Written by: Yue Xiaoyu
The craze for stablecoins continues, and recently many big names from outside the industry have been consulting me for information related to stablecoins.
Many of them have asked me a question: Previously, if companies had liquid funds, they would make some low-risk investment. Now, if they switch to stablecoins, which have no appreciation potential, how can companies achieve growth in their liquid funds?
In fact, many people outside the industry are still stuck at the level of issuing coins and do not realize that the blockchain world has already built a financial system of CeFi + DeFi.
Through the composability of CeFi + DeFi, stablecoins also have numerous investment channels, and can even achieve an annualized return of 10%.
Why can stablecoin investments yield such high returns?
We can look at the eight major sources of stablecoin yields available in the market:
Stablecoin issuers may provide interest to users through channel promotion fees, such as Tether or Circle's partner rewards.
Trading platforms, in order to promote themselves and attract user capital, will also increase investment returns and launch compound interest products.
Trading platforms can operate in the lending market, where users borrowing USDT will pay interest to users lending USDT.
On-chain lending platforms can achieve borrowing and lending of USDT in a decentralized manner.
Providing liquidity to DEX liquidity pools to earn a share of transaction fees. Some pools also offer token rewards, creating dual returns.
Participating in DeFi liquidity mining or yield farming, which is a subsidy from project parties, offering high returns but susceptible to hacks and incentive decay.
Bringing real-world yields on-chain, a typical example is US Treasury bonds on-chain, which can be packaged into yield-bearing stablecoins, allowing ordinary users to enjoy yields from US Treasury bonds, approximately around 4%.
Yield-bearing stablecoins, where project parties engage in arbitrage through CeDeFi, especially with the currently popular neutral strategies, hedging against price volatility risks, although returns may decrease in a bear market.
After counting these sources, we can see that the high returns from stablecoin investments are not baseless but have definite sources of income.
The craze for stablecoins continues; the anticipated stablecoin battle has not yet emerged, but the battle for stablecoin investment subsidies has already begun.
In this wave of stablecoins, the participants are traditional financial institutions and traditional capital, making it difficult for ordinary retail investors to find significant opportunities.
However, in this craze, we retail investors can still benefit, as the direct earnings we can make come from stablecoin investment returns.
The battle for stablecoin investment subsidies benefits us ordinary users, allowing us to seize the dividends of this stablecoin craze.
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