Yield-Bearing Stablecoins: The Next Generation of sDAI, USDe, and More
What are yield-bearing stablecoins? This article explains sDAI, Sky, Ethena, and USDe yield mechanisms, including sUSDe, protocol revenue, delta hedging, and key risks.
Yield-bearing stablecoins are expanding the role of stable-value assets beyond trading and settlement into on-chain yield generation. sDAI represents an earlier model in which value accumulates through a protocol savings mechanism, while Sky has since shifted its focus toward USDS and sUSDS. Ethena takes a different approach with USDe and sUSDe, generating protocol revenue from derivatives funding rates, basis spreads, liquid stable assets, and selected staking-related returns. Different yield sources create very different risk profiles.
What Are Yield-Bearing Stablecoins?
Traditional stablecoins primarily address price stability and settlement. Issuers may earn income by investing reserve assets in short-term government securities or cash equivalents, but ordinary stablecoin holders do not typically receive those returns simply by holding the token.
Yield-bearing stablecoins aim to pass part of the income generated by a protocol to specific token holders. However, “yield-bearing stablecoin” is not a single technical standard. Some products rely on lending interest, others on real-world asset income, protocol savings modules, derivatives funding rates, or basis trades.
For this reason, evaluating a yield-bearing stablecoin should involve more than comparing APY. Users should understand who generates the yield, under what market conditions it is produced, who absorbs potential losses, and whether the position can be exited efficiently.
sDAI and sUSDS: Protocol-Based Savings
sDAI is an important example of this model. When DAI enters the Dai Savings Rate mechanism, users can gain exposure to protocol-defined savings returns through a tokenized structure.
After MakerDAO upgraded to Sky in 2024, USDS and sUSDS became important components of the new system. Sky currently describes sUSDS as a yield-bearing stable asset connected to the Sky Savings Rate. The rate is determined through governance, supported by overall protocol revenue, and can change over time. It is not a guaranteed fixed return.
These yield-bearing tokens also do not necessarily maintain a fixed value of $1. Sky specifically explains that sUSDS is not a conventional stablecoin pegged to $1. Instead, it represents an asset whose redemption value can increase as the Sky Savings Rate accumulates.
What Are Ethena and USDe?
Ethena uses a model that differs significantly from traditional savings-based stablecoins. USDe is a synthetic dollar designed to reduce directional price exposure through supporting assets and corresponding delta-hedging positions.
According to Ethena’s official documentation, protocol revenue primarily comes from three sources: funding rates and basis spreads on derivatives positions, returns generated by liquid stable assets, and consensus- and execution-layer rewards from selected staked ETH assets.
One important distinction is that USDe itself does not automatically pass protocol yield to every holder. Users can stake USDe to receive sUSDe, and eligible protocol rewards then accumulate through the sUSDe rewards mechanism.
It is therefore understandable to describe USDe as a “yield-bearing stablecoin” in broader industry discussions, but any explanation of how the mechanism works should clearly distinguish between USDe and sUSDe to avoid misleading users.
This structure also introduces more complex risks, including negative funding rates, changes in basis spreads, derivatives market liquidity, custody providers, trading venues, smart contracts, and depegging risk.
FAQ
Do USDe holders automatically earn Ethena yield?
Simply holding USDe does not automatically provide access to all protocol rewards. Ethena primarily distributes eligible rewards through sUSDe, which users receive after staking USDe.Why can sDAI be worth more than 1 DAI?
Because it represents a position in a savings mechanism. As returns accumulate, each unit of the yield-bearing token may become redeemable for a greater amount of the underlying stablecoin.Is sDAI still MakerDAO’s main yield-bearing stablecoin?
sDAI remains historically significant and is still relevant across DeFi, but Maker has upgraded to Sky, where the newer system focuses on USDS and sUSDS.Is the APY on yield-bearing stablecoins stable?
No. APY is not a guarantee of principal or future returns. Yield may decline as interest rates, funding rates, protocol revenue, and market conditions change, and additional risks may also be involved.
Mastering the basics is the first step. Follow MGBX Academy to access more cryptocurrency educational resources and market opportunities.
The process for trading on MGBX:
Register a trading account and complete the necessary identity verification;
Deposit funds and select a trade type;
On the cryptocurrency trading page, enter the amount or quantity of the cryptocurrency you wish to purchase;
Confirm the order to complete the trade, and check that your assets have increased accordingly.
Further Readings:
Complete Guide to Stablecoins: The Differences Between USDT, USDC, and DAI
USDC vs. USDT: Which Is Safer?
Decentralized Stablecoins: How DAI Works and Its Key Risks
The Rise and Collapse of Algorithmic Stablecoins: Lessons From UST
