In a volatile crypto market, yield-bearing stablecoins are emerging as a top choice for passive income while hedging against price fluctuations. Analyst DeFi Warhol's tier list of the top 21 yield-bearing stablecoins is a crucial guide to navigate this intricate ecosystem. Decrypting the best options for stable returns in crypto.
At the top of the pyramid of the best stablecoins, we find five projects that are redefining industry standards. USDe from Ethena Labs, a synthetic dollar backed by delta-neutral strategies on ETH, offers yield generated in the background. USDS from Sky Ecosystem functions as an onchain savings account, redistributing protocol revenue and real-world asset (RWA) income.
USDY from Ondo Finance, a tokenized note backed by U.S. Treasury bills, behaves like a liquid onchain bond. USDf from Falcon Finance is a collateralized stablecoin whose capital is constantly staked in CeFi/DeFi strategies. Finally, reUSD innovates by allowing users to borrow while continuing to earn yield on their underlying stablecoins.
Just below, A Tier gathers highly promising projects. syrupUSDC/syrupUSDT from Maple Finance represent deposits in institutional credit pools, offering yield derived from interest paid by verified borrowers. Almanak generates alUSD by depositing funds into AI vaults that automatically deploy capital into DeFi strategies.
USDai is a synthetic dollar backed by loans to AI and GPU infrastructure operators, with yield coming from hardware revenue. Finally, USDa from Avalon is a stablecoin backed by Bitcoin, whose staked version generates interest.
B Tier brings together solid projects but with more complex mechanisms or specific risks, such as USR from ResolvLabs (hedged via perps), NUSD from Neutrl (market-neutral strategies), frxUSD from Frax (Frax ecosystem) and OUSD (auto-rebasing balance).
C Tier, on the other hand, calls for caution. It includes aUSD (highly dependent on Avalanche), USD0/USD0++ from Usual (tainted by a buyback floor controversy) and USDu (low liquidity).
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Finally, D Tier groups together projects to avoid at all costs. srUSD from Reservoir suffered a 96% drop in its TVL. xUSD experienced a massive loss of funds and a depeg. deUSD, closely linked to xUSD, collapsed with it. And yUSD from YieldFi, although still alive, suffered a massive market cap crash. These projects serve as a brutal reminder that in DeFi, due diligence is essential.
This tier list is an excellent starting point for anyone looking to optimize their yield on stablecoins. It highlights the need to understand the underlying mechanisms, assess risks carefully, and avoid being misled by high APYs. In the world of yield-bearing stablecoins, quality and security take priority above all else.
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Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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