Have you noticed platforms recently advertising 12% APY on USDC?
It’s not just a marketing trick. For years, stablecoin holders earned no yield—issuers invested the float (e.g., in U.S. Treasuries and bills) and kept the returns, as with both USDT/Tether and USDC/Circle.
Now, that income is starting to be shared. Beyond USDC’s incentive programs, a new wave of yield-bearing stablecoins is emerging, letting holders earn interest directly from the underlying assets. This not only reshapes how stablecoins are valued but could also become a new growth driver for RWA and Web3.
1) What is a yield-bearing stablecoin?
By definition, a yield-bearing stablecoin holds income-generating assets and passes that income—often from Treasuries, other RWAs, or on-chain strategies—back to holders. This contrasts with traditional stablecoins like USDT or USDC, where issuers keep the yield and users only benefit from the dollar peg, without interest.
In practice, simply holding the token becomes a passive investment. Put plainly, it redistributes the Treasury interest that issuers like Tether historically kept—back to stablecoin users.
Example:
When Tether issues $10B of USDT, users deposit $10B and receive $10B in tokens.
Tether pays no interest on those deposits. If it invests the cash in Treasuries, the interest becomes low-risk revenue at near-zero cost.
Source: Messari
According to its Q2 attestation, Tether directly holds more than $157B in U.S. government securities ($105.5B direct, $21.3B indirect), making it one of the largest Treasury holders globally. Messari data shows that as of July 31, 2025, Tether had surpassed South Korea to become the 18th-largest holder of U.S. Treasuries.
At ~4% yields, this translates into roughly $6B in annual interest, or about $700M per quarter. Tether’s $4.9B Q2 operating profit underscores just how powerful this model can be.
At imToken, we look at stablecoins through the lens of user needs—there’s no single narrative anymore. In our framework (Stablecoins, Simplified: A Practical Framework for User Needs), yield-bearing stablecoins stand out as a distinct category, paying ongoing income to holders in two main ways:
- Natively yield-bearing: Simply holding the token earns yield, like an on-chain savings account (e.g., USDe, USDS).
- With official yield routes: The token doesn’t auto-accrue, but the issuer or protocol offers an official path to earn—such as depositing into DAI’s DSR, staking, or converting into a yield-bearing receipt.
If 2020–2024 was the scale-out phase, then 2025 marks the dividend phase. With compliance, yield, and liquidity in balance, yield-bearing stablecoins could grow into a trillion-dollar sub-sector.
Source: imToken Web (web.token.im) – Yield-bearing stablecoins
2) Leading projects at a glance
Most designs center on tokenized U.S. Treasuries: your on-chain token is backed by Treasuries held with a custodian, combining low-risk income with on-chain liquidity and DeFi composability (lending, leverage, etc.).
Beyond established protocols like MakerDAO and Frax Finance, newer entrants such as Ethena (USDe) and Ondo Finance are scaling rapidly, spanning protocol-native to CeDeFi models.
Ethena — USDe
The headline project of this cycle, with supply recently surpassing $10B. According to Ethena Labs, USDe’s APY is currently ~9.3% and has at times exceeded 30%.
Yield comes from two main sources:
- ETH liquid staking rewards (~4%, relatively stable)
- Delta-hedging funding income (shorting perpetuals), which is market-driven, so APY fluctuates with funding sentiment
Source: Ethena
Ondo Finance — USDY
Ondo is a flagship RWA platform bringing fixed income on-chain. Its USD Yield (USDY) is a tokenized note backed by short-term U.S. Treasuries and bank demand deposits. Practically, it’s a bearer-style claim, meaning holders don’t need KYC to receive yield.
USDY offers Treasury-like exposure for on-chain capital, combined with full DeFi composability (lending, staking, etc.), positioning it as a top proxy for on-chain money market funds
PayPal — PYUSD
Launched in 2023 as a payments-first stablecoin (custodied by Paxos; fully backed by dollar deposits and short-term Treasuries).
In 2025, PayPal added yield distribution in selected custody bank setups, returning part of the underlying interest (from Treasuries and cash equivalents) to holders—bridging stablecoin payments with yield.
MakerDAO — EDSR / USDS
Maker remains the dominant decentralized stablecoin protocol. Its upgraded structure (USDS + Enhanced Dai Savings Rate) lets users deposit directly into the protocol and automatically earn Treasury-linked yield—no extra steps required.
- Current Savings Rate (SSR): 4.75%
- Deposits: ~2B USDS
The rebrand highlights Maker’s evolution from a pure DeFi stablecoin into an RWA-driven yield distribution platform.
Source: makerburn
Frax Finance — sFRAX
Frax Finance is among the most proactive DeFi projects in aligning with the Fed, including pursuing a Fed master account. Its Treasury-backed staking vault, sFRAX, buys U.S. Treasuries through a Lead Bank (Kansas City) brokerage and tracks the Fed rate.
Over 60 million sFRAX are currently staked, with an APY around 4.8%.
Source: Frax Finance
Note: Not all yield-bearing stablecoins are built to last. For example, USDM has entered liquidation—minting is permanently halted, with only limited redemptions still available.
Overall: Most designs concentrate on short-term U.S. Treasuries and reverse repos, offering quoted rates of 4%–5%, in line with current Treasury yields. With more CeFi platforms, regulated custodians, and DeFi protocols entering, this segment is poised to capture a growing share of the stablecoin market.
The sustainability of yield-bearing stablecoins comes from conservative assets—mainly U.S. Treasuries. Holding Treasuries carries near-zero credit risk while paying ~4% or more. Protocols invest in these instruments, deduct operating costs, and pass a portion of the income to holders, creating a “Treasury yield → stablecoin adoption” flywheel.
Holders simply need to own the token to claim Treasury-backed interest. With short- and mid-term yields near or above 4%, most fixed-income stablecoins currently offer ~4%–5%.
This “hold to earn” model is naturally appealing:
- Everyday users: idle funds generate passive yield.
- DeFi protocols: treat them as high-quality collateral for lending, leverage, and derivatives.
- Institutions: gain compliant, transparent on-chain access to traditional yield with lower overhead.
Yield-bearing stablecoins are one of the clearest RWA use cases—already scaling from crypto-native protocols to payment giants and Wall Street-backed entrants. Regardless of where U.S. rates go, this shift has taken stablecoins beyond simple “pegs” into “dividends.”
By redirecting yield from issuers to holders, these assets combine real-world fixed income with on-chain liquidity and composability—positioning yield-bearing stablecoins as a potential growth engine for both stablecoins and the broader convergence of crypto and traditional finance.
Disclaimer: This content is for industry observation and information sharing only and does not constitute investment advice. Scams and high-risk schemes marketed under “stablecoin” or “high yield” do exist. Please stay vigilant, do your own research, and take full responsibility for any investment or transaction decisions.