State of Yield-Bearing Stablecoins in 2025

Growth, Challenges, and Future Outlook for Yield-Bearing Stablecoins

The Launchy Team
June 05, 2025

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Yield-bearing stablecoins have quietly become one of the most interesting developments in crypto over the last couple of years. Instead of just holding value like regular stablecoins, these tokens offer holders a chance to earn steady returns by tapping into strategies like staking, lending, or investing in tokenized government bonds.

What started as a small corner of the market, worth less than a billion dollars in 2023, has grown rapidly to nearly $9B in mid-2025, with even higher peaks earlier this year. Despite this fast growth, yield-bearing stablecoins still make up only a small slice of the overall stablecoin market, which is worth over $240B.

That gap shows just how early this space really is, but it also points to the challenges it faces, especially when it comes to regulation. Different regions have very different takes on how these coins should be treated. In the US, for example, some lawmakers argue that stablecoins paying interest might need to be regulated like securities. Meanwhile, in Europe, rules are even stricter, limiting or banning interest payments on stablecoins altogether.

These legal uncertainties have slowed down mass adoption and kept the market mostly within crypto insiders and early investors. Still, as more institutions get involved and the technology improves, the regulatory landscape could shift, opening up new opportunities.

This report takes a close look at the state of yield-bearing stablecoins in 2025, covering how the market has grown, who the main players are, the hurdles they face, and what the future might bring for this growing corner of DeFi.

Key Takeaways:

Rapid Growth but Small Market Share - Yield-bearing stablecoins have grown from under $1B in 2023 to nearly $9B by mid-2025, yet they still represent a small fraction of the overall $240+ B stablecoin market, signaling a young and evolving sector.
Regulatory Restrictions on Yield Payments - Both the US GENIUS Act and the EU’s MiCA regulation explicitly prohibit stablecoin issuers from offering interest or yield on their tokens, aiming to clearly separate payment stablecoins from investment products.
Third-Party Yield Offerings Remain Separate - While issuers cannot pay yield directly, third-party platforms such as exchanges or lending protocols can provide yield opportunities on stablecoins held on their platforms, operating outside the direct scope of stablecoin issuance regulation.
Asia’s Regulatory Landscape is Cautiously Open but Stringent - Hong Kong and Singapore have established robust licensing and reserve requirements that don’t explicitly ban yield-bearing stablecoins but create practical challenges due to strict rules.

Yield-Bearing Stablecoin Overview

The journey of yield-bearing stablecoins began in 2023 with sDAI (upgradable to sUSDS in the future as Maker rebrand to Sky), which was the first to introduce the concept of combining stability with yield. Following sDAI, Ondo launched USDY, adding more options for investors looking for yield on stable assets. In 2024, Ethena entered the scene with sUSDe, bringing a fresh and innovative approach that quickly gained traction. Toward the end of 2024, the market saw a noticeable influx of new yield-bearing stablecoins, signaling growing interest and competition in this emerging sector.

Yield-bearing stablecoins have seen impressive growth since late 2023, although they still represent a small portion of the overall stablecoin market. Payment stablecoins dominate the market with a market cap consistently above $120B, steadily climbing to around $250B by mid-2025.

In comparison, yield-bearing stablecoins (YBS) hold a much smaller market cap, growing from nearly zero in late 2023 to about $9B by May 2025. This growth, while significant, shows how early-stage this sector still is compared to traditional stablecoins.

Looking at the yield distribution, daily payouts have fluctuated but show a clear upward trend overall. Yield paid out per day peaked near $3.8M around early 2025, reflecting periods of high investor interest and yield generation, before settling into a more stable average payout of around $1.5M daily as of mid-2025.

The cumulative yield paid out to holders has also risen sharply, crossing the $600M mark by May 2025, highlighting the tangible returns these products have delivered so far.

Diving deeper into individual protocols, the historical supply chart reveals the market leaders in yield-bearing stablecoins. Tokens like Ethena’s sUSDe and Sky’s sUSDS together represent the largest shares of supply, followed by others like stUSR, scrvUSD, sDAI, and USDY. These projects have driven most of the market expansion, with notable spikes in supply especially during late 2024 and early 2025.

Our Take

Despite their relatively small share of the overall stablecoin market, yield-bearing stablecoins are proving their value by offering a compelling blend of stability and income generation. As more projects enter the space and the market matures, we can expect continued innovation and increased adoption. However, challenges like regulatory uncertainty and market volatility remain. How these factors play out will shape whether yield-bearing stablecoins can move beyond niche use and become a mainstream option for investors seeking steady returns in the crypto world.

Top 10 Yield-Bearing Stablecoins Based on Market Cap

The yield-bearing stablecoin market is led by a diverse group of projects that combine stable value with attractive returns. Ethena’s sUSDe tops the list with a $2.84B market cap and an estimated annual yield above 6%, showcasing solid and consistent performance. Sky, formerly Maker, includes both sDAI and its upcoming successor, sUSDS, with a combined market cap of around $2.8B and yields around 2.3% to 4.5% APY.

Ondo’s OUSG and USDY tokens provide steady income around 4-4.3% APY and represent over $1.2B in combined market value. Maple/Syrup’s SyrupUSDC stands out with some of the highest yields, around 6.7% APY, attracting yield-focused investors. Other notable players include Hashnote’s USYC and Stables Labs’ sUSDX, which offer APYs ranging from 3.8% to 9.8%. Falcon Finance’s sUSDf has the highest estimated APY near 13.9%, reflecting its aggressive yield strategy.

Complete List of Yield-Bearing Stablecoins

The yield-bearing stablecoin market has expanded significantly, now encompassing a wide range of tokens issued by various projects across DeFi and traditional finance bridges. While some tokens hold large market caps in the billions, many others serve niche use cases or emerging protocols with smaller but growing communities.

Below is a detailed list of yield-bearing stablecoins ranked by market cap, along with their yield performance metrics.

Yield-Bearing Stablecoins Regulatory Landscape

Different regions take varied approaches to managing the risks and opportunities of these digital assets, especially regarding whether stablecoin issuers can pay interest or yield. Here’s a brief overview of the current regulatory stance on yield-bearing stablecoins across major markets.

United States

In the United States, the GENIUS Act explicitly prohibits stablecoin issuers from paying interest or yield on their stablecoins. This restriction is a key feature designed to clearly separate payment stablecoins from yield-bearing financial products. While the Act mandates full reserve backing, regular audits, and transparency for consumer protection, it does not permit issuers themselves to offer yield.

However, third-party platforms (like exchanges or lending protocols) can still provide yield on stablecoins held on their platforms, these yield offerings happen outside the scope of stablecoin issuance and are not regulated by the GENIUS Act.

This means that any yield-bearing stablecoins would require separate legislation or regulatory frameworks distinct from the GENIUS Act, which focuses strictly on payment stablecoins without yield.

Europe

In the European Union, the Markets in Crypto-Assets Regulation (MiCA), effective since December 2024, explicitly prohibits stablecoin issuers from offering interest or yield on their tokens.

This rule applies to both electronic money tokens (EMTs) and asset-referenced tokens (ARTs) under Article 50 of MiCA. The restriction is intended to preserve stablecoins’ primary role as payment instruments rather than investment products, thereby prioritizing consumer protection and financial stability.

Following this regulation, platforms like Coinbase have stopped offering yield on stablecoins such as USDC within the European Economic Area to comply with MiCA’s provisions. While this approach reduces certain risks, it has also sparked debate within the industry, with some stakeholders concerned that it may limit innovation and the development of new financial products involving stablecoins in Europe.

Asia

On May 21, 2025, Hong Kong’s Legislative Council passed the Stablecoins Ordinance, establishing a licensing regime for fiat-referenced stablecoin (FRS) issuers regulated by the Hong Kong Monetary Authority (HKMA).

Issuers must maintain full reserve backing with high-quality, liquid assets equal to the total stablecoins in circulation, and provide prompt redemption at par value. They also need to comply with strict anti-money laundering and counter-terrorism financing rules.

While the ordinance does not explicitly ban stablecoin issuers from offering yield or interest, the stringent reserve and risk management requirements make it difficult in practice for yield-bearing stablecoin products to operate.

Meanwhile, the Monetary Authority of Singapore (MAS) finalized its regulatory framework for single-currency stablecoins (SCS) on August 15, 2023. This framework mandates full reserve backing with low-risk liquid assets, timely redemption at par within five business days, minimum capital requirements, and compliance with AML and cybersecurity standards.

Similar to Hong Kong, the MAS regulations do not expressly forbid interest payments on stablecoins, but the rigorous capital and risk management rules pose practical constraints on yield-bearing stablecoin offerings.

FInal Thoughts

Yield-bearing stablecoins offer an intriguing blend of stability and income potential, attracting growing interest from both retail and institutional investors. However, their future hinges heavily on how regulators balance innovation with risk management. While current laws restrict issuers from directly offering yield, evolving frameworks and technological advances may carve out pathways for growth without compromising consumer protection. The next few years will be critical in defining whether yield-bearing stablecoins move beyond niche products to become mainstream tools in the digital finance ecosystem.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.