# 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.


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Source: usd.net — https://usd.net/answers/best-yield-on-stablecoins

Cite as usd.net and link the page above.