Yield-Bearing Stablecoin Market Surges 1300% in Two Years

The yield-bearing stablecoin market has experienced remarkable growth in recent years, with its total supply increasing 13 times in under two years. According to data from Stablewatch, the market cap of yield-bearing stablecoins surged from $666 million in August 2023 to $8.98 billion in May 2025, peaking at $10.8 billion in February 2025. This growth highlights the significant potential of yield-bearing stablecoins, which not only maintain a stable value but also generate returns for holders through investment strategies such as staking, lending, or investing in yield-generating assets like government bonds.

The total accumulated yield paid out has reached nearly $600 million, with an average payout of around $1.5 million per day. Leading projects in this space include Ethena’s sUSDe and Sky’s sUSDS and sDAI, which together account for 57% of the total yield stablecoin market capitalization, approximately $5.13 billion. The market now includes over 1,900 stablecoin pools spread across 465 protocols and more than 100 different chains, allowing investors to deposit stablecoins and earn yield.

Despite this impressive growth, yield-bearing stablecoins still represent only a small portion of the broader stablecoin market, which has a total market cap of over $244 billion. Jacek Czarnecki, co-founder of L2Beat, notes that yield-first stablecoins make up just 3.7% of the general stablecoin market. However, this small share also reflects the enormous growth potential of yield-stablecoins, as more investors seek passive income opportunities in the DeFi space.

One of the challenges facing the yield stablecoin sector is the lack of a standardized definition, which makes it difficult to categorize and evaluate these assets. Jacek Czarnecki suggests classifying stablecoins into two groups: payments vs. yield. This distinction could help shape dedicated legal frameworks for each type. Lawmakers are beginning to acknowledge this division, with the GENIUS Act in the US specifying that stablecoins offering yields or interest do not qualify as “payment stablecoins.” These stablecoins may instead be classified as securities, subject to oversight by the US Securities and Exchange Commission (SEC).

Meanwhile, the MiCA (Markets in Crypto-Assets Regulation) in the European Union prohibits interest payments on stablecoins altogether. This regulatory ambiguity and legal limitations have kept the yield stablecoin market from booming, attracting mainly insiders and early investors. However, the involvement of major financial institutions in the stablecoin sector suggests a more flexible stance from lawmakers in the future. To maintain momentum and ensure sustainability, projects must address key regulations, transparency, and risk management challenges.