Stablecoin Intrinsic Yield

Native Stablecoin Rewards

Stablecoin Intrinsic Yield

Stablecoins typically differ in various aspects, including their underlying assets, collateralization ratios, issuance processes, and stability mechanism for price stabilization. While different stablecoins may be suitable for specific use cases, they all share a common limitation: the absence of interest or real yield generation.

Given that the majority of stablecoins do not offer interest, those who hold them are forced to suffer from the ongoing erosion of the USD's value due to inflation.

The inherent characteristics of most current stablecoins, driven by their issuance mechanisms and underlying assets, render them incapable of delivering interest.

Fiat-Collateralized stablecoins issued by centralized entities are typically backed by cash and Treasury Securities (mainly US). However, due to the centralization of their business, any yield generated by the collateral is distributed among a few inside players.

Cryptocurrency-Collateralized stablecoins, on the other hand, are often issued when users deposit a specific amount of cryptocurrency as collateral. Given that these collateralized cryptocurrencies do not generate interest income themselves, stablecoin issuers face limitations in providing a secure and steady income stream to their holders.

To sum it up, the current absence of interest in stablecoins can be traced back to the way they are created, the assets that back them and their stability mechanism. Chi Protocol solves the problem of lack of interest in stablecoins by combining the LSTs in the reserves with the dual stability mechanism to generate pure stablecoin interest for stakers, making USC the world’s first scalable stablecoin backed by LSTs to earn a stable yield. This solution seeks to meet the demand of stablecoin holders for generating interest income while preserving the essential characteristics of stablecoins.

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