New Stablecoins Aim to Compete with Tether by Offering Yield
According to Blockworks, Tether currently dominates stablecoin trading, with over 100 billion USDT in existence, representing over 70% of all stablecoins. However, a new crop of stablecoins is aiming to compete with Tether by offering yield. Tether's revenue largely comes from its investment in US Treasurys, and some stablecoin projects are paying out the yield earned by Treasury investments to attract users. This strategy is partly inspired by the returns earned by MakerDAO, which offers its own version of a yield-bearing stablecoin through its DAI savings rate (DSR) contract.
One example is Ondo Finance's USDY, a tokenized note that offers yield on US Treasurys. Since its launch in August 2023, USDY has grown to roughly $95 million in market capitalization. A dashboard from DAO consulting firm Steakhouse lists ten securities tokens, most of which launched in mid-to-late 2023, that also share T-Bill yield. Ethena, another new stablecoin project, offers a locked and yield-generating version of its synthetic dollar USDe, called sUSDe. The yield on sUSDe comes from staked ETH rewards and the fee paid to short positions by those with long positions.
Despite these new offerings, Tether remains dominant in the stablecoin market. However, the emergence of yield-generating stablecoins may attract more users and potentially challenge Tether's dominance in the future.
