Yield-bearing stablecoins surge to $11B, now 4.5% of market: Report

Yield-bearing stablecoins have soared to $11 billion in circulation, representing 4.5% of the total stablecoin market, a steep climb from just $1.5 billion and a 1% market share at the start of 2024.

One of the biggest winners is Pendle, a decentralized protocol that enables users to lock in fixed yields or speculate on variable interest rates. Pendle now accounts for 30% of all yield-bearing stablecoin total value locked (TVL), roughly $3 billion, the firm said in a report shared with Cointelegraph.  

Pendle noted that stablecoins make up 83% of its $4 billion total value locked, a sharp rise from less than 20% just a year ago. In contrast, assets such as Ether (ETH), which historically contributed 80%–90% of Pendle’s TVL, have shrunk to less than 10%.

Traditional stablecoins like USDt (USDT) and USDC (USDC) do not pass on interest to holders. With over $200 billion in circulation and US Federal Reserve interest rates at 4.3%, Pendle estimates that stablecoin holders are missing out on more than $9 billion in annual yield.

Related: How to Use tsUSDe on TON for Passive dollar Yield in 2025

The rise in yield-bearing stablecoins comes amid increasing regulatory clarity under US President Donald Trump’s administration.

In February, the US Securities and Exchange Commission approved yield-bearing stablecoins as “certificates” subject to securities regulation, rather than banning them. The approval allows yield-bearing stablecoins to operate under specific rules, including registration, disclosure requirements and investor protections.  

Proposed bills like the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) signal a favorable direction.

Meanwhile, Pendle said it expects stablecoin issuance to double to $500 billion in the next 18 to 24 months. The firm also anticipates yield-bearing stablecoins to capture 15% of this market with $75 billion in issuance (7x growth from $11 billion).

Related: PayPal to offer 3.7% yield on stablecoin balances: Report

Initially focused on airdrop farming, Pendle has shifted toward serving as an infrastructure layer for decentralized finance yield markets.

Ethena’s USDe stablecoin currently accounts for about 75% of Pendle’s stablecoin TVL. However, newer entrants such as Open Eden, Reserve and Falcon have increased the share of non-USDe assets from 1% to 26% over the past year.

Pendle is also expanding beyond Ethereum, with plans to support networks like Solana and to integrate with Aave and Ethena’s upcoming Converge blockchain.

Interest in yield-generating strategies within the cryptocurrency sector has surged in recent years, driven by both retail and institutional investors seeking to maximize returns on their digital assets.

On May 19, Franklin, a hybrid cash and crypto payroll provider, announced the launch of Payroll Treasury Yield, which uses blockchain lending protocols to help firms earn returns on payroll funds.

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