Yield farming has become a full-time job.
People managing 8 different protocols, checking APRs every hour, worrying about impermanent loss…
Here's why yield-bearing stablecoins will eat traditional yield farming:
1/
Traditional stablecoins like USDC just sit there earning 0%.
While money market funds pay 4-5%.
That gap pushed builders to bolt yield engines onto digital cash. result: yield-bearing stables
Jumped from $660M to $12B in under a year.
2/
There are basically 5 ways these things generate yield:
- lending pool wrappers (aUSDC earning @aave rates)
- RWA-backed (USDM/USDY streaming T-bill income onchain)
- basis trading (spot long + perp short, collecting funding rates)
- protocol fees (scrvUSD capturing @CurveFinance fees)
- hybrid models (mixing all of the above)
@aave 3/
The magic happens in two ways:
Rebasing tokens increase your wallet balance (more tokens, same $1 price)
Value-accrual tokens keep balance fixed but price slowly rises ($1.002 → $1.005...)
Both work, just different UX trade-offs.
@aave 4/
But remember: APY ≠ guaranteed yield.
Dashboards annualize the last 24-48 hours. one spike can make 4% look like 15%.
That's why YPO (yield paid out) matters more than flashy APRs. shows actual dollars distributed, not time-based averages.
@aave 5/
Composability is also super interesting.
Pair two yield-bearing tokens in an AMM = swap fees + dual yield streams
Use sDAI as collateral, borrow USDC, buy more sDAI, repeat = leveraged yield
Meta-vaults automate the rotation between best-paying venues
@aave 6/
Risks are real tho:
Smart contract exploits, oracle failures, exchange risk for basis-trade models, rate volatility when markets go quiet.
Every extra hop in yield stacking adds complexity risk.
(remember to DYOR)
@aave 7/
But for most people? They don't want to manage 8 protocols.
They want to deposit USDC, earn yield in the background, spend with a card (@ether_fi cash). Done.
Complexity is the enemy of adoption.
@aave @ether_fi 8/
Cause honestly, most people don't care how their food is made.
They just want it to taste good.
Anyways, full breakdown at
Will be sharing more on stables, so follow along if this is useful.
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