Tokenized Real-World Assets

Stablecoins & Yield

On-chain fixed-income alternatives and stablecoin yield vehicles.

Investment Overview

Stablecoin yield products offer 4-8% returns on dollar-pegged cryptocurrencies (USDC, DAI) through lending, Treasuries, or DeFi protocols. Unlike bank accounts (0.5% savings rates), stablecoin yields are competitive but carry smart contract and custodial risks. Leading platforms: Coinbase (4.7% on USDC), Kraken (4-5%), Aave (5-8% variable), Compound (3-6%). Yields sourced from: (1) Lending to borrowers, (2) Treasury-backed (Ondo USDY 4.5%), (3) DeFi protocol revenues. Market size: $140B stablecoins outstanding, $10B+ earning yield. Suitable for crypto-native investors comfortable with on-chain custody.

Market Context & Trends

Stablecoin yields compressed 2023-2024 as borrowing demand declined post-2022 crash. Peak yields: 10-20% (2021-2022 bull market), current: 4-8% (2024). CeFi platforms (Coinbase, Kraken) offer easiest access but lowest yields (4-5%) and counterparty risk (custody). DeFi protocols (Aave, Compound) offer higher yields (6-10%) but require self-custody and smart contract expertise. Treasury-backed stablecoins (USDY, USDM) provide safest yields (4.5-5%) backed by government securities.

How to Invest in Stablecoins & Yield

Coinbase USDC Rewards: 4.7% APY on USDC holdings, $0 minimum, insured custody (FDIC sweep)

Ondo USDY: Yield-bearing stablecoin backed by Treasuries, 4.5% yield, $500 minimum

Aave v3 USDC Lending: 5-8% variable APY, Ethereum mainnet, self-custody required

Compound USDC: 3-6% variable APY, oldest DeFi lending protocol, self-custody

Mountain Protocol USDM: Treasury-backed stablecoin, 5% yield, $100 minimum

Key Platforms & Access Points

Coinbase: Easiest access, 4.7% USDC yield, FDIC sweep program, $0 minimum

Kraken Staking: 4-5% on various stablecoins, $1 minimum, custodial risk

Aave: Leading DeFi lending protocol, 5-8% USDC, self-custody, Ethereum/Polygon/Arbitrum

Ondo Finance: USDY yield stablecoin, Treasury-backed, 4.5%, $500 minimum

Mountain Protocol: USDM Treasury stablecoin, 5% yield, Bermuda-regulated, $100 minimum

Key Investment Metrics

APY sustainability: Is yield from organic demand (lending) or incentives (token emissions)?

Custody model: CeFi (Coinbase holds) vs. DeFi (self-custody); risk-return tradeoff

Stablecoin backing: Fiat reserves (USDC), Treasuries (USDY), crypto collateral (DAI)

Withdrawal limits: Instant vs. 1-3 day ACH vs. on-chain only (gas fees $5-$20)

Insurance: FDIC (Coinbase sweep), smart contract insurance (Nexus Mutual), or none?

Risk Considerations

Understanding these risks is critical before investing in stablecoins & yield.

Custodial risk: CeFi platforms can freeze/seize funds; self-custody eliminates but adds complexity
Smart contract risk: DeFi protocols have been hacked (Compound: $0, Aave: $0, but others lost millions)
Depegging risk: USDC briefly dropped to $0.88 (March 2023 SVB crisis); redemption suspended temporarily
Yield compression: Rates fell from 10-20% (2021) to 4-8% (2024) as borrowing demand declined
Regulatory uncertainty: SEC views some yield products as securities; enforcement possible

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