The Ultimate Guide to Stablecoins: From Traditional to New Yield-Bearing Types

A comprehensive overview of the stablecoin market, including traditional fiat-backed stablecoins like USDT and USDC, algorithmic stablecoins like DAI, and new yield-bearing stablecoins like USDe and USD0.

Traditional Stablecoins

USDT (Tether) and USDC (USD Coin) are currently the two most mainstream traditional stablecoins on the market.

USDT (Tether)

Issuer: Tether Limited

Launch Date: 2014

Value Peg: USDT is pegged to the US dollar at a 1:1 ratio, backed by Tether's reserve assets (such as cash, government bonds, etc.).

Market Position: The first stablecoin ever launched globally, and one of the largest in terms of trading volume and liquidity. Widely used in cryptocurrency trading, cross-border payments, and liquidity provision in the DeFi ecosystem.

Controversy: Transparency has always been a focal point of external scrutiny, and Tether's reserve audits have sparked widespread discussion.

USDC (USD Coin)

Issuer: Co-founded by Circle and Coinbase, regulated by the Centre Consortium.

Launch Date: 2018

Strong Compliance: Strictly adheres to US regulatory requirements, with high transparency of reserve assets, audited monthly with public reports.

Value Peg: Pegged to the US dollar at a 1:1 ratio, with reserves consisting of cash and short-term government bonds. Widely used in DeFi, payment solutions, and corporate transactions.

Market Position: Highly favored by institutional users for its compliance and transparency, making it the second-largest stablecoin after USDT.

FDUSD (First Digital USD)

Issuer: First Digital Labs

Launch Date: 2023

Pegging Mechanism: Backed by 100% US dollars or equivalent cash equivalents (such as short-term government bonds), maintaining a 1:1 value peg with the US dollar.

Blockchain Support: Compatible with Ethereum and Binance Smart Chain (BNB Chain), primarily supported by Binance for trading, lending, mining, etc., leading to high market acceptance.

DAI

DAI is a decentralized, over-collateralized stablecoin launched by the MakerDAO smart contract platform on the Ethereum blockchain. Unlike traditional fiat-backed stablecoins, DAI is generated by collateralizing crypto assets (such as ETH), maintaining a 1:1 peg with the US dollar (USD).

Issuer: MakerDAO

Launch Date: 2017

Value Peg: Maintains a stable value of 1:1 with the US dollar through smart contracts and collateral mechanisms.

Operating Network: Ethereum and other EVM-compatible blockchains (such as Polygon, Optimism, etc.). Currently, it is the highest market cap algorithmic stablecoin.

New Stablecoins

Unlike traditional stablecoins, new stablecoins not only maintain relative price stability but also provide additional investment returns to holders through innovative yield models.

Key Features of New Stablecoins:

Provide returns to users by investing in low-risk assets (such as government bonds), staking native tokens, or using structured financial strategies.

Maintain relative price stability and high liquidity using assets like government bonds as collateral, which can be traded or redeemed at any time.

Combine on-chain assets with off-chain funds, bonds, etc.

1. USDe

USDe is a new synthetic dollar stablecoin developed by Ethena Labs, aimed at providing a decentralized, scalable, and censorship-resistant stablecoin solution. It currently ranks third in the stablecoin market by market cap and first among algorithmic stablecoins.

Operational Mechanism

The core mechanism of USDe is to maintain a 1:1 peg with the US dollar through a Delta-neutral strategy. Whitelisted users (typically institutions, exchanges, and large holders) can use crypto assets like ETH, BTC, USDT, and stETH as collateral to mint USDe. Ethena Labs uses these collaterals to open corresponding short perpetual contracts or futures positions to hedge against price fluctuations, ensuring the stability of USDe's value. This strategy allows USDe to achieve stability and scalability without over-collateralization.

Currently, regular users cannot directly deposit ETH or BTC to mint USDe; they can purchase USDe using stablecoin assets (such as USDT, USDC, DAI, crvUSD, etc.), avoiding liquidation risks.

USDe's Yield Mainly Comes From Two Aspects

Staking Yield: When users use liquid staking tokens (like stETH) as collateral, these tokens generate staking rewards, including inflation rewards from the consensus layer, transaction fees from the execution layer, and maximum extractable value (MEV). These rewards accumulate over time, enhancing the value of USDe.

Funding Rate and Basis Yield: In the perpetual and futures markets, traders holding long positions typically need to pay funding rates to those holding short positions. Additionally, the basis of futures contracts (the difference between futures and spot prices) can also generate returns. Ethena Labs utilizes these mechanisms to provide additional yield sources for USDe holders.

Staking USDe can yield sUSDe to enjoy staking rewards, and the yield of USDe fluctuates based on market volatility and changes in funding rates for hedged positions. It once reached an annual