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What are the modes for stablecoins to earn profits?
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As the most traditional financial income model, lending essentially comes from the interest paid by the borrower, and it is necessary to consider the security of the platform or protocol, the probability of borrower default and the stability of income. Currently, the stablecoin lending products on the market are mainly Cefi platforms with top exchanges such as Binance, Coinbase, OKX, and Bybit current financial products. The top Defi protocols are mainly Aave, Sky Protocol, Morpho Blue, etc.
Curve is a representative example, and its revenue comes from the fees and token rewards distributed to LPs by AMM transactions. As the holy grail of stablecoin DEX platforms, Curve has become an important indicator for measuring the adoption of new stablecoins in the industry as a stablecoin supported by Curve Pools. The advantage of Curve mining is its extremely high security, but its disadvantage is that the income is too low and lacks attractiveness. If non-large and long-term funds participate in Curve's liquidity mining, the income may not even cover the transaction Gas Fee.
Market neutral arbitrage strategies have long been widely used in professional trading institutions. By holding long and short positions at the same time, the net market exposure of the investment portfolio is close to zero.
The Fed's interest rate hike cycle in 2022-2023 will push the US dollar interest rate to more than 5%. Even though it has now turned to gradual interest rate cuts, the US dollar interest rate of more than 4% is still a rare asset target that combines high security and high returns in the traditional financial industry. The RWA business has high compliance requirements and a heavy operation model. US Treasury bonds, as a standardized target with high trading volume, are one of the few RWA products with established business logic.
The structured products and dual-currency strategies currently popular in most centralized exchanges are derived from the Sell Put or Sell Call strategies in option trading, which are used to earn premiums by selling options. U-based stablecoins are mainly Sell Put strategies, and the income comes from the option premiums paid by option buyers, that is, earning stable USDT option premiums or purchasing BTC or ETH at a lower target price.
