Source: Cointelegraph
Original: “Report: Yield-bearing Stablecoins Surge to $11 Billion, Accounting for 4.5% of Total Stablecoin Market”
The circulation of yield-bearing stablecoins has soared to $11 billion, accounting for 4.5% of the total stablecoin market, a significant increase from $1.5 billion and 1% market share at the beginning of 2024.
One of the biggest winners in this trend is Pendle, a decentralized protocol that allows users to lock in fixed income or speculate on floating rates. Pendle stated in a report shared with Cointelegraph that it currently accounts for 30% of the total locked value (TVL) of yield-bearing stablecoins, approximately $3 billion.
Pendle noted that stablecoins make up 83% of its total locked value of $4 billion, a substantial increase from less than 20% a year ago. In contrast, historically, assets like Ethereum (ETH) that accounted for 80% to 90% of Pendle's TVL have now shrunk to less than 10%.
Traditional stablecoins like USDT and USDC do not pass interest to holders. Pendle estimates that with a circulation of over $200 billion and a 4.3% interest rate from the U.S. Federal Reserve, stablecoin holders miss out on over $9 billion in earnings each year.
The growth of yield-bearing stablecoins comes alongside an increasingly clear regulatory environment under the administration of U.S. President Donald Trump.
In February, the U.S. Securities and Exchange Commission (SEC) approved the classification of yield-bearing stablecoins as “certificates” regulated by securities, rather than outright banning them. This approval allows yield-bearing stablecoins to operate under specific rules, including registration, disclosure requirements, and investor protection measures.
Additionally, proposed bills such as the “Stablecoin Transparency and Accountability to Improve the Ledger Economy Act” (STABLE) and the “Guidance and Establishment of a National Stablecoin Innovation Act” (GENIUS) further indicate a favorable direction.
Meanwhile, Pendle anticipates that the issuance of stablecoins will double to $500 billion within the next 18 to 24 months. The company also expects yield-bearing stablecoins to capture 15% of this market, with issuance reaching $75 billion (a sevenfold increase from the current $11 billion).
Pendle initially focused on airdrop mining but has now shifted to becoming the infrastructure layer for the decentralized finance (DeFi) yield market.
Ethena's USDe stablecoin currently accounts for about 75% of Pendle's stablecoin TVL. However, in the past year, the share of non-USDe assets from new entrants like Open Eden, Reserve, and Falcon has increased from 1% to 26%.
Pendle is also expanding to networks beyond Ethereum, planning to support networks like Solana and integrate with Aave and Ethena's upcoming Converge blockchain.
Notably, in recent years, there has been a surge of interest in yield-generating strategies within the cryptocurrency space, with both retail and institutional investors seeking to maximize returns on their digital assets.
On May 19, hybrid cash and crypto payroll provider Franklin announced the launch of Payroll Treasury Yield, utilizing blockchain lending protocols to help companies earn returns from payroll funds.
Related: Winning with “Stability”? The GENIUS Act Sets a New Stage for the Dollar in the Digital Age
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