Pendle's Yield-Bearing Stablecoins Soar to $11B in Circulation, Capturing 4.5% of the Market

Yield-bearing stablecoins have soared to $11 billion in circulation, representing 4.5% of the total stablecoin market. By Pendle Labs.

Yield-bearing stablecoins have quickly become a hot topic in 2024, surging to $11 billion in circulation, which accounts for 4.5% of the total stablecoin market. This represents a steep climb from just $1.5 billion and a 1% market share at the start of the year.

As one of the biggest winners of this trend, Pendle, a decentralized protocol that enables users to lock in fixed yields or speculate on variable interest rates, now accounts for 30% of all yield-bearing stablecoin total value locked (TVL), roughly $3 billion, the firm said in a report shared with Cointelegraph.

According to the report, stablecoins make up 83% of Pendle’s $4 billion total value locked, showcasing a significant shift from less than 20% in the prior year. In contrast, assets like Ether (ETH), which historically contributed 80%–90% of Pendle’s TVL, have shrunk to less than 10%.

Traditional stablecoins like Tether’s USDt (USDT) and Circle’s USDC (USDC) do not pass on interest to holders. With over $200 billion in circulation and the US Federal Reserve interest rate at 4.3%, Pendle estimates that stablecoin holders are missing out on more than $9 billion in annual yield.

Growing regulatory clarity benefits stablecoins

The rise in yield-bearing stablecoins comes amid increasing regulatory clarity in the crypto sector.

In February, the US Securities and Exchange Commission approved yield-bearing stablecoins as “certificates” subject to securities regulation, rather than banning them. The approval allows yield-bearing stablecoins to operate under specific rules, including registration, disclosure requirements and investor protections.

Proposed bills like the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) and the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) aim to create a comprehensive regulatory framework for stablecoins, focusing on transparency, risk management and consumer protection. These initiatives signal a favorable direction for the future of yield-bearing stablecoins.

According to Pendle, it expects stablecoin issuance to double to $500 billion in the next 18 to 24 months. The firm anticipates yield-bearing stablecoins to capture 15% of this market with $75 billion in issuance (7x growth from $11 billion).

Pendle shifts focus to yield market

Initially focused on airdrop farming, Pendle has shifted toward serving as an infrastructure layer for decentralized finance yield markets.

Ethena’s USDe stablecoin currently accounts for about 75% of Pendle’s stablecoin TVL. However, newer entrants like Open Eden, Reserve and Falcon have increased the share of non-USDe assets from 1% to 26% over the past year.

Pendle is also expanding beyond Ethereum, with plans to support networks like Solana and to integrate with Aave and Ethena’s upcoming Converge blockchain.