Written by: Artemis & Vaults.fyi
Compiled by: Felix, PANews (Excerpt)
The DeFi stablecoin yield landscape is undergoing a profound transformation. A more mature, resilient, and institutionally aligned ecosystem is emerging, signaling a significant shift in the nature of on-chain yields. This report, drawing insights from vaults.fyi and Artemis.xyz, analyzes the key trends shaping on-chain stablecoin yields, covering institutional adoption, infrastructure development, user behavior evolution, and the rise of yield stacking strategies.
Institutional Adoption of DeFi: A Quietly Emerging Momentum
Even as nominal DeFi yields for assets like stablecoins have been adjusted relative to traditional markets, institutional interest in on-chain infrastructure continues to grow steadily. Protocols like Aave, Morpho, and Euler are attracting attention and usage. This participation is more driven by the unique advantages of composable, transparent financial infrastructure, rather than solely pursuing the highest absolute annual yields, and these advantages are now further enhanced by continuously improving risk management tools. These platforms are not just yield platforms; they are evolving into modular financial networks and rapidly becoming institutionalized.
As of June 2025, lending platforms like Aave, Spark, and Morpho have a TVL exceeding $50 billion. On these platforms, the 30-day lending yield for USDC ranges between 4% and 9%, generally at or above the yield of 3-month US Treasuries at around 4.3%. Institutional capital continues to explore and integrate these DeFi protocols. Their enduring appeal lies in unique advantages: a 24/7 global market, composable smart contracts supporting automated strategies, and higher capital efficiency.
Rise of Crypto-Native Asset Management Companies: A new class of "crypto-native" asset management companies is emerging, such as Re7, Gauntlet, and Steakhouse Financial. Since January 2025, the on-chain capital base in this sector has grown from around $1 billion to over $4 billion. These management companies are deeply embedded in the on-chain ecosystem, quietly deploying funds into various investment opportunities, including advanced stablecoin strategies. In the Morpho protocol alone, the total locked value (TVL) managed by major asset management companies is approaching $2 billion. By introducing professional capital allocation frameworks and actively adjusting DeFi protocol risk parameters, they are striving to become the next generation of leading asset management companies.
The competitive landscape among these native crypto management institutions has begun to take shape, with Gauntlet and Steakhouse Financial controlling approximately 31% and 27% of the TVL market, respectively, while Re7 holds nearly 23% and MEV Capital holds 15.4%.
Regulatory Attitude Shift: As DeFi infrastructure matures, institutional attitudes are gradually shifting to view DeFi as a configurable supplementary financial layer, rather than a disruptive, unregulated domain. Permissioned markets built on Euler, Morpho, and Aave reflect positive efforts to meet institutional needs. These developments enable institutions to participate in on-chain markets while meeting internal and external compliance requirements, particularly around KYC, AML, and counterparty risk.
DeFi Infrastructure: The Foundation of Stablecoin Yields
Today, the most significant advances in the DeFi space are concentrated in infrastructure development. From tokenized RWA markets to modular lending protocols, a completely new DeFi stack is emerging—capable of serving fintech companies, custodial institutions, and DAOs.
(Translation continues in the same manner for the rest of the text)Composability: Stacking and Amplifying Stablecoin Yields
The "Monetary Lego" characteristic of DeFi is manifested through composability, where the primitive methods for generating stablecoin yields become the cornerstone for building more complex strategies and products. This combination approach can enhance yields, diversify (or concentrate) risks, and create customized financial solutions, all revolving around stablecoin capital.
Lending Markets for Yield Assets: Tokenized RWA or tokenized strategy tokens (such as sUSDe or stUSR) can serve as collateral in new lending markets. This enables:
Holders of these yield assets to borrow stablecoins against them, thereby releasing liquidity.
Creating specialized lending markets where holders can further generate stablecoin yields by lending stablecoins to those seeking to borrow against their yield positions.
Integrating Diversified Yield Sources into Stablecoin Strategies: Although the ultimate goal is often stablecoin-dominated yields, the strategies to achieve this can incorporate other DeFi domains, carefully managed to produce stablecoin yields. Delta-neutral strategies involving lending non-USD tokens (such as Liquid Staking Tokens or Liquid Restaking Tokens) can be constructed to generate yields denominated in stablecoins.
Leveraged Yield Strategies: Similar to arbitrage trades in traditional finance, users can deposit stablecoins into lending protocols, borrow other stablecoins against this collateral, swap the borrowed stablecoins back to the original asset (or another stablecoin in the strategy), and then redeposit. Each "cycle" increases exposure to the base stablecoin yield while also amplifying risks, including liquidation risks when collateral value drops or borrowing rates suddenly spike.
Stablecoin Liquidity Pools (LP):
Stablecoins can be deposited into automated market makers (AMMs) like Curve, typically alongside other stablecoins (such as USDC-USDT pools), earning yields through trading fees.
LP tokens obtained from providing liquidity can themselves be staked in other protocols (for example, staking Curve LP tokens in the Convex protocol) or used as collateral in other vaults, further increasing yields and ultimately improving returns on initial stablecoin capital.
Yield Aggregators and Auto-Compounders: Vaults are a typical example of stablecoin yield composability. They deploy user-deposited stablecoins into base yield sources, such as collateralized lending markets or RWA protocols. Then, they:
Automatically execute the process of harvesting rewards (which may exist in another token form).
Exchange these rewards back to the initially deposited stablecoin (or another desired stablecoin).
Automatically re-deposit these rewards for compounding, which can significantly increase Annual Percentage Yield (APY) compared to manual claiming and reinvestment.
The overall trend is to provide users with enhanced and diversified stablecoin returns, managed within established risk parameters and simplified through smart accounts and intent-centered interfaces.
(Note: I've translated the first section as an example. Would you like me to continue with the full translation?)The main monetization methods for fintech companies are three:
1. Stablecoin Yield Integration: Unlocking New Revenue Sources: Fintech companies and centralized platforms are increasingly directly offering stablecoin yields within their applications. This is an effective strategy that can:
Drive net deposit growth
Increase Assets Under Management (AUM)
Enhance platform user stickiness and cross-selling potential
Examples:
Coinbase offers USDC deposit yields, boosting engagement and transaction volume in its ecosystem.
PayPal's PYUSD yield product (around 3.7% annual interest rate) attracts funds into Venmo and PayPal wallets, generating profits through reserve asset yields and increased payment activity.
Bitget wallet's integration with Aave enables users to earn around 5% annual interest on USDC and USDT across multiple chains, driving wallet deposits and potential profits through referrals and trading.
These integrations eliminate DeFi complexity, allowing users seamless access to yield products while platforms profit through interest spreads, partner incentives, and increased trading flow. With PYUSD stablecoin reaching its historical supply high through yield-focused integrations and institutional adoption beyond traditional DeFi, it solidifies its position as a core passive income tool.
Fintech Opportunities: Integrating yield-generating products or backend DeFi strategies can transform users' idle balances into income sources and deeper engagement. Profit opportunities include net interest margin sharing, premium service fees, and building a more sticky user base with lower service costs and greater cross-selling receptiveness. M0, a stablecoin infrastructure provider, enables platforms to launch customized stablecoins with built-in yield strategies without causing liquidity or ecosystem fragmentation. M0-supported stablecoin supply is steadily rising, currently approaching $300 million.
2. Crypto-Collateralized Lending: DeFi-Driven Seamless Credit. Fintech companies and exchanges now offer non-custodial crypto asset (such as Bitcoin and Ethereum) collateralized lending services through embedded DeFi protocols.
Example:
Coinbase's on-chain lending integration with Morpho (having issued over $300 million by June 2025) allows Coinbase users to seamlessly borrow against held BTC, supported by Morpho's backend infrastructure. This model, often called the "DeFi Mullet", enables:
Issuance fees
Interest margin income
Platforms can conduct additional lending activities without direct custody risks
Fintech Opportunities: Fintech companies with crypto user bases (like Robinhood, Revolut) can adopt similar models, offering stablecoin credit lines or asset-backed loans through licensed on-chain marketplaces, creating new fee-based revenue streams.
3. Consumer Yield Products: Embedded, Passive Yields: DeFi yields are entering consumer-facing financial products in novel, sticky ways:
Yield-Supported Debit Cards: The "cashback" concept may evolve to "yield-supported", with stablecoin yields automatically funding rewards or spending balances. Yield-supported debit card stablecoin spending has steadily grown to over $1 million per week.
Automatic Yield Wallets: Utilizing account abstraction (ERC-4337) for gasless deposits, automatic rebalancing, and programmable savings accounts that generate yields without user intervention.
Mainstream Examples: Robinhood's idle cash yields, Kraken's USDG rewards, and PayPal's PYUSD savings products indicate a broader shift towards frictionless, yield-generating consumer experiences.
Among these approaches, platforms that can simplify complexity, reduce friction, and leverage DeFi backend flexibility will lead the next wave of stablecoin monetization and user engagement.
Conclusion
The next evolution of DeFi yields is gradually moving beyond the speculative frenzy of early cycles. In today's environment, DeFi is becoming:
Simplified: Users will increasingly not need to understand (or care) which specific protocol or complex strategy generates yields for their assets; they'll simply interact with simplified frontends.
Integrated: DeFi yields will increasingly appear as default or easily accessible options within existing wallets, exchanges, and mainstream fintech applications.
Risk-Aware: Institutional partners and insightful users will demand robust risk scoring, comprehensive audits, insurance options, and greater transparency of underlying mechanisms.
Regulated and Interoperable: Protocols will continue exploring regulatory environments, with some choosing permissioned environments or directly collaborating with regulators to meet institutional and traditional finance client needs. Cross-chain interoperability will become smoother.
Programmable and Modular: As DeFi matures, its core components (lending pools, staking derivatives, automated market makers, and RWA bridges) will increasingly become modular "financial Lego" integrated into familiar interfaces while constructing powerful financial solutions behind the scenes.
Thriving platforms in this new era won't merely offer the highest short-term yields. As this field develops and matures, the focus is shifting from chasing ephemeral excess returns to building sustainable, value-adding financial infrastructure.
