🔎Stablecoins are booming💣
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In today’s newsletter:
🔎My bull thesis for stablecoins
📊 On-chain alpha
😂 Crypto meme of the week
🗞️ The latest DeFi news
🔎My bull thesis for stablecoins
The return to fundamentals is finally happening.
Just a few months ago, most people on Crypto Twitter (CT) were talking only about memecoins and which celebrity coin they should buy next.
Now, two of the hottest topics on CT are stablecoins and RWA.
I believe that stablecoins have tremendous upside potential and will eventually become a multi-trillion-dollar sector.
In this issue, I’ll cover why I’m bullish on the stablecoin sector, how to capitalize on their growth, and a few good yield opportunities for stables👇
The bull case for stablecoins
The stablecoin sector now has more tailwinds than ever before:
Friendly Regulation - The Trump Administration aims to sign legislation on stablecoins by August and believes they’ll expand the dominance of the US dollar
The world’s largest institutions will soon launch their own stablecoins - Fidelity, a $6 trillion asset manager, announced plans to do this earlier this week
Yield-bearing stablecoins are offering highly competitive yields - Sometimes, you can earn even up to 20-30% APR using certain dApps
I could go on and on and share a lot of other tailwinds.
But perhaps the most bullish thing for stablecoins is this:
The international payment fees charged by today’s most popular payment companies are outrageous.
Yet when opting to use stablecoins, this cost drops to almost 0.
And now that friendly legislation for stablecoins is coming in the US, I expect stablecoin adoption to surge.
How to capitalize on their growth
Get exposure to the tokens of the largest stablecoin issuers
Sounds simple in theory, doesn’t it?
The problem is that neither Circle nor Tether, which created USDC and USDT, has a token or a publicly traded stock that can be bought by retail investors.
Indeed, one idea would be to invest in the tokens of some stablecoin protocols like Ethena ($ENA) or MakerDAO/Sky ($MKR), as those protocols have attracted billions of dollars in TVL.
The issue, in my opinion, is that $ENA has a relatively high inflation rate, as only ~34% of its supply is currently in circulation.
MKR doesn’t have this problem, but it faces another issue:
Sky/MakerDAO’s TVL has been mostly stagnant for the past few years without benefiting much from the stablecoin boom.
However, it’s interesting to point out that on-chain data is showing that smart money has been accumulating ENA and MKR:
Besides stablecoin issuers, popular money markets like AAVE and dApps like Pendle might also benefit from the stablecoin boom.
I’m saying this because a large % of their TVL comes from stablecoins.
So, an increase in the total stablecoin supply could also lead to a surge in their TVL, fees, and revenue.
Farm the airdrops of the tokenless stablecoin protocols
There are actually quite a few new stablecoin protocols with live points programs.
A few ones I’m using + my yield strategies:
Resolv - A delta-neutral stablecoin protocol with a dual token model
USR is Resolv’s stablecoin, and RLP can be seen as its delta-neutral vault token that acts as USR's insurance in exchange for higher rewards.
To farm this airdrop, I swapped some USDC for USR on the Resolv app, and deposited it in the new HyperUSD vault.
HyperUSD is a new vault that automatically manages the deployment and optimization of liquidity across Hyperliquid DeFi.
Depositors earn 30x Resolv points + 9 other types of points from the Hyperliquid ecosystem dApps.
Before we continue, here’s an overview of the Scallop x Binance Wallet Yield Campaign:
Together with Scallop
PUT YOUR CAPITAL TO WORK WITH SCALLOP
Looking for a good yield opportunity for stablecoins?
Scallop, one of the most popular money markets on Sui, has just launched a campaign in collaboration with Binance Wallet.
By supplying USDC on Scallop through Binance Wallet, you can start earning a high yield on your capital in just a few clicks.
How to participate?
Log in to your Binance Wallet
Deposit USDC on Sui into your Binance Wallet
Go to [Earn] → [Simple Yield] → [Protocol] → [Scallop] → [USDC]
Click on [Supply Now] and deposit a minimum of 25 USDC
Once you see “Staking Successful”, the transaction is completed
Why participate?
$300,000 in incentives - $250,000 in USDC and $50,000 in SCA will be distributed as campaign incentives over the next 30 days
Get rewarded from multiple sources - On top of the campaign incentives, USDC suppliers will also earn Scallop’s lending APR
Trustworthy protocol - Scallop is the first DeFi protocol to receive an official grant from Sui Foundation
With Scallop, you can easily put your capital to work and earn an 11%+ APR.
Participate in the Scallop x Binance Wallet Yield Campaign!
Level Finance - The protocol behind lvlUSD, a stablecoin with DeFi-native yield
Level Finance’s lvlUSD is backed by USDC and USDT, which are automatically deposited into DeFi protocols like AAVE to generate yield.
By staking lvlUSD for slvlUSD, you’ll start earning that yield.
Personally, I provided some stablecoins as liquidity to Pendle’s slvlUSD pool to earn 14% APY + 20x Level points.
Level is backed by Dragonfly and Polychain, two well-known crypto VCs, so I’m pretty sure it will release a token at some point.
Coinshift - the first on-chain treasury network
Coinshift provides solutions for earning institutional-grade yield on stablecoins.
csUSDL is Coinshift’s yield-bearing stablecoin, which provides access to yields generated from US Treasuries and cash equivalents.
In just 4 months, csUSDL supply went from 0 to 35M.
And a few days ago, leveraged csUSDL farming went live on Gearbox.
By looping csUSDL up to 6 times, you can earn up to a whooping 46% APY (from T-bill yields and DeFi lending returns) + 6x SHIFT points.
If you start using Gearbox, make sure you manage your risk properly and don’t use excessive leverage in order to avoid getting liquidated.
OpenEden - A RWA tokenization platform with $154M in TVL
OpenEden has recently released USDO, a yield-bearing stablecoin that delivers real yield from tokenized U.S. Treasuries.
Its points program has also gone live a short time ago.
For farming its airdrop, my strategy is this:
Swap USDC/USDT to cUSDO on ParaSwap (on Ethereum L1) → Provide cUSDO as liquidity on Spectra (which is a yield trading protocol like Pendle)
Using this strategy, you’ll earn 18% APY + 5x OpenEden’s bill points.
To start accruing points, you also need to sign a message on OpenEden’s points program page.
Use stablecoins for consumer payments
Gone are the days when you could use stablecoins only for earning yield.
Right now, there are quite a few solutions that you can use to pay for your daily expenses directly with stablecoins without having to cash out first.
The best crypto card that I’ve tested so far is the Gnosis Pay card.
You might ask yourself:
“Why would I use a crypto card instead of a regular card?”
For me, there are quite a few reasons:
Self-Custody - For instance, Gnosis Pay is a self-custodial card solution, so when I use it, I have full control over my assets
No fees - To incentivize early adopters, many crypto cards, including Gnosis Pay, offer zero fees (no transaction fees, no foreign exchange fees, no off-ramp fees)
Especially when traveling, the 0 foreign exchange fees can save you lots of money.
Most banks aren’t crypto-friendly - This is making it very hard to sell crypto for fiat (especially when we talk about large amounts of money), and that’s why I prefer to cash out some of my crypto using a crypto card
Another interesting thing about Gnosis Pay is that you can also get a custom IBAN to send EUR to it, and convert fiat to crypto in just a few minutes.
I think that soon we’re also going to see the launch of some points programs that will incentivize the usage of crypto cards for everyday payments.
Whenever this happens, I expect the adoption of crypto cards and stablecoins as a payment solution for everyday purchases to explode.
I’m planning to try out more crypto cards and novel crypto payment solutions over the next few months. I’ll share my experience in future issues.
But one thing is clear to me:
Stablecoins, especially yield-bearing stablecoins, are going to be one of the fastest-growing sectors over the next few years.
On-chain Alpha🔎
Ethereum and its L2s hold over 80% of the total market share in the RWA sector
Crypto Meme😂
The latest developments in DeFi
BlackRock’s BUIDL fund has expanded to Solana
Chainlink partnered with Abu Dhabi Global Market to develop compliant tokenization frameworks in the UAE
Sonic announced the development of a high-yield algorithmic stablecoin that will offer an annual APR of up to 23%
Beraborrow introduced its token $POLLEN and scheduled its public sale on Fjord Foundry for March 28. Just a few days ago, Beraborrow's private sale sold out in just 10 minutes
Ethereum’s final testnet for the Pectra Upgrade has launched
dYdX launched its token buyback program. 25% of the net protocol fees started being allocated to monthly DYDX buybacks
Hyperliquid launched spot trading for ETH. Besides this, the exchange suffered an attack earlier this week due to market manipulation
Berachain’s Proof of Liquidity went live
Resolv announced plans to expand to new chains and add BTC as a backing asset for its stablecoin
CARV launched Infinite Play - a data-powered engine that rewards gamers while collecting data for game developers
Rysk finance introduced a new DeFi primitive that unlocks upfront yield on any asset
WorldLibertyFi announced plans to launch its own stablecoin
Kernel DAO (the project behind Kelp DAO) released its airdrop checker
Fidelity, a $5.8 trillion asset manager, filed for an on-chain U.S. Treasury fund
Polymarket has added support for Solana deposits
That’s all for this week!
Until next time,
The DeFi Investor
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