Table of Contents
- USDe and USDS Become the Biggest Beneficiaries
- ENA Token Soars with Strong Yield Incentives
- Stablecoin Market Continues to Expand
- Can Third-Party Platforms Offer Rewards?
USDe and USDS Become the Biggest Beneficiaries
According to data from DefiLlama, since July 18, the issuance of Ethena’s USDe has surged by 70%, reaching 9.49 billion tokens, with its market capitalization rising to third place in the stablecoin market. Meanwhile, Sky’s USDS issuance has grown by 23%, reaching 4.81 billion tokens, ranking fourth by market capitalization.
Holders of these two stablecoins are required to stake them within their respective protocols to earn yields; the issuers do not directly distribute interest to wallet holders. In other words, although legislation has restricted issuers from providing yields, investors can still circumvent the prohibition through internal mechanisms of the protocols to profit indirectly.
ENA Token Soars with Strong Yield Incentives
Driven by the significant increase in USDe supply, Ethena’s governance token ENA has risen nearly 60% since mid-July, currently priced at $0.58. Anthony Yim, co-founder of crypto analytics firm Artemis, stated on X:
CryptoQuant’s research director Julio Moreno added that the GENIUS Act’s prohibition on issuers directly providing yields has further prompted investors to turn to stablecoins like USDe and USDS, which can generate profits through staking.
As of June, the inflation rate in the U.S. stands at 2.7%. In contrast, the annualized yield (APY) for staked sUSDe is 10.86%, while sUSDS offers 4.75%. Adjusted for inflation, the real yields for both are 8.16% and 2.05%, respectively.
This indicates that even though the law prohibits direct yield offerings, investors still prefer stablecoins with built-in yield mechanisms as alternatives for hedging and passive income.
Stablecoin Market Continues to Expand
According to DefiLlama data, the overall market capitalization of stablecoins has grown from $205 billion at the beginning of the year to the current $268 billion, marking an increase of 23.5%. Moreno estimates that if this growth trend continues, the total could approach $300 billion by the end of the year.
However, Temujin Louie, CEO of Wanchain, believes that traditional financial institutions promoting asset tokenization may suppress further growth of stablecoins. He pointed out:
It is worth mentioning that despite the GENIUS Act prohibiting interest payments on stablecoins to users, certain platforms continue to offer stablecoin rewards to users. Coinbase and PayPal still provide USDC and PYUSD rewards, with annualized yields of approximately 4% and 3.7%, respectively. During last week’s earnings call, executives from both companies assured shareholders that they would continue to provide attractive “reward programs” for stablecoin holders.
In response to a shareholder’s question, Coinbase CEO Brian Armstrong firmly stated that they will continue to offer stablecoin rewards in the future, emphasizing that this is one of the reasons users choose Coinbase:
In this regard, a Senate aide confirmed to the media that the bill only regulates stablecoin issuers and not the secondary market or holding platforms. The aide also noted that the restriction on stablecoin issuers offering interest products is intended to prevent confusion between stablecoins and traditional bank deposit products.
Although PYUSD is PayPal’s native stablecoin and includes “PayPal” in its name, it is actually issued by a third-party company, Paxos, meaning that PayPal is similarly not subject to the ban.