TechFlow news: dForce founder Mindao Yang tweeted that the reason dollar-pegged stablecoins can achieve a higher "risk-free rate" than the underlying dollar is primarily due to token circulation leverage.
There exists a spread between the risk-free rate of the upper-layer stablecoin and the underlying risk-free rate (such as U.S. Treasury yields). The theoretical value of this spread is: (full circulation / interest-bearing deposits) × underlying interest rate. The more widely adopted a DeFi stablecoin is, the higher its circulation leverage, and thus the higher its theoretical yield.
This yield leverage resembles the relationship between staking ratio and returns in LSDs (Liquid Staking Derivatives). This monetary phenomenon exhibits significant reflexivity, impacting the circulation of underlying dollars. In theory, centralized stablecoins could also adopt similar mechanisms.
