Yield Stablecoin: A New Round of Asset Issuance Innovation

Stablecoins are becoming a market consensus. Not only are traditional financial institutions beginning to get involved, but DeFi giants are also launching their own stablecoin products. At the same time, a new type of stablecoin - interest-bearing stablecoin (YBS) is rapidly rising.

Yield-bearing stablecoins attract users through yield generation, distributing a portion of asset profits to holders. This is fundamentally different from traditional stablecoins. The issuance of traditional stablecoins like USDT is a process of creating new assets, and their reserves are unrelated to users. In contrast, YBS follows the on-chain banking logic of deposit-taking and lending, deconstructing the power of asset issuance.

The history of the cryptocurrency industry is a history of innovation in asset issuance models. However, this time, it is slightly milder under the name of stability, unlike the intensity of ERC-20, NFTs, and Meme Coins.

Stability stems from volatility, and volatility creates stablecoins. Yield-bearing stablecoins require a yield mechanism and a stablecoin mechanism, which can be based on CDP mechanisms, Delta-neutral mechanisms, etc., as long as stability can be ensured. The real distinction lies in the yield and profit-sharing mechanisms, depending on the source of the yield-bearing assets. The simplest methods are two: using on-chain staked assets like stETH and off-chain income-generating assets like U.S. Treasury bonds.

Currently, there are nearly a hundred yield-bearing stablecoin projects in the market. However, there may be no more than 5 that can truly stand out. The intersection of DeFi, RWA, and stablecoins leaves market space for emerging yield-bearing stablecoin protocols.

From the perspectives of underlying assets, core mechanisms, and TVL, there are currently 12 prominent yield-generating stablecoin projects. They mainly compete in the retail market for interest calculation, pricing, and payment scenarios. These projects generally adopt a combination strategy of multi-chain, multi-protocol, and multi-pool, similar to the early DeFi Lego blocks.

The scale of interest-bearing stablecoins has expanded, and the main token of the protocol may not necessarily increase in value, as the protocol may not have high net profits. Conversely, a drop in the price of the protocol's main token may also lead to a withdrawal of liquidity from interest-bearing stablecoins. Therefore, it is essential to pay attention to the protocol's ongoing profitability and the safety of the principal.

In addition to Sky and Ethena, emerging protocols such as Resolv, Avalon, Falcon, Level, and Noon Capital are also worth paying attention to. The credibility and capital reserves required for the issuance of yield-generating stablecoins are not far off from the recognition needed for creating BTC/ETH. This will be the main battleground for a new round of asset issuance innovation.