Stablecoins have become a crucial infrastructure for digital payments and transactions. In 2024, the total transaction volume of stablecoins reached $27.6 trillion, surpassing the combined annual transaction volume of Visa and Mastercard. Currently, over 90% of order book trades and approximately 70% of on-chain settlements use stablecoins. The stablecoin market size grew from $138 billion in February 2024 to over $230 billion in May 2025, establishing its position as infrastructure in decentralized finance.

Recently, yield-generating stablecoins have emerged and been rapidly adopted, with their scale growing from $660 million in August 2023 to approximately $9 billion in May 2025, a 13-fold increase, representing about 4% of the total stablecoin market. If this growth trend continues, this track is expected to occupy 50% of the stablecoin market in the coming years, with total locked value potentially reaching hundreds of billions of dollars.

This report aims to explore the rise of yield-generating stablecoins, tracing their development path from early forms to rapid growth—a trajectory somewhat similar to the growth of traditional money market funds. We will also analyze the risks in their design and focus on potential future innovation directions. By reviewing historical context and cutting-edge trends, this report hopes to provide a clear framework for understanding the evolving role of such stablecoins in the DeFi ecosystem.

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According to Stablewatch data, yield-bearing stablecoins are experiencing explosive growth, with their total supply surging from $666 million in August 2023 to $8.98 billion in May 2025, with a peak of $10.8 billion in February 2025. Although currently representing less than 5% of the entire stablecoin market, this subsector has achieved a 583% growth in 2024 alone, primarily driven by increased institutional demand for native crypto yield instruments and the continuous improvement of decentralized financial infrastructure.

Unlike traditional stablecoins, yield-bearing stablecoins automatically embed yield strategies through smart contracts, such as risk-neutral hedged trading or tokenization of U.S. Treasuries (a market that grew by 414% in 2024), enabling automatic asset appreciation. By removing centralized intermediaries, these stablecoins realize the core DeFi principles of "autonomy, transparency, and permissionless access".

Regulatory trends also provide support for their development, such as the U.S. Securities and Exchange Commission's approval of certain yield products within a programmable monetary framework, further proving their viability and compliance as next-generation financial instruments.

Comparison with Money Market Funds

Yield-bearing stablecoins are rapidly expanding along a trajectory far beyond traditional money market funds. Introduced in 1971, money market funds have grown to a $7 trillion industry by May 2025; similarly, yield-bearing stablecoins are meeting market demand for automated yield on cash-equivalent assets.

Key similarities between the two include:

· Yield Demand: Both fill the gap between traditional savings rates and market yields

· Liquidity Acquisition: Money market funds enhanced liquidity by supporting check payments; yield-bearing stablecoins achieve efficient liquidity through instant on-chain redemption

· Regulatory Driving Factors: Money market funds benefited from Regulation Q's restrictions on bank deposit rates; today, regulatory clarity for stablecoins is supporting their development

JPMorgan predicts that by 2030, yield-bearing stablecoins could occupy 50% of the stablecoin market, growing from less than $10 billion to hundreds of billions of dollars.

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DeFi Lending, Liquidity Mining, and Automated Yield Aggregation

These protocols generate revenue by allocating capital to lending, liquidity mining, and other automated strategies. Currently, the total locked value in this category ranges from hundreds of millions to billions of dollars, with lending strategies offering annual yields of approximately 3-12%, and liquidity mining reaching 5-20%+. As of April 2025, the total TVL of DeFi lending and liquidity mining protocols is approximately $42.7 billion. However, the stablecoin TVL generated by these mechanisms represents only a tiny fraction, currently estimated at hundreds of millions to billions of dollars.

This gap primarily stems from three reasons:

1. Most TVL comes from high-volatility assets (such as BTC and ETH), not stablecoins;

2. Stablecoins are more commonly used for lending rather than depositing to earn yields;

3. Liquidity mining rewards are typically distributed in governance tokens, not stablecoins themselves, which decouples TVL from actual stablecoin earnings.

Therefore, although these strategies provide a certain revenue source for stablecoins, their overall scale and sustainability still significantly lag behind RWA collateral or derivative arbitrage stablecoins.

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Unitas strategically positions itself as a multi-functional crypto financial ecosystem that combines earnings mechanisms, payment, and credit systems, creating a pathway between on-chain earnings and real-world financial applications.

Moreover, this model reveals broader potential directions: in the future, protocols can unlock more underutilized on-chain income sources (such as DEX fees, Non-Fungible Token royalties, etc.), providing support for a new type of yield-generating stablecoin, and achieving deep integration of DeFi innovation with scalable financial infrastructure.

Off-chain Income Sources: Potential Innovative Paths for Yield-Generating Stablecoins

Private Credit and Asset-Backed Securities (ABS) as Collateral

Incorporating tokenized private credit instruments and asset-backed securities into the stablecoin reserve system to generate income through off-chain loan interest. For example, YLDS stablecoin launched by Figure Markets includes securities similar to those held by high-quality money market funds, encompassing private assets like ABS. This collateral structure differs from most traditional stablecoins that primarily rely on US Treasury or fiat currency reserves, enabling access to higher-yield, traditionally hard-to-access credit markets.

GPU Mining or Computing Resource Income

Tokenizing income from GPU mining farms or decentralized computing networks as collateral for stablecoin yields. This method can transform operational income from off-chain, hardware-intensive businesses into on-chain earnings. For instance, GAIB will tokenize ownership and future computing income of NVIDIA H100, H200, GB200 GPUs and issue tradable yield certificates; USD.ai similarly focuses on tokenizing AI infrastructure (such as computing resources) for stablecoin yield generation. Although no protocol currently uses such computing income directly as stablecoin yield support, these projects validate the feasibility of tokenizing off-chain computing infrastructure income.

Insurance Premiums and Underwriting Income

Using premium income from decentralized or traditional insurance underwriting activities as a stablecoin yield source. Stablecoins can be backed by asset pools earning premium income, with this income distributed to token holders. This model connects insurance cash flows with stablecoin yields, expanding income sources beyond financial markets. While no protocol currently issues stablecoins fully collateralized 1:1 by insurance premiums, designs like BakUp's RLP model and Resolv's layered yield structure have initially demonstrated how insurance income can complement traditional collateral (such as Treasury bonds or staked ETH).

These innovative paths are driving yield-generating stablecoin models from single on-chain DeFi strategies to broader real-world income streams and synthetic collateralization methods, enhancing stability, scalability, and regulatory friendliness.

Conclusion: Seeking Balance Between Innovation and Stability

Yield-generating stablecoins represent a significant evolution in digital finance, combining the stability of traditional assets with DeFi protocol efficiency. Over the past two years, this track has grown 13-fold and gained support from large institutions like BlackRock, showing strong expansion momentum. The key to sustainable growth lies in balancing yield optimization with regulatory compliance. In the future, protocols that effectively integrate institutional-grade custody mechanisms with native DeFi innovation may lead the next phase of financial infrastructure evolution. As the market matures, yield-generating stablecoins are transforming from experimental products to fundamental components of the global financial system, providing users not only with stability but also meeting their demand for yields.

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