New Report Shows Rapid Growth in Interest-Bearing Digital Dollars
Yield-bearing stablecoins have surged to $11 billion in total supply, representing 4.5% of the entire stablecoin market, according to a new report by digital asset research firm 21.co. The rise underscores a growing demand for stablecoins that offer passive income opportunities while maintaining price stability.
These interest-generating tokens combine the stability of traditional stablecoins with the earning potential of DeFi or tokenized yield strategies, making them increasingly attractive to both retail and institutional investors.
Leading Projects Driving the Surge
The report highlights that the growth is driven by a handful of emerging protocols, including:
- Ethena’s USDe, now commanding a dominant share of the yield-bearing stablecoin sector.
- Mountain Protocol’s USDM, one of the first regulated offerings in this category.
- Ondo Finance’s USDY, which is backed by short-term U.S. Treasuries and gaining traction quickly.
“Investors are now looking for more utility from their stablecoins beyond just a store of value,” said a spokesperson from 21.co. “Yield-bearing stablecoins fill that demand while avoiding direct crypto volatility.”
Why Yield-Bearing Stablecoins Are Gaining Momentum
Traditional stablecoins like USDT and USDC offer price stability but no yield, meaning users miss out on passive income opportunities when inflation is high or cash interest rates are rising. Yield-bearing stablecoins bridge this gap by allowing holders to earn yield automatically, often backed by real-world assets like U.S. Treasuries or DeFi lending protocols.
This new wave of stablecoins represents a significant innovation in tokenized finance, especially as more investors seek on-chain alternatives to traditional savings accounts and money market funds.
Regulatory Outlook and Risks
While the growth is rapid, the report also cautions about regulatory clarity and risk transparency. Many of these products operate in a gray area, and the source of yield, custody of backing assets, and redemption mechanisms can vary widely between issuers.
“As adoption grows, regulators are likely to pay closer attention to these instruments,” the report noted. “Clear disclosures and compliance frameworks will be key for long-term viability.”
Conclusion: A Growing Share of the Stablecoin Pie
With $11 billion in supply and a 4.5% market share, yield-bearing stablecoins are no longer a niche experiment. They represent a growing appetite for yield-enhanced digital assets that blend stability with returns.
As traditional finance meets crypto innovation, yield-bearing stablecoins could reshape how investors think about cash and liquidity in a blockchain-native world.