Where can I get the best yield on stablecoins?
Yield above the T-bill rate is always payment for a specific risk. Tokenized Treasury funds pay roughly the risk-free rate. Lending markets pay a spread for borrower and liquidation risk. Delta-neutral synthetics pay funding, which can go negative. Incentive APYs pay in a token that can fall faster than the yield accrues.
The four sources of stablecoin yield
Every stablecoin yield in the market resolves to one of four things. Knowing which one you hold tells you exactly how it fails.
- Treasury yield — tokenized MMFs and T-bill funds; the benchmark, roughly risk-free, capacity-limited by KYC
- Lending spread — Aave, Morpho, Compound; paid by leveraged borrowers, falls to near zero when leverage demand dies
- Funding rate — Ethena-style synthetics; paid by perpetual longs, goes negative in bear markets
- Incentives — protocol emissions; the headline APY is real, the token price is not guaranteed
How to compare fairly
Compare every rate against the current T-bill yield, not against zero. A 5.2% lending APY when bills pay 4.3% is a 90bp risk premium — that is the number to judge, and it is usually much smaller than the headline suggests.
Then check whether the pool is large enough for your size. A 14% APY on a $2M pool is not a 14% APY for a $5M allocation.
Frequently asked
- Is stablecoin yield taxable?
- In most jurisdictions yes, generally as income at receipt. Tokenized fund distributions and DeFi lending interest are usually treated differently — take local advice.
- What is a realistic safe yield?
- Roughly the short-dated Treasury rate, via a tokenized Treasury fund. Anything meaningfully above it involves credit, smart-contract or funding risk.