62.9M): An over-collateralized stablecoin on BNB Chain, minted using BNB, ETH (LST), or stablecoins as collateral.
- f(x) Protocol (fxUSD – $65M): Minted through leveraged xPOSITIONs backed by stETH or WBTC, with yield stemming from stETH staking, opening fees, and stability pool incentives.
- Bucket Protocol (BUCK – $72M): An over-collateralized CDP stablecoin based on the Sui Network, minted by staking SUI.
- Felix (feUSD - $71M): A Liquity fork CDP on Hyperliquid. feUSD is an over-collateralized CDP stablecoin minted using HYPE or UBTC as collateral.
- Superform Labs (superUSDC – $51M): An auto-rebalancing USDC-backed vault deployed into leading lending protocols (Aave, Fluid, Morpho, Euler) on Ethereum and Base, powered by Yearn v3.
- Reserve (3USD – $49M): Backed 1:1 by a basket of blue-chip yield-bearing tokens (pyUSD, sDAI, and cUSDC).
4. Hybrid Revenue Sources (Combining DeFi, TradFi, CeFi)
These stablecoins combine multiple strategies to diversify risk and optimize returns.
- Reservoir (rUSD – $230.5M): An over-collateralized stablecoin backed by a combination of RWAs and USD-based capital allocation tools and lending vaults.
- Coinshift (csUSDL – $126.6M): Backed by T-Bills and DeFi lending through Morpho, it offers managed, low-risk yield through a vault managed by Steakhouse Financial.
- Midas (mEGDE, mTBILL, mMEV, mBASIS, mRe7YIELD – $110M): Compliant institutional-grade strategy stablecoins. LYT tokens represent claims on actively managed yield strategies combining RWAs and DeFi.
- Upshift (upUSDC – $32.8M): Earns yield and is partially backed by a lending strategy, but its returns also originate from liquidity provision (LP) and staking.
- Perena (USD* - $19.9M): A native interest-bearing stablecoin on Solana, central to the Perena AMM, earning yield through swap fees and IBT-powered liquidity pools.
Key Takeaways and Risks
The projects highlighted above represent interest-bearing stablecoins with a total supply of approximately $20 million or more. However, it is crucial to remember that all interest-bearing stablecoins carry inherent risks. Yield is not risk-free, and these instruments can be exposed to smart contract risk, protocol risk, market risk, and collateral risk, among others. 👉 Explore advanced yield-generation strategies
Frequently Asked Questions
What is the main advantage of an interest-bearing stablecoin?
The primary advantage is the ability to earn passive income on assets that maintain a stable value, unlike volatile cryptocurrencies. This combines capital preservation with yield generation.
How do RWA-backed stablecoins generate yield?
They generate yield by investing their reserves in low-risk, income-producing real-world assets like U.S. Treasury bonds. The interest earned from these assets is then distributed to the stablecoin holders.
Are interest-bearing stablecoins as safe as traditional stablecoins?
Not necessarily. While they aim to maintain a stable peg, the additional yield comes from strategies that introduce new risks, such as smart contract vulnerabilities, protocol failure, or the depegging of the underlying collateral.
Can the yield on these stablecoins change?
Yes, the yield is typically variable and depends on the performance of the underlying strategy and prevailing market conditions, such as interest rates and DeFi yields.
What is a delta-neutral strategy?
A delta-neutral strategy is a method used to hedge against price movements in an underlying asset. For stablecoins, this often involves taking offsetting positions (e.g., holding an asset and shorting its futures) to profit from funding rates or other market inefficiencies without being exposed to the asset's price volatility.
Where can I use these interest-bearing stablecoins?
Their usability varies by project. Some are designed for use within their native DeFi ecosystem for lending, trading, or providing liquidity, while others may be more widely accepted across various platforms. Always check the specific use cases for each stablecoin.