Dude, Where's My (Stablecoin) Yield?

Key Insights

• Pendle USDe and sUSDe pools offer the best return on stablecoins with APYs around 30%, driven by expectations surrounding the second Ethena airdrop.
• Anyone who believes Morpho will launch its token at an FDV of at least $4 billion would find the yields on Morpho’s USDA vaults compelling.
• Staking GHO in Aave’s Safety Module also offers a competitive yield driven by Aave’s Merit Program, which had an APY of 35% last month. However, depositors will take on slashing risk if the protocol incurs bad debt.
• BounceBit’s integration with Ethena gives users access to Ethena sUSD yield while also earning BounceBit rewards.

Introduction

Over the past few weeks, I’ve been trying to figure out where I could find the best yield on stablecoins, a task which is becoming increasingly difficult due to an influx of yield sources. These include lending, providing liquidity on spot and perpetual DEXs, RWAs, and airdrop/incentive farming. It is clear that the highest yields across the space are through incentive farming and the opportunity to earn a portion of future token distribution. However, there are a limited number of opportunities to farm incentives passively, as most incentive programs are activity-based rather than liquidity-based, meaning users need to be active in interacting with the protocol to earn a decent return.