David Edwards
Yield-bearing stablecoins have experienced significant growth in 2025, with the market expanding from $1.5 billion at the start of the year to $11 billion, now representing 4.5% of the total stablecoin sector. This surge underscores growing demand for on-chain yield strategies in an era of elevated interest rates and increasing regulatory clarity.
Leading the charge is Pendle, a decentralized finance protocol offering tokenized yield solutions. Pendle has emerged as a dominant player, accounting for approximately 30% of the total value locked (TVL) in yield-bearing stablecoins—equivalent to around $3 billion. The protocol reports that 83% of its $4 billion TVL is now composed of stablecoins, up sharply from less than 20% a year ago. By contrast, assets like Ether, which once constituted the majority of Pendle’s TVL, now represent under 10%.
Traditional stablecoins such as USDT and USDC do not offer yield to holders. With over $200 billion of these assets in circulation and U.S. interest rates at 4.3%, Pendle estimates that holders are foregoing more than $9 billion annually in unrealized interest. This gap has driven growing interest in yield-generating alternatives.
The regulatory landscape in the United States has also contributed to this momentum. In February, the Securities and Exchange Commission approved yield-bearing stablecoins as regulated securities, allowing them to operate under defined rules related to registration, disclosures, and investor protection. This clarity has encouraged both issuers and investors.
Pending legislation, including the STABLE Act and GENIUS Act, further signals U.S. policymakers’ willingness to support stablecoin innovation under a transparent framework.
Pendle projects that overall stablecoin issuance could double to $500 billion within 18 to 24 months, with yield-bearing variants potentially reaching $75 billion—nearly 15% of the market. This would represent a more than six-fold increase from current levels.
Initially focused on speculative strategies like airdrop farming, Pendle is repositioning as a yield infrastructure layer for decentralized finance. The protocol plans to expand beyond Ethereum, with upcoming integrations on Solana, Aave, and Ethena’s Converge blockchain.
Ethena’s USDe remains the dominant stablecoin on Pendle, comprising 75% of its stablecoin TVL. However, alternative issuers such as Open Eden, Reserve, and Falcon have increased their collective share from 1% to 26% over the past year.
Interest in stablecoin yields is also extending into enterprise solutions. On May 19, Franklin, a hybrid payroll provider, launched Payroll Treasury Yield, a product designed to help businesses earn returns on idle payroll funds using blockchain-based lending protocols.
