For stablecoin yield, consider sUSDS due to its actively managed, diversified portfolio and strong risk management. In contrast, the high yield from Ethena's sUSDe is now considered less attractive as its single "basis trade" strategy has become crowded and carries significant concentration risk. For a more conservative approach, look into BlackRock's BUILD tokenized T-bill, which is expected to see significant growth next year as a safer on-chain yield source. The entire Yield-Bearing Stablecoin sector is positioned for major expansion, especially if central banks lower interest rates, making DeFi yields more attractive. Keep an eye on emerging projects like USDAI, which plans to generate yield by financing GPU power, as a potential opportunity for 2026.

Yield-Bearing Stablecoins (YBS) - General Market

• The total market for Yield-Bearing Stablecoins (YBS) saw massive growth in 2025, growing 3x from $7.5 billion to over $20 billion in total supply.
• The speakers are very bullish on the continued growth of this sector, with one predicting the total market size could reach $100 billion in 2026.
• The growth of YBS is linked to the overall crypto market sentiment. When markets are bullish ("risk on"), more capital flows into YBS as users leverage up to earn yield.
• A key theme is the tokenization of real-world assets (RWAs) like T-bills and private credit (e.g., Collateralized Loan Obligations or CLOs), which are becoming a major source of yield for these products.
• A potential catalyst for a DeFi "golden age" is a low-interest-rate environment. If central bank rates fall to 1-2%, DeFi lending protocols offering 4-5% become extremely attractive on a risk-adjusted basis.

Takeaways

• The YBS sector is a high-growth area within crypto that provides investors with a way to earn yield on their stablecoins.
• Investors should pay close attention to the source of the yield. Is it from a single, concentrated strategy (like a trading position) or a diversified basket of assets (like private credit and T-bills)?
• The macro environment, particularly interest rate cuts by the Federal Reserve, is seen as a major tailwind for this sector, as it could make DeFi yields comparatively more attractive and fuel market expansion.

Spark (sUSDS)

• sUSDS is described as the "biggest yield bearing stablecoin" by Total Value Locked (TVL) and the one that experienced the most growth.
• The key strength of sUSDS is its diversified portfolio. Unlike competitors who may rely on a single strategy, the Sky team (the DAO behind Spark) actively manages the portfolio, allocating capital across various on-chain and off-chain sources.
• The portfolio includes both DeFi strategies and tokenized real-world assets like private credit. It was mentioned that through an investment in JAAA, Sky is effectively lending to major corporations like Burger King.
• A unique safety feature is the "junior risk capital" model. The managers (subDAOs) must invest their own capital first, which acts as a first-loss buffer. If a strategy fails, the managers' capital is wiped out before depositors' funds are affected, creating strong incentive alignment.
• The OBEX incubator is highlighted as a future growth driver, designed to bring more high-quality, risk-siloed yield products into the Sky ecosystem.

Takeaways

• sUSDS is presented as a potentially safer, more diversified option for investors seeking stablecoin yield. The active management and risk-sharing model are significant advantages.
• Investors are essentially buying into a professionally managed, transparent, on-chain fund that diversifies across multiple yield sources.
• The complexity of the DAO structure (Sky) can be a barrier to understanding, but the core value proposition is strong diversification and risk management. The speakers are very bullish, a sentiment they call "Sky pilling".

Ethena (sUSDe)

• Ethena was the "flagship" project for the past two years, popularizing the "delta-neutral" or "basis trade" strategy to generate high yield for its stablecoin, sUSDe.
• The project saw massive growth due to the high yields it offered, which was considered "big alpha" when it launched.
• However, the speakers believe this "alpha is over" as the strategy has become too crowded, which compresses yields.
• A major risk factor is concentration risk, as the entire yield comes from a single source (the basis trade). The "10-10 event" (a market stress event) caused a significant TVL decrease and "shook a lot of people's boots" about the strategy's robustness.
• The Spark (Sky) team notably withdrew all of its capital from Ethena before this market event, highlighting their risk management.

Takeaways

• sUSDe represents a higher-risk, higher-reward play focused on a single trading strategy.
• While the team is considered very smart, the primary yield source is becoming less profitable due to competition.
• Investors should be aware of the concentration risk and the potential for sharp drawdowns during periods of market volatility, as seen during the "10-10 event".

Tokenized T-Bills & Money Market Funds (BUILD, USYC)

• BUILD is a tokenized T-bill product from BlackRock and Securitize. One speaker believes it will "absolutely explode next year."
• USYC is a tokenized money market fund from Circle, the issuer of USDC.
• These products represent the "porting of real life yield onto blockchain," allowing users to gain on-chain exposure to traditional financial assets like US Treasury Bills.
• While seen as a major growth area, the speakers note that the costs of tokenizing these assets are currently "crazy high," but are expected to come down as the sector matures.

Takeaways

• These products are a bridge between Traditional Finance (TradFi) and DeFi, offering a relatively safe, on-chain yield sourced from US government debt.
• They are a good option for more conservative investors who want to earn yield on-chain without taking on the smart contract and strategy risks associated with more complex DeFi products.
• The attractiveness of their yield is directly tied to central bank interest rates. As rates come down, their yield will also decrease.

Maple Finance (Syrup USDC)

• Syrup USDC is a yield-bearing stablecoin from Maple Finance that was shown to have a high APY of around 5.5%.
• The yield is generated by providing collateralized loans to "trusted parties," which are essentially private credit loans to institutional borrowers.
• The model relies heavily on Maple's internal curation system and the skill of their team to underwrite and manage these loans.
• This was described as a "Trust me bro" model, where the user is trusting the skill of the team, their allocators, and their legal department.

Takeaways

• An investment in Syrup USDC is a bet on the Maple Finance team's ability to manage a private credit portfolio effectively.
• The higher yield comes with increased counterparty risk and less transparency compared to fully on-chain strategies or tokenized T-bills.

Other Mentioned Opportunities & Risks

• USDAI & Daylight: Mentioned as two new, interesting projects with "sustainable business models" to watch in 2026. USDAI is focused on financing GPU power, a novel source of real-world yield.
• Plasma: Mentioned as a cautionary tale. It was a "Neobank play" that one of the speakers invested in, but its chart "went down 95%." This serves as a stark reminder of the high risks in emerging crypto ventures.
• GMX (GLP): The failure of delta-neutral strategies built on GLP was mentioned as a historical example ("RIP, man") of how these complex strategies can blow up, reinforcing the need for careful risk assessment.