Yield-bearing stablecoins surge to $11B, now 4.5% of market: Report

The market for yield-bearing stablecoins has experienced explosive growth, surging to $11 billion in circulation—a 4.5% share of the total stablecoin market. This represents a significant increase from just $1.5 billion and a 1% market share at the start of 2024. Pendle, a decentralized protocol enabling users to lock in fixed yields or speculate on variable interest rates, is a major player in this expansion. It currently commands a 30% share of the total value locked (TVL) in yield-bearing stablecoins, approximately $3 billion.

Stablecoins now constitute 83% of Pendle’s $4 billion TVL, a dramatic increase from less than 20% a year ago. This shift contrasts with the reduced role of assets like Ether (ETH), which previously contributed 80–90% of Pendle’s TVL but now accounts for less than 10%. This growth is noteworthy because traditional stablecoins like USDT and USDC don’t offer interest to holders. Pendle estimates that with over $200 billion in circulation and US Federal Reserve interest rates at 4.3%, stablecoin holders are forgoing over $9 billion in annual yield.

This boom coincides with increased regulatory clarity under the Trump administration. The SEC’s February approval of yield-bearing stablecoins as regulated “certificates” rather than an outright ban has paved the way for their growth under specific rules, including registration, disclosure, and investor protection. Proposed bills like STABLE and GENIUS further signal a favorable regulatory environment.

Pendle projects a doubling of stablecoin issuance to $500 billion within the next 18–24 months, with yield-bearing stablecoins capturing 15% of this market—a sevenfold increase from the current $11 billion. Initially focused on airdrop farming, Pendle has transitioned into an infrastructure provider for decentralized finance (DeFi) yield markets. While Ethena’s USDe stablecoin currently dominates Pendle’s stablecoin TVL (75%), newer entrants are expanding the platform’s asset diversity. Pendle is also expanding beyond Ethereum, with plans to support Solana and integrate with Aave and Ethena’s Converge blockchain. The growing interest in yield-generating strategies within the crypto sector is attracting both retail and institutional investors seeking to maximize returns on their digital assets.