From Market Demand to Exquisite Design: Exploring the Path of Stablecoin Issuance

The design concept of the interest-bearing stablecoin ( YBS ) is derived from the banking model, but many issues still need to be resolved in actual operation, such as the sources of user earnings, distribution methods, and long-term project operations. The collapse of DeFi projects is merely a norm in the financial industry, but the systemic risks of traditional banking require regulatory agencies to take swift action.

Era of Excessive Leverage

After the introduction of computer technology in the financial industry, quantitative speculation has gone through three stages: portfolio insurance, leveraged trading, and credit default swaps. In the current financial world, spatial arbitrage opportunities have significantly decreased, while regularization, small-scale, and decentralization have become mainstream. In terms of time dimension, long-term value preservation is no longer the focus, while leveraging, extremism, and speculation have become the main objectives.

In this context, the YBS project faces a dilemma: a yield that is too low is hard to attract funds, while a yield that is too high is prone to leading to a Ponzi scheme, ultimately collapsing at multiple stages. The essence of hedging is arbitrage, but it cannot avoid market momentum.

Products lack characteristics, US Treasury bonds become mainstream

YBS requires a strong asset reserve, and the credit leverage model is difficult to initiate. The fundamental reason why USD/U.S. Treasuries have become the mainstream choice for YBS is their seamless transferability in Web2 and Web3, which can maximize the profit of the yield portfolio.

There are mainly four forms in the selection of underlying assets:

1. U.S. Treasury/ U.S. Dollar Cash/ U.S. Dollar Related Assets
2. Mainstream On-chain Assets and Their Pegging Forms
3. USDT/USDC as underlying assets
4. Alternative forms, such as GPU computing power tokenization

In terms of the minting mechanism, the new era of YBS generally adopts a 1:1 full collateralization, while a few non-full collateralized products use credit or guarantee mechanisms.

The sources of income include two dimensions: the interest mechanism and stability. Taking Ethena as an example, its delta-neutral mechanism is composed of ETH spot and short positions for hedging, ensuring that USDe is pegged to the dollar at a 1:1 ratio, while the funding rate arbitrage of opening short positions serves as a source of interest.

There are two types of profit distribution mechanisms:

1. Value increases, quantity remains unchanged
2. Quantity increases, value remains unchanged.

Yield Competition, High Volume and Enthusiasm

The YBS project faces the challenge of balancing yield and capital scale. To address this, the project team needs to provide more yield options to create a flywheel effect.

Three perspectives on YBS yield formation:

1. Coin-based: stablecoin and sToken issuance data
2. Pool-based: Uses and interest data of stablecoins and sToken
3. Protocol Basis: The overall governance structure of stablecoins and sTokens.

The design of the reward system needs to balance between anti-witchcraft and genuine customer acquisition. Common reward methods include:

• Deposit: The longer you hold, the more points you earn.
• Staking: earn fewer points
• Commission: The more people you refer, the higher the commission.
• Specific behavior: interact with associated protocols

There are three main modes for market volume increase:

1. User outreach: KOL and media promotion
2. Off-chain legitimacy: endorsement by large enterprises
3. Endorsements by celebrities

There are differences in the calculation of financial indicators such as APR/APY among different projects, providing room for operation for project parties.

The YBS market is still a competition for yield data, and users need to actively explore specific strategies to amplify returns and participate in this gold rush.