Yield-Bearing Stablecoins Poised to Challenge Market Leaders

Decentralized finance (DeFi) protocol Angle introduces a new dollar-pegged stablecoin, USDA, aiming to provide yield from real-world asset backing and DeFi lending revenue. USDA is backed by U.S. Treasury bills and offers at least 5% yield for stakers. Amidst the rise of yield-bearing stablecoins, Angle also seeks to establish a blockchain-based foreign currency hub for euro-dollar conversion.

Will Yield-Bearing Stablecoins Eat Stablecoin Market Share?

Stablecoins, digital currencies pegged to fiat currencies like the U.S. dollar, have been gaining traction in decentralized finance (DeFi). But now, a new breed of yield-bearing stablecoins is emerging, offering holders a piece of the action.

Angle Protocol's USDA stablecoin, backed by U.S. Treasury bills and tokenized T-bills, is the latest entrant. By staking USDA, holders can earn rewards from yield generated by the backing assets and DeFi lending. The target yield is a tempting 5%.

The Rise of Yield-Bearing Stablecoins

Yield-bearing stablecoins have been popping up like mushrooms lately. Mountain USD and Ethena's USDe have already attracted hundreds of millions in deposits. And BlackRock, a financial heavyweight, recently launched its own dollar-pegged token, BUIDL.

USDT and USDC, the current stablecoin market leaders, don't pass on the yield earned on their backing assets. This has created an opportunity for yield-bearing stablecoins to tempt holders away.

Angle's Forex Ambitions

Angle doesn't just want to offer a yield-bearing stablecoin; it also aims to establish a blockchain-based forex hub. With its existing EURA token, pegged to the euro, and USDA, Angle wants to enable seamless currency conversion between euros and dollars without fees or slippage.

"The forex market is huge, but it's tough to find a DeFi protocol offering on-chain currencies trading at the real forex rate," says Pablo Veyrat, CEO of Angle Labs.

Liquidity and Accessibility

To boost liquidity for USDA, Angle will allow users to convert USDC to USDA and back, without incurring any fees. USDA will undergo beta testing in the coming days, with a broader roll-out planned for April.

U.S. Investors Left Out

One potential drawback for USDA is its restriction to non-U.S.-based investors. This limitation may prevent it from tapping into the significant market potential within the U.S.