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Stablecoin issuers lead crypto protocol revenue
Stablecoin issuers continue to dominate crypto protocol revenue, regularly accounting for roughly 60% to 75% of daily earnings across major categories such as lending platforms, decentralized exchanges (DEXs), collateralized debt positions (CDPs), and blockchain infrastructure. As the most profitable vertical in the crypto ecosystem, stablecoins provide traders, exchanges and DeFi protocols with a dependable medium of exchange and a predictable collateral asset.
How issuers extract value
The core business model for top stablecoin issuers centers on investing reserves into low-risk, yield-bearing instruments—typically U.S. Treasuries and cash equivalents—and retaining the resulting interest. Companies like Tether and Circle manage large reserve pools and capture the spread between the yield on those backing assets and the operational costs of running the tokens. Tether’s management has publicly projected around $15 billion in profit for the year, citing an extraordinary 99% profit margin, a figure that places it among the most profitable firms per employee globally.
Regulation and the GENIUS Act
U.S. regulation has codified some of these practices. The GENIUS Act, enacted in July, explicitly prevents permitted payment stablecoin issuers from paying interest or distributing yield directly to stablecoin holders. The law treats payment stablecoins more like digital cash than deposit-like financial products, limiting how issuers can share returns with users.
Competition forces new value-sharing models
Despite regulatory constraints, competitive pressure within the stablecoin market is driving innovation in how value is returned to users. Emerging projects and platforms are experimenting with different mechanisms to distribute yield or incentives without running afoul of the GENIUS Act.
Examples of evolving approaches
- USDe has grown into the third-largest stablecoin by offering a synthetic dollar model that can deliver yield-like benefits to users, pressuring incumbents to rethink product value.
- Coinbase recently began offering a 3.85% APY for USDC held on its platform. By having a third-party platform, rather than the issuer itself, provide the yield, Coinbase’s approach navigates regulatory limits while signaling a shift in how returns might be distributed in the ecosystem.
Meanwhile, Tether is raising additional capital to expand USAT, its U.S.-regulated, dollar-backed complement to USDT, underscoring how regulated alternatives and product differentiation will shape competition.
What this means for traders and DeFi participants
Stablecoins’ outsized share of protocol revenue demonstrates both their systemic importance and the lucrative economics behind reserve management. For users, the trend means greater options—ranging from traditional payment-oriented stablecoins designed for regulatory compliance to alternative tokens and platforms offering yield-like incentives. For the broader crypto market, expect continued innovation around custody, reserve transparency, yield distribution, and regulatory alignment as issuers compete for liquidity and market share.
Staying informed about stablecoin mechanics, issuer reserve strategies, and evolving regulatory frameworks will be essential for traders, developers, and institutional participants navigating the changing landscape of digital dollars and crypto finance.
Source: theblock
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