Hey Edge readers,
Stablecoins have become the foundation of crypto, powering payments, trades, and serving as a source of onchain stability. But holding traditional stablecoins like USDC and USDT means sitting on idle capital. That’s now starting to change.
A new wave of yield-bearing stablecoins (YBS) is quietly emerging, offering users passive income while maintaining a stable value. And their growth has been explosive. In under two years, the YBS market has expanded from $666M to over $9.5B.
This week, we dive into what’s driving that growth, who the major players are, and why protocols like Pendle are doubling down on this trend.
Stay sharp. 🫡
- The Exponential team
The rise of Yield-Bearing Stablecoins
Stablecoins are the backbone of DeFi. They power payments, serve as stores of value, and enable seamless trading across protocols. But while most stablecoins have traditionally been passive instruments, designed to maintain a dollar peg and facilitate liquidity, an emerging category is redefining what it means to hold digital dollars.
Yield-bearing stablecoins (YBS) represent the next frontier for onchain savings. These assets allow users to remain denominated in USD while passively earning yield, often sourced from real-world assets like U.S. Treasuries, overcollateralized lending, and other DeFi strategies.
In less than two years, this segment has grown from $666M to $9.5B in circulating supply, a 14× increase! At their peak in February 2025, YBS reached $10.8B, a still-modest 3.6% of the total stablecoin market. But the trend is clear: YBS are growing fast and fulfilling a long-awaited promise—making stablecoins productive.
And it’s not just users taking notice.
One of DeFi’s largest protocols, Pendle, has shifted the majority of its operations to support YBS. As of May 2025, 83% of Pendle’s total value locked (TVL) comes from YBS, up from less than 20% a year ago. With more than $3B in YBS assets on its platform, Pendle now facilitates roughly 30% of all YBS activity across the ecosystem. This is a powerful signal. When a major DeFi platform restructures around an asset class, it’s no longer a niche. It marks a structural shift in how stablecoins are used in DeFi.
What are Yield-Bearing Stablecoins?
At a high level, stablecoins now serve two distinct functions:
- Payment stablecoins are designed to move money quickly while maintaining a stable peg (e.g., USDC, USDT).
- Yield-bearing stablecoins offer holders exposure to yield while preserving dollar parity (e.g., sUSDe, sDAI).
These yield-bearing assets work by deploying the underlying collateral into income-generating strategies. The resulting yield is passed on to holders in a composable format, often via wrapped tokens or automated rebase mechanics.
But not all YBS are created equal.
Each protocol has its own yield strategy, liquidity profile, and mechanics for distributing returns. And until recently, there’s been limited limited visibility into how much yield these stablecoins actually deliver over time.
Tracking the growth: Stablewatch and the YPO metric
This is where Stablewatch steps in.
Stablewatch is the first analytics platform focused entirely on the YBS ecosystem. It provides:
- YPO (Yield Paid Out): A metric that tracks real yield distributed to holders, excluding inflationary token emissions.
- Historical analytics: Including market cap growth, APY trends, and cumulative payouts.
- Data visualizations: For quickly understanding performance across different YBS protocols.
Here’s how the current top YBS compare:
Over $600M in real yield has already been distributed by this sector in just two years. That’s a meaningful step toward making crypto-native dollars competitive with traditional savings accounts and money market funds.
A new stablecoin era is here
YBS are evolving from a niche innovation into a core component of DeFi. They offer users a way to stay in stable assets while earning yield, and they’re quickly becoming the default choice for onchain savings.
With platforms like Stablewatch helping surface performance data, and major protocols like Pendle reorienting around YBS, the ecosystem is maturing fast. Capital is flowing, infrastructure is forming, and user behavior is shifting.
This is the future of stablecoins, and it’s already here.
yoUSD is live, and it’s already seeing strong early traction. In just two weeks, it has surpassed $8M in TVL, with deposits capped at $10M for now, so spots are filling fast.
YO also recently launched its Points program with early users receiving a 7x multiplier.
If you’re exploring new YBS opportunities, this one’s worth checking out.
In the news 🗞️
- 1inch co-founder Anton Bukov emphasized that DeFi’s near-zero onboarding costs could unlock access for 1.4B unbanked people. Unlike traditional banks, which spend up to $300 per user to onboard, DeFi only requires a smartphone and internet connection. Bukov argued that DeFi can offer financial inclusion and access to global liquidity, giving users in underserved regions the ability to transact, save, and earn using stablecoins like USDT.
- Securitize’s tokenized credit fund to debut on Solana DeFi. Kamino and Steakhouse are bringing Securitize’s ACRED token, representing Apollo’s private credit fund, onto Solana, enabling onchain borrowing and looping strategies. The move marks a major step for real-world asset (RWA) adoption on Solana. ACRED will be the first token to use Securitize’s sToken standard on Solana, with institutional players eyeing the launch as a tipping point for institutional DeFi adoption.
- Sui DEX Cetus suffers exploit with over $200M drained. Cetus, a leading DEX on the Sui blockchain, was hit by a suspected hack that siphoned off over $200M in assets, with more than $60M bridged to Ethereum. While the team framed it as a “bug,” onchain data and blockchain security firms suggest otherwise, noting rapid withdrawals and suspicious wallet activity.