In recent years, the decline in investment returns has made on-chain stablecoin investment a new choice.

In the past two years, it has become increasingly difficult to find suitable financial products. Bank interest rates continue to decline, and the returns on government bonds and money market funds struggle to outpace inflation. Insurance financial products are also quietly lowering their yields. For investors looking to achieve asset appreciation, facing the generally 1% return rate in financial applications can be disappointing.

We seem to live in an era where the variety of financial products is unprecedented, yet reliable ways to profit from wealth management are becoming increasingly scarce. Against this backdrop, a new wealth management approach—on-chain wealth management based on stablecoins—has gradually garnered more attention.

Advantages of Stablecoin Wealth Management

A stablecoin is a digital asset that is pegged to fiat currency, lacking the high volatility of Bitcoin, and primarily serves the function of "digital cash." Stablecoin financial management allows users to lend, stake, or invest idle stablecoins on blockchain networks or centralized platforms to earn annualized returns.

The logic of this financial management method is similar to traditional banking operations, but in the blockchain world, the distribution of earnings is more transparent and the returns are more reasonable. Currently, stablecoin financial products mainly include types such as lending, staking, and protocol investment.

According to the data from the first half of this year, the annualized interest rates for USDT/USDC in mainstream decentralized finance (DeFi) lending protocols mostly fluctuate between 2.5% and 4%. Some DeFi platforms may offer total annualized returns exceeding 8% through liquidity mining or reward mechanisms, but this usually comes with higher volatility and locking requirements. In contrast, fixed-income products, although not offering the highest annualized returns, have shown steady growth overall, reaching up to about 5%. Due to their stable returns and lower entry thresholds, these products have become the preferred choice for many users engaging in on-chain wealth management.

It is worth mentioning that the flexibility and user experience of such products are rapidly improving. Users only need to hold stablecoins, choose a platform and product type, and they can subscribe with one click. Some platforms even support deposit and withdrawal at any time, with interest calculated daily. This operation method is not only as convenient as Yu'ebao but also offers returns close to U.S. Treasury bonds; it has the stability of a fixed deposit without early redemption penalties. This experience, which combines stability and flexibility, is the ideal financial management state for many users.

The Sources of Income for Stablecoin Wealth Management

The income from stablecoin wealth management mainly comes from three channels:

1. On-chain lending interest: The platform lends the user's locked stablecoin to other users, earning profit from it.
2. Staking rewards or node income: This is particularly common in Staking-type products.
3. Profit distribution from participating in options or yield tiering strategies.

For users, as long as the platform's product structure is transparent and asset custody is secure, it can be regarded as an "on-chain quasi-fixed income product."

Currently, the number of active on-chain addresses for stablecoins is continuously growing. Although there is no clear statistics on the number of users participating in stablecoin financial management, the scale is rapidly expanding based on on-chain activity and capital inflows. Especially in regions with unstable local currencies and inadequate financial system coverage, such as Southeast Asia, Latin America, and the Middle East, stablecoins have become an important tool for residents to avoid local currency depreciation and obtain returns on dollar assets.

It is worth noting that institutional funds are also continuously entering this field. Insurance companies, family offices, and funds have incorporated stablecoin wealth management into their liquidity management tools, as part of the dollar asset pool. This trend drives platforms to continuously upgrade in terms of risk control, transparency, and compliance, providing individual users with a more mature product environment and service experience.

Risks and Suggestions for Stablecoin Financial Management

Although stablecoin investment offers higher returns, risk identification remains crucial in this emerging field. Some stablecoins may face de-pegging risks due to issues such as liquidation mechanisms and management of the underlying assets. Factors such as smart contract audits and security measures can also impact the safety of funds.

For regular users, it is recommended to choose top platforms or products from regulated institutions, prioritizing stablecoin investment methods with clear return structures and flexible redemption support. Products with annualized returns exceeding 10% should be approached with caution to avoid blindly chasing high returns. Stability, transparency, and compliance are key prerequisites for long-term participation.

In the current low interest rate environment, stablecoin wealth management offers users more robust investment options. While it is not necessary to fully immerse oneself in the world of cryptocurrency, through stablecoins, users can have a transparent, secure, annual yield of about 5% "crypto savings account" to seek certain returns in an uncertain financial environment.