Tiger Research: DeFi Is No Longer Chasing High Yields—Yield-Bearing Stablecoins Are the New Infrastructure
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Tiger Research: DeFi Is No Longer Chasing High Yields—Yield-Bearing Stablecoins Are the New Infrastructure
DeFi is shifting from a market that generates yield to one that imports and distributes yield from traditional finance. The stronger the foundation, the more robust the upper structure.
Navigating Web3 tides with focused insightsAuthor: Tiger Research
Translated and edited by TechFlow
TechFlow Insight: sUSDe’s supply has halved, yet capital is flowing into lower-yielding USYC and sUSDS. This is not capital flight—it reflects a fundamental shift in DeFi’s underlying logic: from chasing high APYs to selecting verifiable, collateralizable yield-bearing stablecoins. S&P awarded Sky Protocol the first-ever credit rating for a DeFi protocol, while assigning USDe a 1250% risk weight—formal institutional recognition is reshaping market dynamics.
Key Takeaways
- While sUSDe’s supply has been cut in half, capital has flowed into lower-yielding USYC and sUSDS—not an exodus, but a shift in selection criteria
- APY is no longer the dividing line for asset allocation. What matters more is whether an asset can be accepted as collateral, a savings instrument, or reserve
- S&P issued the first-ever credit rating for a DeFi protocol—awarding USDS—and simultaneously assigned USDe a 1250% risk weight
- Ethena will fully overhaul its collateral structure by April 2026, shifting from a synthetic model to a hybrid one. A single yield source is no longer sufficient to survive in the YBS market
- DeFi is evolving from a market that *generates* yield to one that *imports and distributes* yield from traditional finance. The stronger the foundation, the more robust the upper layers
What’s Behind sUSDe’s Decline?
Yield-bearing stablecoins (YBS) are dollar-pegged tokens that generate yield simply by being held. USDC and USDT function like cash; YBS function like deposits—their value rises with interest rates.
An unusual shift is underway in this market. Ethena’s flagship product, sUSDe, once commanded over 30% of the YBS market share. Over the past 90 days, its supply has dropped by approximately $1.8 billion—down 49% from its peak. There was no hack, no protocol failure.
Yet the market itself hasn’t shrunk—in fact, total YBS TVL has risen during the same period. Within those 90 days, USYC (Circle’s Treasury-backed stablecoin) attracted $1.4 billion in inflows, and sUSDS (Sky’s hybrid stablecoin) drew $1.2 billion. Combined, these inflows exceed sUSDe’s decline.
Viewed purely through capital flows, a different story emerges: capital hasn’t exited the market—it has rotated within it.
More Important Than APY: Holder Base and Underlying Assets
On APY alone, there’s no rationale for capital to move. On a 30-day basis, USYC yields ~3%, sUSDS ~3.6%, and sUSDe ~4%. If yield were the sole driver, capital should concentrate in sUSDe. The shift appears driven not by yield, but by two other factors: (1) holder base and (2) underlying assets.
Retail vs. Institutional
Averaged per wallet, USDe holders number roughly 1/800th of USYC holders. Excluding large block purchases widens this gap further. USYC was designed from inception to attract only large-scale capital; USDe relies heavily on retail.
USDe and USYC have diverged fundamentally in their holder bases.
For USDe, both retail and institutional investors justify holding based on yield—they come for APY and leave when APY drops. USYC follows a different path: no retail access, institution-first design.
USYC is available exclusively to qualified investors, with a minimum purchase threshold of $100,000. In July 2025, Binance adopted it as collateral for institutional derivatives. Once traders can post yield-bearing assets as collateral on the largest exchange, demand follows. $2.54 billion was issued on BNB Chain alone.
Delta-Neutral vs. RWA
The distinction between USDe and USDS lies in their reserve assets. Institutions seek predictability—how yield is generated and how it fluctuates must be predictable.
USDe operates a delta-neutral structure: crypto collateral on one side, perpetual futures short positions on the other, offsetting price volatility. Yield is tied to perpetual funding rates. During the 2024 bull market, sUSDe’s APY exceeded 47%; after markets turned sideways, it fell into the 3% range—more than tenfold volatility within months. Yield moves in lockstep with market conditions.
USDS is backed by short-term U.S. Treasuries and money market funds. Its yield tracks real-world interest rates. At end-2024, its APY stood in the 9% range, taking over a year to decline to the 3% range.
This divergence also appears in S&P’s assessment. In August 2025, S&P Global assigned Sky Protocol a B− credit rating—the first-ever credit rating issued to a DeFi protocol. While the rating itself is modest, the milestone is historic: a DeFi protocol has received formal credit evaluation.
In the same report, USDe was assigned a 1250% risk weight—cited for its “complex maintenance mechanism.” Under Basel III (the Bank for International Settlements’ framework for bank capital adequacy), USDe falls into the highest-risk category for crypto assets. Regardless of any incident, sUSDe lies outside the approval scope of institutional risk committees.
To institutions, predictability matters as much as yield. Ethena may deliver higher returns depending on market conditions—but institutional trading desks may find them harder to underwrite.
The Direction of the YBS Market
YBS assets fall along two axes: “How stable is the yield?” and “Can the yield source be verified?” A 4% APY is not always the same 4%. Risk type depends on who pays the interest. Most capital is migrating toward the more predictable side.
Treasury-backed YBS (OUSG, sfrxUSD, USYC) are easiest to describe.
Short-term Treasury yields flow transparently from issuers to holders via the operational layer. As of May 2026, average APY ranges between 3.1% and 3.5%. The constraint is direct linkage to Treasury rates.
Synthetic YBS (sUSDe) offers transparent yield sources but remains highly sensitive to market conditions.
Funding rates from perpetual contracts constitute the primary income stream. Yield is verifiable on-chain but swings violently with market conditions. APY exceeded 15% in September 2025; on a 7-day basis as of May 12, 2026, it sits in the 4% range.
Credit-based YBS (syrupUSDC, syrupUSDT) offer high yield stability but low verifiability.
Via Maple Finance, hedge funds and trading firms pay interest that flows back to holders. A fixed-rate structure around 4% ensures low volatility. However, borrower creditworthiness and collateral value are difficult to assess externally.
Hybrid YBS (sUSDS) sits between the two extremes.
Its yield blends Spark lending fees, RWA returns, reserve management, and governance-set savings rates. Its 7-day rate stands at 3.6%, below sUSDe. On the risk side, the absence of a single point of failure helps. The trade-off is difficulty in externally decomposing the yield structure.
This classification points to a unifying pattern: except for Ethena’s synthetic model, every category is importing traditional finance yield sources onto-chain.
Ethena Knew All Along
The first signal that Ethena recognized its structural limitations was the launch of USDtb. USDtb is a Treasury-backed dollar, backed by short-term U.S. Treasuries. It was designed to buffer USDe when funding rates turn negative.
In April 2026, Ethena took further action—directly overhauling USDe’s collateral structure. Ethena reduced perpetual contract exposure to 11% of total collateral and added new categories: stablecoin reserves, DeFi lending, CLOs, investment-grade corporate bond funds, and short-term credit.
Ethena is also exploring integrating a gold-based perpetual delta-neutral strategy into USDe’s collateral. This would apply the same methodology used for BTC and ETH to gold (PAXG, XAUT). The risk committee has completed its formal review.
This represents the largest structural change since launch. Effectively, Ethena acknowledges that a delta-neutral strategy built solely on crypto assets is no longer viable.
USDe and sUSDe began as synthetic instruments and are now evolving into hybrids. This transition confirms that a single yield source is no longer sufficient to remain competitive in the YBS market.
Foundation First
DeFi importing yield from traditional finance rather than generating it natively may appear contradictory to decentralized finance’s ethos. But this does not mean DeFi is doomed.
Blockchain aimed to build a decentralized internet—yet ultimately runs atop the internet itself. Without the internet, there would be no blockchain. Stablecoins aimed to replace the dollar—yet ultimately run on top of the dollar. And in turn, they catalyzed DeFi’s rise. Traditional foundations have never prevented innovation above them.
YBS can follow the same path. BUIDL is already collateral for USDtb. USDtb serves as reserve for USDm (MegaETH’s native stablecoin). New monetary Legos are already stacking atop Treasury-backed YBS.
As Treasury-backed YBS solidify into infrastructure, yields compress and the underlying asset set narrows. Alpha available from any single asset continues shrinking. Just as the internet became infrastructure—with access costs approaching zero—so too will YBS. Stability and composability will outweigh yield.
Once infrastructure matures, experiments built upon it can operate on stronger fundamentals. Early synthetic dollars proved unsustainable due to unstable underlying assets.
Early DeFi yield structures were built on sand—relying on altcoin prices, token incentives, and leveraged demand. Now, proven yield sources are forming the foundation, and on-chain financial architecture is being built atop them.
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