Gains on the chain: from interest-bearing stabilizers to encrypted credit products
Author:TurboIOSG & James
TL;DR
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A stable currency-based fixed-income product in Bear City will be preferred
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THE WHOLE PRODUCT OF THE COW MARKET ROSE, BUT THE BEAR MARKET SHOWED A MARKED DIFFERENCE. IN BEAR CITY, INVESTORS TEND TO BE MORE STABLE IN TERMS OF RETURNS AND LOWER DOWNSIDE RISKS, WHICH BOOST THE GROWTH OF INTEREST-BEARING STABLE CURRENCIES
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protocol forward and backend development
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The large DeFi protocol starts to build its own wallet and mobile applications to control traffic entry. The encryption industry is entering its era of application and retail users can access financial services through mobile applications
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New L1/L2 and DeFi demand for their own stable currency will drive interest-bearing agreements to the “back-end” model, generating huge demand for interest-bearing agreements
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Interest rate reduction, declining returns on national debt and substitutionRWARise of revenue sources
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THE EXPECTED REDUCTION IN INTEREST RATES WOULD LEAD TO A DECLINE IN THE RATE OF RETURN ON NATIONAL DEBT. THIS WILL HELP STABILIZE THE CURRENCY AND BRING THE BROADER RWA ASSETS TO THE BOTTOM
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Real-world operations and financial products could be a solid source of income and could be a special advantage of the interest-bearing agreement even at a weaker front end。
I. Overview of gains on the current chain
We have studied 18 chain-based revenue products covering a wide range of revenue sources. Includes monetized national debt and its derivatives, primary pledge (ETH/SOL), liquid pledge coins (LSTs) such as Lido and Jito, interest-bearing stabilization currency (sUSDE, SyrupUD), protocol revenue-sharing model (JLP, SKY), DeFi strategy and eco-incentives (Lido GgV, SIUD/LIUD, asBNB), DEX LP (DEX LP)UniswapI'm not sure if I'm going to be able to do this. For each product, the dimensions of ASY, liquidity, timing of withdrawals and major risks are assessed。
SOURCE: IOSG; DATA AS OF NOVEMBER 2025, USP, SIUSD, LISD, JANUARY 2026
Source: Surf
Proceeds model
There are eight different mechanisms for chain gains, each with different benefits, risk and market-impact sensitivity:
The Consensus Incentive (ETH/SOL pledge, LST) provides stability and the agreement level guarantees the proceeds. Capital-rate arbitrage and agreed income are influenced by the market cycle, with strong cattle and a condensed bear market. Loans and RWA gains introduce the risk of a countervailing exercise but are also relatively stable. LP can capture transaction costs. DeFi strategies and eco-incentives aggregate multiple agreement gains, with smart contract risks。
Risk layer
The product has four main dimensions of risk:
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Agreement risk: technology risk, including smart contract risk
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Participants risk: reliance on markets for centralized entities or lower-chain participants
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Strategy risk: Portfolio of asset price fluctuations or tactical issues
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Liquidity risk: TVL DEPTH AND WITHDRAWAL MECHANISM
At the very low risk level, there are monetized national debt and mature borrowing. Low-risk products such as primary pledge and flow-based derivatives introduce smart contractual risk, but their code is very mature and low risk. The medium-risk product increases the complexity of the agreement through the DeFi strategy aggregate or the agreed income-sharing, while at the same time facing the risk of currency price fluctuations and income movements. High-risk products are subject to multiple overlaps and risks, the capital rate strategy is subject to reduced returns in bear markets, market Vault is exposed to market manipulation risks, and the emerging RWA agreement introduces third-party participants, leading to problems of opacity and limited liquidity。
Key findings and the future of chain gains
Stable currency-based/relative fixed-interest-rate product is the bear market ' s preferred option
WE ANALYZED IN DEPTH THE PERFORMANCE OF TVL AND ASY OF DIFFERENT PRODUCTS IN BEAR CITY。Selectit's a steth(Leds), JitoSOL (Leds), SUSDS (Led), WETH/USDT(Uniswap DEX LP), SyrupusDC (Maple Borrowing) and sUSDE (Ethena Finance Rate Strategy) represent different revenue products. Cow City is about June to October, after which the market turned bear。
Source: DeFiLlama
ACCORDING TO TVL DATA, ALL PRODUCTS DURING THE COW MARKET HAVE INCREASED。But in Bear City, the TVLs for steth, sUSDE and JitoSOL are down and the TVLs for sUSDS and SyrupusDC are up。
Source: DeFiLlama
WETH/USDT pool and stETH ASY are relatively stable in different market environments. There has been a decline in ASY in JitoSOL, SyrupusDC, sUSDE and sUSDS, with significant decreases in sUSDE and SyrupusDC. The chart also shows that the higher the ASY the higher the product volatility. The sUSDS APY is more governance-driven than market-driven and therefore remains stable for most of the time。
Overall, revenue products based on stable currency in bear towns will attract more attention and more liquidity。REVENUE PRODUCTS SUPPORTED BY NON-STABILIZED CURRENCY MAY EXPERIENCE A FALL IN TVL IN THE BEAR MARKET DUE TO A FALL IN THE PRICE OF LOWER ASSETS. INVESTORS ARE ALSO INCLINED TO BE MORE STABLE IN TERMS OF RETURNS AND LOWER DOWNSIDE RISK, WHICH ALSO CONTRIBUTES TO THE GROWTH OF THE INTEREST-BEARING STABLE CURRENCY TVL。
In bear markets, products with a relatively fixed interest rate are a more reasonable option。Although sUSDS is not market-driven, its ASY is stable and predictable in the medium term. The ASY of sUSDE is too volatile by market conditions and is likely to decline significantly in Bear City and is therefore not an ideal option。
THIS ALSO SUGGESTS THAT LOOKING AT APY ALONE DOES NOT FULLY REFLECT POTENTIAL RETURNS IN ASSESSING THE OPPORTUNITIES FOR RETURNS IN THE CHAIN。Bottom assets play a key role in determining actual performance, particularly for products such as JLP (SOL, BTC, ETH), asBNB and SKY. In such cases, currency price fluctuations often exceed ASY itself, making asset selection as important as the rate of return. However, some investors can mitigate this risk by hedge strategies, such as emptying bottom assets on CEX or DEX, to isolate bottom asset price volatility and capture only interest earnings。
protocol forward and backend development
In the past, through 4 per cent of the national debt, the stabilization currency was an excellent cash flow business. However, the revenue-based stabilizer is the product of sharing almost 100 per cent of the national debt to users, which poses some challenges to the traditional stabilizer. Since 2024, the market share of interest-bearing stable currencies has steadily increased. If we look at the supply of the third-highest primary-income and third-highest primary-income-stabilized currencies (USDT, USDC, PYUSD, USDe, USDS, USDY), the market share of the stable currencies with primary-income rose from 0.1 per cent to 7.6 per cent, peaking at 11.5 per cent。
It's not like it's a good idea
That's why many of the DeFi protocols began to control the traffic entrance and tried to establish their own distribution channels。Many large DeFi protocols are building their own wallets or moving applications to control access。
This also shows a trend: the encryption industry is entering the era of application。Retail users can access financial services through mobile applications, which are easier for Web2 usersWeb3Introduction. These applications can also provide help-free linguistic services to lower the learning threshold。
The L1 and DeFi project's demand for its own stable currency will be an important catalyst for the future growth of interest-bearing agreements. Interest-bearing agreements may also be pushed to the “back-end” mode。
GIVEN THE CURRENT STABLE CURRENCY SUPPLY, IF ALL L1 BLOCK CHAINS DEPLOY THEIR OWN STABILIZATION CURRENCY INSTEAD OF RELYING ON USDT OR USDC, THEIR REVENUES COULD INCREASE BY TWO TO THREE TIMES。This is a major incentive for project participants. It is clear that MegaETH, Jupiter, Hyperliquid, and BNB are making their own stability coins, which will bring great demand for interest-bearing agreements。
Ethena has seen this trend. They provide a stable currency or service (Stablecoin-as-a-Service), which brings national debt gains to these projects. Agreements and chains can generate significant and stable revenue streams by deploying their own stable currencies。
Source: DeFiLlama
INTEREST RATE REDUCTION, DECLINE IN NATIONAL DEBT GAINS AND SUBSTITUTION OF RWA REVENUE SOURCES RISE
As a result of monetary policy in the United States, the chain pattern of gains will also change。
Source: FOMC
President Trump nominated Kevin Warsh to replace Powell as Chairman of the Federal Reserve and, if approved, is expected to complete the handover in May 2026。
The nomination of the new Fed Chairman is expected to accelerate the interest rate reduction process, leading to a decline in the return on the United States Treasury (T-Bill)。
Source: FOMC Parties' assessments of application Montalary policy: Midpoint of target rangeor target level for the fderal funds rat; Dec 10th 2025
This will lead to a stabilization currency that integrates broader RWAs assets into the bottom assets, thereby diversifying their bottom assets。
Figure's PRIME is a typical case of chaining HELOC proceeds. The HELOC (Housing Net Value Credit Line) is a loan that allows homeowners to borrow, consume and repay on demand on mortgage. PRIME currency holders finance HELOC loans with a fixed return of 8 per cent。
Source: Kamino
There is also a chaining of real-world operations as a source of revenue。USDai is the way to chain GPU finance. USDai ' s proceeds are from the borrower ' s loan repayments, specifically the monthly repayments made by the GPU infrastructure operator after the acquisition of financing through the mortgage of GPU hardware。
THERE IS ALSO GROWING INTEREST IN PRIVATE CREDIT, WHICH IS ALSO AN ATTRACTIVE AND SOLID SOURCE OF INCOME FOR APY。Projects such as Craft and Pareto allow users in the chain to earn income by lending assets to institutions and businesses. Such gains are also underpinned by solid and realistic operations。
These examples show that real world operations and financial products can be a solid source of revenue。Even in situations where the front end is weaker, this can be the special advantage of interest-bearing agreements。
The source of the benefits of encryption is also becoming increasingly important in highly competitive markets。Products that provide exclusive revenue streams are of particular value. For example, asBNB provides the Binance Launchpad yield exposure, which is a source of income available only within the BSC ecology。
Similarly, income-sharing models are attractive when they are underpinned by transparent income fundamentals。THE SUCCESS OF JLP AND HLP SHOWS THAT USERS ARE WILLING TO INVEST FUNDS IN PRODUCTS THAT DIRECTLY SHARE THE PROCEEDS OF GENUINE AGREEMENTS。
Institution adoption of chain gains: end-to-end services and Crystal credit products (priority shares)
As institutions adopt waves, many may try to capture chain gains or encrypt revenues. The key is to provide end-to-end services。
End-to-end services for the DeFi protocol
For example, Ether.fi provides an institutional pledge service with end-to-end asset management at its core。They offer both non-trust and custodial pledge options, as well as a service called White Glove, an end-to-end pledge service that provides a controlled environment and includes annual audits, KYC compliance and monthly statements. The ETH Fund is also the CIMA Registered Fund. In addition to the pledge, the institution may also participate in the fixed proceeds of DeFi lending and other agreements。
Priority shares are based on a “national debt” of Crypto, which is an important way of distributing encryption proceeds to institutions
DAT's preferred shares, as a way for institutions to reap the benefits of the chain, are actually underestimated and, in essence, are based on a credit-debt asset of Crypto, and national debt is a similar product. The national debt was a debt created on the basis of national credit and capacity, while DAT created a credit market on the basis of Cripto assets, and the preferred share was a credit debt product created on the basis of that credit market。Priority shares provide encryption gains to traditional institutions through dividends. There are two main types of proceeds: long-term CAGR and DeFi proceeds, including pledge。
Strategy ' s STRC provides an annualized 11.5 per cent dividend that can be paid in monthly cash and traded on most mainstream voucher platforms。Strategy is based on bitcoin's CAGR. The assumption is that BTC is an inflation-resistant asset and that the real inflation rate is about 8 per cent. STRF and other similar priority stock products such as STRD and STRK bring returns on inflation-resistant components to investors. Investors could also choose a STRK of 8 per cent of earnings, with the opportunity to convert to MSTR to capture more bitcoin rise space。
Base information about STRC; source: Strategy
THERE ARE SIMILAR ANTI-INFLATION PRODUCTS IN TRADITIONAL FINANCE, SUCH AS TIPS (INFLATION SECURITY BONDS ISSUED BY THE GOVERNMENT). TIPS DECLINES WITH INFLATION AND DEFLATION. THEY WILL ADJUST TIPS USING THE CPI (CONSUMER PRICE INDEX) OF THE US BUREAU OF LABOR STATISTICS. ALTHOUGH THE TIPS INTEREST RATE IS LOWER THAN THE INFLATION RATE (2.7 PER CENT), THIS IS THE REAL GAIN AFTER INFLATION, AS THE PRINCIPAL IS ADJUSTED FOR INFLATION AND THE REAL GAIN IS ABOUT 4 PER CENT。
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Interestingly, the Stabilized Currency Project, such as Saturn Labs, is taking DAT ' s steady earnings uplink as the source of the Stabilized Currency. In the digital asset age and in the Fed ' s interest rate reduction cycle, this may be an alternative to chain-based national debt。
Priority dividends can also be used as a way to distribute the proceeds of the chain to equity investors。Solana DAT Forward Industries pledged almost all of its SOL holdrooms (over 6.87 million SOLs), receiving about 7% of the pledge proceeds. They also convert about 25% of SOL into fwdSOL (LST) to gain greater DeFi liquidity and revenue opportunities. Although they have not announced that these returns will be allocated to investors through preferential shares, they are able to provide about 7 per cent of the proceeds and to use chain agreements to generate higher returns. DeFi Development Company provides a series C permanent priority, with an annualized dividends rate of 10 per cent. Depending on the current chain rate of return and SOL pledge rate, they are able to afford these dividends。
