The battle for profits has begun. How will emerging stablecoins challenge the billion-dollar profit monopoly of USDT and USDC?

Written by: Duo Nine

Compiled by: Tim, PANews

The stablecoin market is undergoing changes, as USDT and USDC do not return the profits they generate to users, but instead keep them for themselves.

This has provided an opportunity for other stablecoin competitors.

Now let's take a look at the three project cases below, and more cases are in preparation.

The current market share of stablecoins is approximately 250 billion USD, with USDT accounting for 62% and USDC for 24%. Together, they make up 86% of the total market value of stablecoins.

What problems do they have?

USDT and USDC do not pay any returns to their holders; all dollar assets used as collateral are invested in U.S. Treasuries, which can generate an annual yield of about 4%, and these returns belong entirely to Tether and Circle, not to the users.

You can imagine that in 2024, Tether became the most profitable company in the world, generating over $50 million in profit per employee, and by 2025, this figure approached $60 million. This makes Tether the most profitable bank that actually exists.

However, this is also an obvious weakness.

Token holders cannot obtain any returns, and they will certainly strongly demand the right to control these returns. This is an excellent entry point for other stablecoins aimed at sharing profits with users. The following three cases can support this viewpoint.

1. Resolv, USR—8.6% annual yield

Resolv has two key products.

USR: A stablecoin fully backed 1:1 by Bitcoin and Ethereum.

RLP: Resolve Liquidity Pool Token

Annualized returns can be generated through the hedge positions of Bitcoin and Ethereum as shown in the following text.

USR has 168% of collateral assets as security, therefore the risk is very low. Its greatest risk lies in the potential loss of its peg to the US dollar, but this has never happened to date. An average annualized return of 8.65% is twice that of the AAVE platform, making its performance noteworthy.

RLP is a token that accumulates value through yield and drives price appreciation over time. Its yield comes from excess collateral being leveraged into the same market-neutral strategy. RLP has a high-risk profile, and if market conditions are unfavorable, the token price may also decline.

RLP acts as a buffer and protection layer for USR, where RLP depositors take on higher risks in exchange for higher returns, while USR users are protected. This design mechanism is quite fair.

Advantages of USR

Yield superior to AAVE

Fully backed by BTC and ETH

High Transparency

Protected by the RLP mechanism in unfavorable market conditions

Zero minting and redemption fees

Support for instant staking and unstaking without a lock-up period.

Disadvantages of USR

This service is only available on the Ethereum network, which may result in higher fees.

Users must stake USR tokens to earn rewards.

2. Noble Dollar, USDN—4.1% annual yield

Noble Dollar is a product launched by m0, and its core feature is that users can earn a 4.1% yield on U.S. Treasury bonds based on the USDN stablecoins they hold, without the need for locking or staking operations. In short, users' wallets will automatically receive additional USDN every day, equivalent to a free airdrop.

Although the current use cases for USDN are limited, it is about to gain support in multi-chain ecosystems such as Ethereum and its layer 2 networks. Imagine the scenario of staking USDN in AAVE: users can not only earn the default 4% base yield but also earn an additional 4% to 5% in AAVE incentive rewards.

The potential applications of this digital dollar are endless. If this dollar is successfully implemented in the future, USDT and USDC may be affected.

The advantages of USDN

Substantial returns backed by U.S. Treasury bonds

High transparency

No need to stake

Daily Settlement Earnings

You can purchase with fiat currency on their website.

The native cross-chain bridge allows for easy transfer of USDC.

The disadvantages of USDN

Current application scenarios are limited (will be improved in the future)

The yield is lower than that of competitors like Resolv.

3.infiniFi, iUSD—8.5% to 16% annual yield

InfiniFi belongs to a new generation of "stablecoins" that can offer different yield rates based on user interests and risk preferences. To obtain 1 iUSD, 1 USDC must be deposited, which will be used to invest in diversified yield strategies.

If users want to withdraw USDC at any time for instant liquidity, the yield will be lower. However, if the locking period for iUSD is extended, the protocol can adopt more advanced USDC strategies to achieve higher returns. Although the risks increase accordingly, the higher yield may compensate for this.

The current interest rate for non-locked periods is approximately 8.5%. However, if users are willing to lock iUSD for 4 weeks or longer, the yield can reach up to 16.4%.

Overall, I do not recommend locking up funds for several weeks. This is because once a problem arises, you will find yourself in a passive position. However, this practice is reasonable for stablecoin investments. To some extent, it is similar to the model of short-term bank deposits.

The mechanism of iUSD operates as follows: Users lock iUSD for a period of one to several weeks, which can provide protection for users who keep iUSD in a liquid state (not locked). If there is an anomaly in the system, the users with the highest earnings will bear the losses first. This is similar to the model where Resolv RLP users provide protection for USR holders. Why is this mechanism crucial?

Imagine a scenario: everyone holding iUSD wants to withdraw and get back their USDC. However, only when there is sufficient liquidity can those holding liquid iUSD exit first.

If there is insufficient liquidity (due to a large amount of USDC being locked in various long-term strategies), then iUSD may lose its 1:1 peg to USDC or incur losses. This is because early withdrawal from the locked USDC strategies, which can last up to 8 weeks, may incur additional costs.

These losses will primarily be borne by the users with the longest locking period. In principle, this mechanism can maintain the pegged exchange rate of iUSD and protect the holders of liquid iUSD. However, if the liquidation speed is insufficient, black swan events may still cause iUSD to decouple and fluctuate.

In general, as long as InfiniFi does not hold a large amount of USDC or suffer significant losses in its strategies, the risks are relatively low. However, if the DeFi protocol used in its long-term strategy (such as Ethena) is compromised or drained of funds, the risks will escalate. At that time, iUSD users who adopt the locking mechanism will suffer heavy losses, and may even lose their principal.

Advantages of iUSD

Ultra High Yield

High Transparency

The minimum yield tier can also have instant liquidity.

High yield files support low yield.

Suitable for different risk preference groups

Disadvantages of iUSD

This is not a true stablecoin, but a receipt certificate for USDC deposits.

The risk of insufficient liquidity, meaning there is not enough USDC to meet redemption requests.

Once liquidity dries up, iUSD may "depeg".

High-risk strategies may lead to returns that do not meet expectations or even result in the loss of principal.

This product is linked to the potential risks associated with all DeFi platforms used to generate returns.

When investing in new protocols like this, I recommend testing with a small amount of funds first, and make sure to wait until the bear market is over before investing larger amounts. These new types of protocols must undergo stress testing to complete market validation. Taking InfiniFi as an example, their protocol operates more like a hedge fund that absorbs user funds for investment.

On the other hand, it is crucial to pay attention to the development of these new tracks. Various protocol combinations can not only provide diversified options but also allow users with different risk tolerances to achieve specified return targets through platter combination strategies at their own comfortable risk levels.