What are yield-bearing stablecoins? Overview of five leading projects: USDe, USDY, PYUSD…

Unlike traditional stablecoins, the next generation of yield-bearing stablecoins directly allocates the interest from underlying assets (such as U.S. Treasury bonds) to holders, transforming holding the coin itself into a form of passive investment, thereby changing the value logic of stablecoins. This article is sourced from an article written by imToken, organized, translated, and authored by PANews. (Background: Payment giant Stripe secretly develops new chain 'Tempo', integrating Bridge and Privy for seamless stablecoin payments) (Additional background: Coinbase integrates Samsung Pay: Samsung Pay allows one-click coin purchases, initially available to users in the U.S. and Canada) Have you recently seen a 12% annualized yield on USDC on certain platforms? It's not just hype; traditionally, stablecoin holders often acted as 'interest-free savers', while issuers invested the idle funds in safe assets such as U.S. Treasury bonds and bills, earning significant yields, as seen with USDT/Tether and USDC/Circle. Additional background: Binance announces USDC lending promotion with '4% annual interest', is it possible to profit from 12% savings? Now, the exclusive bonuses that were once reserved for issuers are being redistributed - in addition to the interest subsidy competition for USDC, more and more new generation yield-bearing stablecoin projects are breaking down this 'yield wall', allowing coin holders to directly share in the interest income from underlying assets. This not only changes the value logic of stablecoins but may also become a new growth engine for RWA and the Web3 sector. 1. What are yield-bearing stablecoins? By definition, yield-bearing stablecoins are those whose underlying assets can generate income and directly distribute that income (usually from U.S. Treasury bonds, RWA, or on-chain yields) to holders. This is clearly different from traditional stablecoins (like USDT/USDC), as their income belongs to the issuer, and holders only enjoy the advantage of being pegged to the dollar without any interest income. Yield-bearing stablecoins turn holding the coins into a passive investment tool; the reason is essentially that the interest income from Treasury bonds, which was solely enjoyed by Tether/USDT, is now shared with a broader base of stablecoin holders. An example might help make this clearer: When Tether issues USDT, it essentially means that crypto users are using dollars to 'purchase' USDT - Tether issuing $10 billion of USDT means that crypto users have deposited $10 billion with Tether to receive this $10 billion in USDT. Once Tether receives this $10 billion, it doesn't need to pay interest to the corresponding users, effectively acquiring real dollars from crypto users at zero cost, and if it buys U.S. Treasury bonds, that results in zero-cost, risk-free interest income. Source: Messari According to Tether's disclosed second-quarter verification report, it directly holds over $157 billion in U.S. government bonds (including $105.5 billion in direct holdings and $21.3 billion in indirect holdings), making it one of the largest holders of U.S. Treasury bonds globally - according to Messari data, as of July 31, 2025, Tether surpassed South Korea to become the 18th largest holder of U.S. Treasury bonds. This means that even with a Treasury bond yield of around 4%, Tether can earn approximately $6 billion a year (about $700 million per quarter), and Tether's second-quarter operating profit of $4.9 billion also corroborates the high profits of this model. Based on the market practice that 'stablecoins are no longer a tool that can be summarized by a unified narrative; their use varies by person and need', imToken has also categorized stablecoins into various exploratory sub-collections. According to imToken's classification method for stablecoins, yield-bearing stablecoins are specifically listed as a special subcategory that provides holders with continuous income, mainly comprising two major categories: Native Yield-Bearing Stablecoins: Users only need to hold this type of stablecoin to automatically earn income, similar to a bank's demand deposits. The tokens themselves are a form of income-generating asset, similar to USDe, USDS, etc.; Stablecoins with Official Yield Mechanisms: These stablecoins may not automatically generate income but their issuers or management protocols provide official income channels. Users need to perform specific actions, such as depositing them into designated savings protocols (like DAI's Deposit Rate Mechanism DSR), staking, or exchanging them for specific yield certificates, to start earning interest, similar to DAI, etc.; If 2020-2024 is the 'expansion period for stablecoins', then 2025 will be the 'dividend period for stablecoins'. Balancing compliance, yield, and liquidity, yield-bearing stablecoins may become the next trillion-dollar sub-track for stablecoins. Source: imToken Web (web.token.im) on yield-bearing stablecoins 2. Overview of Leading Yield-Bearing Stablecoin Projects From a specific implementation perspective, most yield-bearing stablecoins are closely related to the tokenization of U.S. Treasury bonds - the on-chain tokens held by users essentially peg to U.S. Treasury assets held by custodians, preserving the low-risk attributes and yield capacity of Treasury bonds while also offering the high liquidity of on-chain assets, which can be combined with DeFi components to derive financial functionalities such as leverage and lending. Currently, in the market, in addition to established protocols like MakerDAO and Frax Finance continuing to increase their stakes, new players like Ethena (USDe) and Ondo Finance are also rapidly accelerating their development, forming a diverse landscape ranging from protocol-based to CeDeFi hybrid models. Ethena's USDe, as a leading player in the current yield-bearing stablecoin wave, naturally refers to the stablecoin USDe under Ethena, which recently saw its supply first exceed the $10 billion mark. Data from Ethena Labs' official website shows that as of the time of writing, USDe's annualized yield remains as high as 9.31%, having previously maintained above 30%. The high yield mainly comes from two sources: ETH's LSD staking yield; Delta hedge positions (i.e., short positions in perpetual futures) funding rate income; The former is relatively stable, currently floating around 4%, while the latter completely depends on market sentiment, thus USDe's annualized yield is to some extent directly dependent on the funding rate across the network (market sentiment). Source: Ethena Ondo Finance USDY Ondo Finance, as a star project in the RWA sector, has been focused on bringing traditional fixed-income products into the on-chain market. Its launched USD Yield (USDY) is a tokenized note backed by short-term U.S. Treasury bonds and bank demand deposits, essentially belonging to a bearer bond, meaning that holders do not need to undergo real-name verification to hold and enjoy the yields directly. USDY essentially provides on-chain capital with an exposure to risk levels close to Treasury bonds while endowing the token with composability, allowing it to be combined with DeFi lending, staking, and other modules to achieve amplified yields. This design makes USDY an important representative of current on-chain quasi-money market funds. PayPal's PYUSD PayPal's PYUSD was introduced in 2023...