Stablecoin issuers dominate crypto revenue, capturing up to 75% of daily protocol earnings
Stablecoin issuers continue to command the lion's share of crypto protocol revenue, consistently capturing 60% to 75% of total daily revenue across major crypto categories, including lending platforms, decentralized exchanges, collateralized debt positions, and blockchain infrastructure.
This dominance reflects the sector's position as crypto's most profitable vertical, providing users with a stable foundation for trading and a reliable collateral option for exchanges and DeFi protocols.
Tether, the issuer behind the largest stablecoin USDT, announced it is on track to generate $15 billion in profit this year with a 99% profit margin, according to CEO Paolo Ardoino. This efficiency places Tether among the world's most profitable companies per employee.
The business model centers on earning yield from backing assets. Major issuers like Tether and Circle hold user deposits in low-risk yield-generating instruments such as U.S. Treasuries and cash equivalents, retaining the interest earned rather than distributing it to stablecoin holders. This practice has been codified into U.S. law through the GENIUS Act, signed in July, which explicitly prohibits permitted payment stablecoin issuers from paying interest or yield to holders of payment stablecoins. The aim is to treat these payment stablecoins more like digital cash rather than deposit-bearing or investment products.
However, increased competition within the stablecoin sector is pushing some players to explore alternative approaches to value sharing. USDe, which has risen to become the third-largest stablecoin, has applied pressure on incumbents by offering yield through its synthetic dollar model.
Coinbase has begun rewarding users for holding USDC on its platform, currently offering 3.85% APY. While this technically circumvents the GENIUS Act's restrictions by having a third-party platform rather than the issuer provide the yield, it signals a shift in how value could be distributed in the ecosystem. As Tether moves to raise more capital to expand USAT, its U.S.-regulated, dollar-backed complement to USDT, it’s worth watching how stablecoin issuers continue to compete for users through new incentives and differentiation.
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