Four Cent's Ambition: How DeFi is disrupting the stablecoin market through verticalization

Original author: Prathik Desai

Original compilation: Block unicorn

billions of dollars are up for grabs, but the final return is only about four cents. That's the return every dollar of U.S. Treasury bonds produces each year.

For nearly a decade, decentralized finance (DeFi) protocols have relied on USDT and USDC as the backbone of their offerings while allowing Tether and Circle to capture yields from their reserves. These companies make billions of dollars in profits through the world's easiest way to earn. But now, DeFi protocols want to reap this part of the gain themselves.

Stablecoin leader Tether currently holds over $100 billion in reserves, generating over $4 billion in interest income. That's more than Starbucks' total profit of $3.761 billion from selling coffee worldwide in the previous fiscal year. And USDT issuers have achieved this simply by investing their reserves in U.S. Treasuries. Circle took the same approach when it...

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