The Rise of Interest-Bearing Stablecoins: A New Wave of Asset Issuance Innovation

Stablecoins are becoming a market consensus. Recently, a series of significant events have occurred in the stablecoin sector, reflecting the market's preference for stablecoins.

Yield-bearing stablecoin ( YBS ) is a new direction in the development of stablecoins. Unlike traditional stablecoins, YBS attracts users through a yield-bearing mechanism and distributes part of the asset income to users. This model actually follows the on-chain banking logic of deposit-lending, deconstructing the power of asset issuance.

The development history of the cryptocurrency industry can be regarded as a history of innovation in asset issuance models. This time, the innovation under the name of stability is relatively mild, unlike the previous on-chain assets such as ERC-20 and NFTs, which were more intense.

Earning stablecoins require an earning mechanism and a stablecoin mechanism, which can be implemented in various ways, such as CDP mechanisms, Delta-neutral mechanisms, etc. The real distinction lies in the earning and profit-sharing mechanisms, which depend on the source of the earning assets. Common methods include using on-chain staked assets or off-chain income assets.

Currently, there are nearly a hundred interest-bearing stablecoin-related projects in the market. However, after filtering, there are no more than a dozen projects that are truly worth paying attention to. These projects each have their own characteristics in terms of underlying assets, core mechanisms, TVL, and so on.

The main challenges faced by yield stablecoin projects include: yield sustainability, protocol profitability, and volatility of the main token price. Investors need to pay attention to the project's ongoing profitability and the safety of the principal.

Emerging projects that may stand out in the future include Resolv, Avalon, Falcon, Level, and Noon Capital. These projects each have their own characteristics in terms of mechanism design and market positioning.

Overall, interest-bearing stablecoins represent a new round of innovation in the stablecoin space. They are different from traditional stablecoins and also from speculative crypto assets. Whether interest-bearing stablecoins can gain widespread recognition in the future still needs to be tested over time.