What is interest-bearing stablecoin? Several stablecoins that automatically generate interest

2023-12-27

Stablecoins are often known as a tool for users to trade to make profits in the crypto market, they themselves do not bring profits to the holder. For example, when you hold 100 USDT for 1 year, you still only have 100 USDT, and their value may even decrease due to inflation.

However, there are stablecoins that automatically generate profits (also known as interest-bearing, yield-bearing stablecoins) when you own them, so let's learn about some of these stablecoins to increase profits when participating in the market.

1. eUSD

What is eUSD?

eUSD is the Lybra Finance project's stablecoin, pegged 1:1 to USD, created by collateralizing LST assets such as stETH, rETH or other assets accepted by the protocol and then minting eUSD. At the time of this article, there are 156 million eUSD minted and circulating in the market - in the top 20 stablecoins with the largest capitalization.

The most special feature of eUSD is that it can generate profits for the owner with an APY of about 8%, however it should be noted that eUSD has a Service Fee of 1.5%, meaning the APY after deducting fees is about 7 .7%.

Peg stability module

Lybra Finance says that eUSD is pegged 1:1 to USD, so what is the mechanism to ensure eUSD is always equal to 1 USD?

Mechanism 1: Overcollateralization

By maintaining the collateral ratio at a minimum of 160% with eUSD, for every 1 eUSD there will be at least 1.5 USD LST guaranteed, thereby ensuring the value of eUSD and peUSD

Mechanism 2: Liquidation mechanism

When a user's loan position falls below the safe collateral ratio, anyone can liquidate that position by buying back the collateralized portion of LST, paid in eUSD. It will ensure stability for eUSD and safety for the protocol

Mechanism 3: Arbitrage trading

This mechanism is relatively common with stablecoins of CDP projects. With eUSD, arbitrage opportunities arise when the eUSD price deviates from the 1 USD level. Users can take advantage of these price differences to make a profit and help restore the eUSD price to 1 USD

eUSD price per 1 USD: Users can mint new eUSD by depositing ETH as collateral with 1eUSD = 1 USD and then sell the newly minted eUSD on the DEX at market price. As more eUSD is sold, the market supply increases, pushing the price back down to 1 USD

eUSD price below 1 USD: If the eUSD price drops below 1 USD, users can buy eUSD at a discount on the market and then exchange it in the Lybra Protocol for 1 USD worth of ETH (LST). When users buy undervalued eUSD, demand increases, pushing the price back to 1 USD. Users can keep the redeemed ETH or sell it, profiting from the price difference.

Mechanism 4: Price "stabilization" fund

Stability Fund is an eUSD fund obtained from Advance Vesting Bounty and dLP Bounty activities, aimed at maintaining the stability of eUSD

How to use eUSD

As the title of this article states, users can hold eUSD to receive an APY of ~7.7%, or can use it in Defi applications such as buying, selling, and investing in tokens; provide liquidity for eUSD trading pairs; or arbitrage trading for profit and future use cases.

How to own eUSD

The mechanism of eUSD is similar to Maker DAO's DAI, and Lybra Finance can be said to be a lending protocol, allowing users to mortgage LST to mint eUSD with a minimum collateral rate of 160%. Besides, users can use USDT, USDC to buy eUSD on Curve Finance

You can mortgage LST and mint eUSD at the project website: https://lybra.finance/dashboard

2. OUSD

What is OUSD?

OUSD is a stablecoin created by Origin Protocol, this stablecoin was created with the main purpose of helping users make profits easier with Yield Farming by providing an expected interest rate of 6.64% APY (at the moment).

OUSD is owned by using USDT, USDC or DAI to swap to OUSD, then the project will use these assets to earn profits on Defi protocols. The difference of the project is that the profit margin can be higher than usual.

OUSD's most recent integration example is the integration of DSR - a mechanism to keep Maker DAO's DAI stablecoin exchange rate, allowing users to deposit DAI with the highest interest rate of up to 8%. This means the project sends collateral DAI (or buys DAI with USDT, USDC) to mint users' OUSD

This DSR mechanism does not allow US users to participate, so through OUSD, US users can still receive DSR interest rates.

Peg Stability Module

1 OUSD is bought with 1 USDT, USDC or DAI, so the total circulating supply of OUSD is guaranteed by the corresponding amount of stablecoin, so there is basically no need for an additional exchange rate guarantee mechanism.

How to use OUSD

The main purpose of OUSD is to help users profit from Yield Farming without doing much work, so the best use of OUSD is probably to hold it and receive interest.

You can buy OUSD at the project website: https://app.ousd.com/

3. USDY

What is USDY?

USDY is a stablecoin backed by short-term US Treasury bills and demand bank deposits. In other words, through USDY, users can easily and indirectly access US treasury bills. In return, USDY offers an interest rate of approximately 5.2%, which adjusts depending on the actual monthly interest rate.

Some differences between USDY and regular stablecoins besides being self-profitable are that USDY is compliant with US financial and securities laws and more here

Peg Stability Module

Each USDY is created when the corresponding amount of USDC or USD is sent to Ondo Finance's wallet/account address. Therefore, we can be sure that the USDY exchange rate will always be maintained once the USDY issuance mechanism is implemented as committed.

How to use USDY

After receiving USDY, users can buy, sell, exchange or participate in Defi protocols like regular stablecoins. Currently USDY is being released on 3 blockchains: Ethereum, Solana and most recently Mantle Network

How to own USDY

Currently there are 3 ways to own USDY that users can do

Buy USDY on exchanges

Buy USDY directly from Ondo Finance using USDC

Buy USDY directly from Ondo Finance by depositing money into Ondo Finance's bank account

It can be seen that for regular users, the simplest way is to buy USDY on exchanges, because buying USDY directly from Ondo Finance requires you to create an account on this platform, then KYC and do many things. Other operations. In addition, users have to wait a while after sending money to Ondo Finance to receive USDY.

4. VNST

What is VNST?

VNST is the first decentralized stablecoin anchored to the VND exchange rate, all VNST is guaranteed by the corresponding amount of USDT. There are currently 7.8 billion VNST circulating in the market.

VNST itself does not generate profits when you hold it in the usual way, however VNST combines with Nami Exchange to "turn" VNST into an interest-bearing stablecoin by providing a 12.79% APY when users simply hold VNST on your Nami Exchange account and do not need to do anything else

Learn more about earning interest every day with VNST on Nami Exchange

Peg Stability Module

For each VNST created, a corresponding amount of USDT is required as collateral, so the value of VNST is always committed to 1 VNST ~ 1 VND.

How to use VNST

In addition to automatically receiving interest, users can use VNST with the most practical functions of a stablecoin, which is spot or futures trading to earn profits on Nami Exchange.

The biggest advantage of VNST's automatic profit-generating mechanism on Nami Exchange is that it does not require locking assets to receive interest. Users can use VNST to trade whenever necessary without waiting for unlocking like when participating in staking or saving on exchanges or regular Defi protocols.

See instructions for depositing and withdrawing VNST on Nami Exchange here:

https://vnst.io/vi/blogs/vi-instructions-for-depositing-and-withdrawing-vnst-with-nami-exchange

How to own VNST

Currently, users can buy and sell VNST through 2 methods

Conclusion

The above article has given you information about some interest-bearing stablecoins and buying and selling instructions for these types of stablecoins. Hopefully you can find another way to profit in the crypto market and choose a suitable stablecoin for yourself.

VNST, with the mission of providing safe, stable and convenient financial solutions for users, helping them easily participate in the financial technology market, will continue to contribute to the community to improve understanding of electricity money. electronics and blockchain technology.

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