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What is a yield-bearing stablecoin?
A yield-bearing stablecoin is a dollar-pegged token, or a wrapper around one, that passes income to its holders, typically from interest on reserves, lending or trading strategies. Either the holder's balance grows, or each token becomes redeemable for more of the stablecoin over time.
What it means for you
The yield comes from somewhere, and each source adds a risk a plain stablecoin does not carry. In the US, the GENIUS Act bars permitted payment stablecoin issuers from paying holders interest just for holding, so yield usually reaches people through an exchange, a vault or a separate product, on that party's terms.
How it works
A common on-chain form is a vault: you deposit stablecoins and receive shares, and as the vault earns, each share converts to more of the underlying stablecoin. ERC-4626 standardises this, with deposit and redeem functions and a convertToAssets view showing what a share is worth. Off-chain, some issuers pass part of their reserve interest to an exchange, which pays rewards to customers holding the coin there. The US GENIUS Act of 2025 prohibits a permitted issuer from paying yield solely for holding, but a Congressional Research Service note says it does not explicitly stop exchanges from paying rewards.
Sources: ERC-4626: Tokenized Vaults, Congressional Research Service: The Stablecoin Yield Debate (2026) · checked 4 October 2026
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