With the gradual implementation of friendly legislation for stablecoins in the United States, the popularity of high-yield stablecoin products is expected to rise rapidly in the coming years.
Author: The DeFi Investor
Translation: ShenChao TechFlow
A few months ago, discussions in the cryptocurrency community were focused on memecoins and celebrity coins, with many eager to speculate on which coin to invest in next. However, the focus has quietly shifted. Stablecoins and Real World Assets (RWA) have become the core topics of industry discussions.
Image source: Kaito
Stablecoins are showing tremendous development potential and are expected to become a trillion-dollar market in the future. In this article, I will share my reasons for being optimistic about the stablecoin sector and explore how to seize growth opportunities in this market.
Why are stablecoins promising?
Currently, the stablecoin sector is welcoming a series of favorable factors:
- ### More Friendly Regulatory Environment
The Trump administration plans to pass stablecoin-related legislation before August, hoping to further consolidate the dollar's dominance globally. This will pave the way for the legalization and popularization of stablecoins.
- ### Entry of Traditional Financial Giants
Fidelity, with a global asset management scale of $6 trillion, announced this week the launch of its own stablecoin. This marks a significant recognition of this sector by traditional financial institutions and injects confidence into the stablecoin market.
- ### High-Yield Stablecoin Products
Some interest-bearing stablecoins offer extremely attractive annualized yields through decentralized applications (dApps), reaching as high as 20%-30%. These products not only attract crypto investors but are also beginning to catch the attention of the traditional financial sector.
Moreover, the advantages of stablecoins in cross-border payments are particularly significant. Traditional payment companies have high international transfer fees, while these fees can be almost negligible when using stablecoins for payments. With the gradual implementation of friendly legislation for stablecoins in the United States, their popularity is expected to rise rapidly in the coming years.
How to seize growth opportunities in the stablecoin market?
- ### Invest in Stablecoin-Related Protocol Tokens
Although mainstream stablecoin issuers (such as Circle and Tether) have not yet provided direct investment channels for ordinary investors, protocol tokens related to stablecoins are still worth paying attention to, such as Ethena ($ENA) and MakerDAO/Sky ($MKR). These protocols have attracted billions in Total Value Locked (TVL) and are expected to benefit from the expansion of the stablecoin market. However, it is important to note that both tokens have their own issues. $ENA currently has only 34% of its tokens in circulation, and a high inflation rate is expected in the future. Meanwhile, MKR's TVL growth has stagnated in recent years, failing to benefit from the rapid growth of the stablecoin market. Nevertheless, on-chain data shows that market-savvy "smart money" is increasing its holdings of ENA and MKR, indicating that these tokens may perform well in the future.
Image source: Nansen
Additionally, DeFi projects like AAVE and decentralized applications like Pendle may also benefit from the expansion of the stablecoin market. A significant portion of their TVL comes from stablecoins, and if the supply of stablecoins continues to grow, the TVL, revenue, and transaction fees of these protocols are also expected to increase accordingly.
- ### Participate in Airdrops of Stablecoin Protocols That Have Not Yet Issued Tokens
Many emerging stablecoin protocols have launched reward programs, offering generous returns to early users. Here are a few protocols and their strategies worth noting:
- Resolv: A neutral risk stablecoin with a dual-token model.
Resolv's stablecoin USR and vault token RLP form its dual-token system. RLP serves as the insurance token for USR, providing risk protection while offering users higher rewards.
Users can exchange USDC for USR through the Resolv app and deposit it into the HyperUSD vault. HyperUSD is a new type of vault that can automatically optimize liquidity deployment in Hyperliquid DeFi. By depositing funds into the HyperUSD vault, users can earn 30 times the reward points and additional points from the Hyperliquid ecosystem.
- Level Finance: An interest-bearing stablecoin supporting DeFi-native yields.
Level Finance's stablecoin lvlUSD is backed by USDC and USDT, which are automatically deposited into DeFi protocols (such as AAVE) to generate yields. After staking lvlUSD as slvlUSD, users can start earning yields; for example, users can earn a 14% annualized yield (APY) and 20 times Level points by providing stablecoins to Pendle's slvlUSD liquidity pool.
Level Finance is backed by well-known crypto venture capital firms Dragonfly and Polychain, making the possibility of future token issuance high.
- Coinshift: An on-chain treasury management solution providing institutional-level yields.
Its yield stablecoin csUSDL generates returns through U.S. Treasury bonds and cash equivalents. In just 4 months since its launch, the supply of csUSDL has grown from 0 to 35 million. Recently, Gearbox launched a leveraged csUSDL circular mining feature, allowing users to earn up to 46% annualized yield by looping csUSDL up to 6 times while earning 6 times SHIFT points.
However, it is important to manage risks when using Gearbox to avoid over-leveraging and liquidation.
- OpenEden: A platform focused on the tokenization of Real World Assets (RWA).
OpenEden recently launched the interest-bearing stablecoin USDO, which provides real yields through tokenized U.S. Treasury bonds. Its points program is also live. Users first exchange USDC or USDT for cUSDO on ParaSwap, then provide cUSDO to Spectra's liquidity pool (Spectra is a yield trading protocol similar to Pendle). In this way, users can earn an 18% annualized yield and 5 times OpenEden bill points. To participate in this points program, users need to sign a message on OpenEden's points program page to start accumulating points.
- ### Use Stablecoins to Pay for Daily Expenses
The use of stablecoins is no longer limited to earning yields. Nowadays, there are various solutions that allow users to pay for daily expenses directly with stablecoins without converting to fiat currency.
Compared to traditional bank cards, the advantages of cryptocurrency cards include:
Self-custody: Users have complete control over their assets without relying on third-party institutions.
Zero fees: To attract early users, many cryptocurrency cards currently offer zero-fee services, including no transaction fees, no foreign exchange fees, and no withdrawal fees, making them especially suitable for overseas travel.
Solving banking restrictions: Cryptocurrency cards provide a convenient solution for users who find it difficult to cash out crypto assets through traditional banking channels.
In the future, with the launch of more stablecoin project points programs, the popularity of cryptocurrency cards and stablecoins as payment methods is expected to further increase. The stablecoin market is undergoing an unprecedented transformation. Whether it is the improvement of the regulatory environment, the entry of traditional financial institutions, or the attractiveness of high-yield products, the growth potential of stablecoins cannot be ignored. Interest-bearing stablecoins are particularly expected to become one of the fastest-growing areas in the coming years.
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