Where Does Stablecoin Yield Come From? Is 5–10% APY Safe?

Stablecoin yield mainly comes from three places: lending interest, market-making/funding, and underlying Treasury returns. The higher the APY, the higher the risk it usually implies. This explains the sources, platform risk and depeg risk — and how to tell reasonable yield from a Ponzi trap.

Stablecoin yield mainly comes from three places: lending interest, market-making/funding, and underlying Treasury returns. The higher the APY, the higher the risk it usually implies. This explains the sources, platform risk and depeg risk — and how to tell reasonable yield from a Ponzi trap.