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The rise of yield-generating stablecoins reshapes the Crypto Assets ecosystem.
New Trends in the Stablecoin Market: The Rise and Challenges of Yield-bearing Stablecoins
Recently, the global financial market has been turbulent, and the fiat currency system is facing severe challenges. Against this backdrop, stablecoins in the cryptocurrency ecosystem are also迎来新的发展机遇, especially yield-bearing stablecoin (YBS) is becoming the focus of market attention.
The 2008 financial crisis gave birth to Bitcoin, and the potential shaking of the fiat currency system in 2025 may drive the development of on-chain stablecoins, particularly interest-bearing stablecoins that are non-USD and not fully backed. Although non-fully backed stablecoins are still in the theoretical stage, some partially backed stablecoins are expected to become mainstream in the market. Non-USD stablecoins are also actively trying, but the global currency status of the USD is difficult to shake in the short term.
Currently, YBS is mainly based on the US dollar and sufficient reserves, but it already contains the prototype of post-dollar and non-sufficient reserve stablecoins. The seigniorage of the US dollar is manifested as inflation and the dollar tidal cycle, and this model is facing challenges.
The operation of the dollar system relies on countries holding dollars and US Treasury bonds, but the current international situation is breaking this balance. The fragmentation of the global trade and financial system may instead become a catalyst for the "globalization" of cryptocurrencies. In the near future, global economic turmoil will intensify competition among stablecoins, and on-chain stablecoins are expected to become an important medium for cross-border transactions.
Although the market capitalization of cryptocurrencies is high, the issuance of stablecoins is the true indicator reflecting the market size. Currently, among the approximately 230 billion USD in stablecoins, USDT accounts for the largest share, but its reserves are questionable. As some stablecoins have reduced their level of decentralization, the existence of fully or over-collateralized stablecoins based on on-chain assets has in fact tended to disappear.
In contrast, the value creation of Bitcoin and Ethereum appears more illusory. If we compare the crypto ecosystem to the traditional currency system, BTC and ETH can be seen as M0, stablecoins as M1, while the reissue volume based on staking and lending constitutes M2 or M3. This perspective may better reflect the true state of the crypto market.
In this architecture, the significance of YBS is highlighted, as it can convert the volatility of cryptocurrencies into stablecoins. However, in reality, 230 billion dollars of stablecoins need to provide liquidity for a 27 trillion dollar market, which puts immense pressure.
A well-known YBS project has achieved rapid growth through a hedging model, once occupying 3% of the stablecoin market. Its operating model involves authorizing issuers to deposit interest-bearing assets, while the project team shorts to hedge on a centralized perpetual contract platform, obtaining profits through funding rate arbitrage. The project is also attempting to mimic the real US dollar system but faces numerous challenges.
Ideally, YBS should have a considerable proportion circulating in scenarios such as trading and payments, rather than being entirely used for staking to obtain returns. However, currently, most YBS projects find it difficult to enter trading and payment scenarios, mainly relying on the DeFi ecosystem.
The yield of YBS is essentially a liability of the protocol and also a form of customer acquisition cost. Only when more users regard it as an equivalent to the dollar and hold it, rather than putting all of it into the staking system, can YBS continue to develop. Currently, the annual yield of YBS, which has a relatively large market capitalization, generally ranges from 5% to 10%, significantly down from the hundreds of times return rates seen in past DeFi projects.
The era of low-interest wealth management has arrived, but risks still exist. Many YBS projects rely on U.S. Treasury bonds as the underlying source of returns, which is not entirely safe. In addition, on-chain yields require strong secondary market liquidity support; otherwise, it is difficult to maintain.
In the future, the competition focus among YBS projects will still be market share. YBS can only occupy the market space of traditional stablecoins while maintaining a high yield when most users use YBS as a stablecoin rather than purely pursuing profits. If all users chase profits, the source of profits will dry up, and the entire ecosystem will face the risk of collapse.