Stablecoins have become a cornerstone of the modern financial system, boasting a market capitalization exceeding $200 billion. These digital assets facilitate faster, cheaper, and more efficient payments compared to traditional alternatives. While many understand the basics of stablecoins, fewer grasp how businesses can leverage them to generate yield and optimize operations.
By harnessing blockchain technology, stablecoins combine the security of decentralized protocols with the stability of fiat currencies like the USD. This article explores how businesses can integrate stablecoins into their financial strategies for competitive advantage.
How Stablecoin Projects Generate Revenue
Before adopting stablecoins, businesses should understand how these assets maintain their peg to fiat currencies. Below, we examine the revenue models of leading stablecoin projects.
Tether (USDT): Leveraging Reserves and Fees
Tether’s USDT dominates the stablecoin market, accounting for approximately 70% of total market share. Tether generates revenue through:
- Minting and Redemption Fees: Charging 0.1%–0.3% for conversions between USD and USDT.
- Interest on Reserves: The majority of Tether’s reserves are invested in short-term U.S. Treasury bills, yielding over 4%. In 2024, Tether reported $7.7 billion in profits over nine months.
👉 Discover how Tether’s reserves work
USDS: Decentralized Yield Generation
Sky (formerly MakerDAO) introduced USDS as a partially decentralized stablecoin collateralized by crypto and real-world assets (RWAs). Key revenue streams include:
- Liquidation Fees: Charged on under-collateralized positions.
- Stability Fees: Paid by borrowers and redistributed to USDS holders.
- RWA Yields: Sky earns approximately $9 million annually from $200 million in RWA collateral.
Emerging Stablecoin Projects
Other notable stablecoins include:
- PYUSD: PayPal’s stablecoin, earning revenue through transaction fees and interest on collateral.
- USDB: Built on Ethereum L2 Blast, it generates yield via staked ETH (sETH) and operates without traditional banking infrastructure.
Currently, USDT, USDC, USDS/DAI, and USDe collectively command ~98.5% of the stablecoin market.
Building a Competing Stablecoin: Opportunities and Challenges
Entrepreneurs exploring stablecoin ventures should consider:
- Market Demand: Is there a need for non-USD-pegged stablecoins?
- Regulatory Hurdles: Will governments permit such projects?
- Sustainability: Can the business model compete with established players?
👉 Explore decentralized finance opportunities
For finance professionals, fully decentralized stablecoins remain a niche yet promising area for innovation.
Stablecoin Treasuries: A Viable Business Strategy?
While MicroStrategy uses Bitcoin as a treasury reserve, stablecoins offer lower volatility and higher yields. Key considerations include:
- U.S. Businesses: Stablecoin treasuries may be less critical due to robust banking systems.
- Emerging Markets: Stablecoins provide access to USD and higher yields, often outperforming local banks.
For example, $100 million in USDS could yield $12.5 million annually—far exceeding traditional savings accounts.
Yield-Generating Strategies for Businesses
1. Interest-Bearing Accounts
- Retail Rates: Platforms like Coinbase (4%+) and Kraken (6%+) offer competitive APYs.
- Decentralized Options: USDS yields can exceed 12% annually.
2. DeFi Lending Protocols
Platforms like Aave and Balancer offer variable yields, often exceeding 10% during bullish markets.
3. RWA Lending
Protocols like Maple and Centrifuge enable stablecoin lending with APYs up to 20%.
4. Yield-Bearing Stablecoins
Assets like Ethena’s USDe automatically accrue yield (currently 12% APY).
Potential Risks and Mitigations
While stablecoins offer compelling benefits, businesses should be aware of:
- Regulatory Uncertainty: Evolving policies may impact operations.
- Smart Contract Risks: DeFi protocols are vulnerable to hacks.
- De-Pegging Events: Algorithmic stablecoins without reserves are particularly risky.
👉 Learn more about stablecoin risks
FAQs
1. How do stablecoins maintain their peg?
Stablecoins like USDT and USDC are backed by reserves (e.g., Treasury bills), ensuring 1:1 redemption with USD.
2. Can businesses earn yield on stablecoins?
Yes, through interest-bearing accounts, DeFi lending, and RWA protocols.
3. Are stablecoin yields sustainable?
Yields fluctuate with market conditions but often outperform traditional savings accounts.
4. What are the risks of stablecoin treasuries?
Key risks include regulatory changes, smart contract vulnerabilities, and de-pegging.
5. How do decentralized stablecoins differ?
Projects like USDS combine crypto and RWA collateral, offering partial decentralization.
6. Which stablecoin offers the highest yield?
Yield-bearing stablecoins like USDe currently provide up to 12% APY.
Conclusion
Stablecoins present a transformative opportunity for businesses to optimize treasury management and generate yield. By understanding revenue models, yield strategies, and associated risks, enterprises can harness stablecoins to enhance financial efficiency and competitiveness.