From Demand to Design: Analyzing the Issuance Logic of Interest-Generating Stablecoins

Yield stablecoin ( YBS ) mimics the operations of the banking industry but faces many challenges, such as how to generate user profits and maintain long-term operations. The collapse of DeFi projects has become the norm, while the systemic risks of traditional banks require rapid intervention from regulatory agencies.

Era of Excessive Leverage

The financial industry has gone through three stages in quantitative speculation: portfolio insurance, leverage, and credit default swaps. The current characteristics of the financial market are miniaturization and decentralization, with on-chain MEV and off-chain centralized exchanges imitating traditional finance in Web3. Long-term value preservation is no longer mainstream; speculation has become the new trend.

The YBS project faces a dilemma: low yield rates make it difficult to attract funds, while high yield promises may lead to a collapse. Hedging is essentially arbitrage and cannot avoid the impact of market momentum.

The stablecoin market has three main branches: institution-specific clearing networks, traditional finance-dominated USD-pegged stablecoins, and emerging interest-bearing stablecoins. The market always has an impulse to chase high returns, and the YBS project will compete to raise yields, ultimately experiencing market clearing.

Product Design: Core of US Treasury Bonds

The YBS project requires a strong asset reserve, with USD/U.S. Treasury bonds becoming the mainstream choice. This creates market space to help Web3 projects purchase physical assets and assist traditional financial giants in issuing compliant YBS.

The selection of underlying assets mainly includes:

1. U.S. Treasury / U.S. dollar cash / U.S. dollar-related assets
2. Mainstream on-chain assets and their anchoring forms
3. USDT/USDC as underlying assets
4. Innovative forms such as GPU computing power tokenization

The minting mechanism mostly adopts a 1:1 full collateralization, with a few using credit or guarantee mechanisms. The source of income is mainly based on the interest mechanism and stability design of the underlying assets. There are two modes of income distribution: the value increases while the quantity remains unchanged, or the quantity increases while the value remains unchanged.

Market Strategy: Diversified Yield Pools and Reward Mechanisms

To enhance attractiveness, the YBS project needs to provide a variety of yield options:

1. Establish a yield pool on multiple chains and protocols
2. Use platforms like Pendle to amplify returns
3. Adopt emerging lending mechanisms such as Morpho to enhance yield.

The design of the reward system needs to balance anti-witch and real customer acquisition:

1. The longer the deposit time, the more points you earn.
2. Staking earns fewer points
3. Recommended Rebate System
4. Specific Behavior Rewards

Market volume is mainly established through three ways:

1. KOL and media reach users
2. Obtain off-chain authoritative endorsement
3. Influencer Endorsement

In the yield display, project parties can utilize factors such as calculation periods and off-chain data for strategic obfuscation.

Overall, YBS appears simple on the surface, but it is actually complex. The savings and lending business aimed at the public always involves deep social and political issues. Among the many YBS projects, few are likely to survive in the long term. The entrepreneurial journey is difficult, and project owners need to carefully consider various factors.