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Yield-generating stablecoins have surged to $11 billion in circulation, reflecting 4.5% of the overall stablecoin market, a significant increase from merely $1.5 billion and a 1% market share at the beginning of 2024.
One of the top beneficiaries is Pendle, a decentralized protocol that allows users to secure fixed yields or speculate on changing interest rates. Pendle now makes up 30% of the total value locked (TVL) in all yield-generating stablecoins, approximately $3 billion, as stated in a report shared with Cointelegraph.
Pendle highlighted that stablecoins comprise 83% of its $4 billion total value locked, a notable leap from under 20% just a year prior. In contrast, assets like Ether (ETH), which formerly constituted 80%–90% of Pendle’s TVL, have diminished to below 10%.
Conventional stablecoins such as USDt (USDT) and USDC (USDC) do not transfer interest to holders. With over $200 billion in circulation and US Federal Reserve interest rates at 4.3%, Pendle estimates that stablecoin holders are forgoing more than $9 billion in annual yield.
Related: Utilizing tsUSDe on TON for Passive Dollar Yield in 2025
Increasing regulatory transparency enhances stablecoins
The growth in yield-generating stablecoins occurs alongside rising regulatory transparency under US President Donald Trump’s administration.
In February, the US Securities and Exchange Commission recognized yield-bearing stablecoins as “certificates” subject to securities regulation, instead of prohibiting them. This acknowledgement permits yield-bearing stablecoins to function under specific regulations, including registration, disclosure obligations, and investor safeguards.
Proposed legislation like the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) indicate a positive trajectory.
Meanwhile, Pendle anticipates that stablecoin issuance will double to $500 billion within the next 18 to 24 months. The company also expects yield-bearing stablecoins to seize 15% of this market with $75 billion in issuance (7x growth from $11 billion).
Related: PayPal to provide 3.7% yield on stablecoin balances: Report
Pendle redirects emphasis to yield market
Originally centered on airdrop farming, Pendle has transitioned to act as an infrastructure layer for decentralized finance yield markets.
Ethena’s USDe stablecoin currently represents around 75% of Pendle’s stablecoin TVL. However, newer entrants like Open Eden, Reserve, and Falcon have raised the share of non-USDe assets from 1% to 26% over the past year.
Pendle is also broadening its reach beyond Ethereum, planning to support networks like Solana and to integrate with Aave and Ethena’s forthcoming Converge blockchain.
Interest in yield-generating strategies within the cryptocurrency arena has surged in recent years, propelled by both retail and institutional investors aiming to optimize returns on their digital assets.
On May 19, Franklin, a hybrid cash and crypto payroll provider, declared the launch of Payroll Treasury Yield, leveraging blockchain lending protocols to assist companies in gaining returns on payroll funds.
Magazine: NBA player Tristan Thompson misses $32B in Bitcoin by accepting $82M contract in cash
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