Two dollar tokens from the same organisation, on the same blockchain, paid very different rates on 28 October 2026. Savings DAI (sDAI) earned 1.25% a year. Savings USDS (sUSDS) earned 3.80%. We read both numbers directly from the Sky protocol’s contracts on Ethereum that morning, and the 2.55-point gap between them was not set by a market. It was set by a governance vote.
The same day, on Solana, Avalanche and seven other chains, BlackRock’s BUIDL token was paying a seven-day yield of 3.73%, according to rwa.xyz. It also turns up on lists of yield-bearing stablecoins, yet nothing about it works like sUSDS. One is a smart contract anyone can enter; the other is a share in a fund incorporated in the British Virgin Islands and sold only to investors who pass a high wealth test.
The label covers at least three different products. They differ on who pays the yield, who may hold the token, how you get your dollars back and which law applies when something breaks. That last point matters more than the label: in the European Union and the United States, regulators now treat yield as the thing that turns a payment token into an investment.
This is lesson 12 of the Coindaro DeFi path. The previous lesson, Ethena’s USDe and how its delta-neutral dollar works, covered one family of yield-bearing dollars in depth. Here we put it next to the others.
Yield-bearing stablecoins come in three families
A short reminder first. A stablecoin is a token that aims to hold a fixed value, usually one dollar, through reserves, collateral or a trading strategy; our guide what stablecoins are and how they keep their peg explains the basics, and it shows why the big payment stablecoins, USDT and USDC, pay their holders nothing. Their issuers keep the interest earned on the reserves. On 28 October 2026 DefiLlama counted about 302.5 billion dollars of stablecoins in circulation, of which USDT alone made up 181.2 billion and USDC 71.3 billion.
Yield-bearing stablecoins try to hand some of that interest, or another source of income, back to the holder. They do it in three ways that have little in common under the hood.
The first family is the savings wrapper. You deposit a crypto-native dollar such as DAI or USDS into a vault contract and get a share token, sDAI or sUSDS, whose value in DAI or USDS rises over time. The rate is a parameter that token holders vote on, and the money comes from the protocol’s own revenue. The CDP mechanics behind DAI and USDS (vaults, stability fees, the peg stability module) were the subject of our lesson on CDP stablecoins and Sky; here we only follow the savings leg.
The second family is the tokenised fund. BUIDL, BENJI, USYC, USDY, OUSG and a growing list of others are shares in funds or notes that hold US Treasury bills, repurchase agreements and cash. The yield is the fund’s interest income minus its fees. The token is a legal claim on a fund, and in most cases only investors who pass identity checks and wealth tests may hold it.
The third family is the synthetic dollar with a carry strategy. Ethena’s staked USDe (sUSDe, see our Ethena project page) is the best-known case: the protocol holds crypto collateral and shorts perpetual futures against it, and the yield comes mainly from the funding payments that long traders pay to short ones, plus staking income and reserve assets. DefiLlama showed sUSDe on Ethereum paying 5.08% on 28 October 2026, on about 1.19 billion dollars. The previous lesson covered how that can go wrong; we will not repeat it.
| Family | Examples | Where the yield comes from | Who can hold it | Legal nature |
|---|---|---|---|---|
| Savings wrapper | sDAI, sUSDS | Protocol revenue, rate set by governance vote | Anyone with a wallet | Smart contract share, no issuer promise of a rate |
| Tokenised fund or note | BUIDL, BENJI, USYC, USDY, OUSG, Spiko EUTBL | Treasury bills, repo, cash, minus fees | Mostly vetted investors; whitelisted wallets | Fund share or debt note: a security |
| Synthetic dollar with carry | sUSDe | Perpetual funding, staking, reserve assets | Depends on platform and country | Token of a protocol; status differs by country |
DefiLlama even lists BUIDL among stablecoins, with 2.18 billion dollars on 28 October 2026. That is a data provider’s classification choice. Legally, as we will see, a fund share and a payment stablecoin sit under different laws.
Sky’s two savings rates: DSR at 1.25%, SSR at 3.80%
Sky is the organisation formerly known as MakerDAO (project page for Sky). It runs two dollars side by side: the older DAI and the newer USDS, which DefiLlama counted at 4.70 billion and 6.67 billion dollars in circulation on 28 October 2026. Each has its own savings rate. The Dai Savings Rate (DSR) pays holders of DAI who lock it in the Pot contract or in sDAI. The Sky Savings Rate (SSR) pays holders of sUSDS.
The two rates are voted separately, and governance has kept the DSR far below the SSR, which pushes savers towards USDS. Money followed: the sUSDS vault on Ethereum held about 4.67 billion USDS on 28 October 2026, while the sDAI vault held about 163 million DAI, roughly 28 times less.
sDAI and sUSDS are vaults whose share price only goes up
Both tokens follow ERC-4626, the Ethereum standard for tokenised vaults. Sky’s developer documentation describes sUSDS as fully compliant with that standard and states that no fees are charged. You deposit USDS, receive a number of sUSDS shares, and the number of shares in your wallet never changes. What changes is how many USDS each share can be redeemed for. At a 3.80% annual rate, 1,000 USDS deposited today would be redeemable for about 1,038 USDS a year from now if the rate stayed the same, which it rarely does.
That design, in which the balance is fixed and the exchange rate climbs, has consequences for wallets, DEX pools and tax records. A later lesson on interest-bearing tokens goes through it in detail. For now, keep one idea: the yield shows up as a price, not as new tokens.
Who pays the SSR, and what happens if it is set too high
A savings rate is a promise the protocol makes to itself. Sky’s documentation for the Pot contract says plainly that governance sets the DSR, and that it is meant to stay below the stability fees borrowers pay. If savers were paid faster than borrowers pay in, the system would run a deficit. The documentation adds that such a deficit can eventually lead to new SKY tokens being minted to cover it, which dilutes SKY holders rather than hurting savers directly.
In practice Sky’s income comes from several places: interest on loans to vault owners, the yield on reserves it holds, including dollars parked in Treasury-backed products, and allocations run through affiliated protocols such as Spark. We could not open a primary breakdown of how much each source contributes as of October 2026, so treat any precise split you read elsewhere with care. What matters for a saver is the mechanism: the rate is a policy choice, made by votes, financed by a balance sheet you can inspect but do not control.
That is very different from a Treasury fund. If short-term US interest rates fell to 2%, a T-bill fund would pay roughly 2% minus fees within weeks, by construction. Sky could keep the SSR above that for a while if its revenue allowed, or cut it below. The 1.25% DSR shows the second case already happening to one of its own products.
Check the numbers yourself on Etherscan
You do not need to deposit anything to verify these figures. The contracts are public, and reading them costs no gas.
- Open Etherscan and search for the sUSDS contract at 0xa3931d71877C0E7a3148CB7Eb4463524FEc27fbD.
- Go to the Contract tab, then Read as Proxy, and call ssr. The result is a per-second rate scaled by 10 to the power 27; raised to the number of seconds in a year (31,536,000), it gives the annual rate.
- Call totalAssets on the same contract to see how many USDS the vault holds, then convertToAssets with a share amount to see what one share is worth today.
- For the older product, read dsr on the Pot contract at 0x197E90f9FAD81970bA7976f33CbD77088E5D7cf7 and totalAssets on sDAI at 0x83F20F44975D03b1b09e64809B757c47f942BEeA.
- Compare your result with DefiLlama’s yields page, which on 28 October 2026 showed 3.8% for sUSDS and 1.25% for sDAI.
If you later decide to deposit, the risks below apply, and every deposit and withdrawal on Ethereum mainnet costs gas, which can make small amounts uneconomic. A wallet on a layer 2 such as Arbitrum, where DefiLlama listed about 364 million dollars of sUSDS, cuts that cost but adds bridge risk, the subject of our lesson on cross-chain bridges.
Tokenised money market funds now hold 14.59 billion dollars
The second family has grown fastest. On 28 October 2026 rwa.xyz, which tracks tokenised real-world assets, counted 14.59 billion dollars in tokenised US Treasury products, spread over 119 assets and 84,271 holders, with an average seven-day yield of 3.74%. The largest products on its list that day:
| Product (ticker) | Platform or issuer | Value on 28 Oct 2026 (million dollars) |
|---|---|---|
| Ondo U.S. Dollar Yield (USDY) | Ondo | 2,378.8 |
| Circle USYC (USYC) | Circle | 2,374.2 |
| BlackRock USD Institutional Digital Liquidity Fund (BUIDL) | Securitize | 2,186.2 |
| iBENJI | Franklin Templeton | 1,713.6 |
| JPMorgan OnChain Liquidity-Token Money Market Fund (JLTXX) | Kinexys | 789.3 |
| WisdomTree Treasury Money Market Digital Fund (WTGXX) | WisdomTree | 761.9 |
| BENJI | Franklin Templeton | 666.7 |
| ChinaAMC USD Digital Money Market Fund, Class I (CUMIU) | Libeara | 555.1 |
| USTB | Superstate | 504.3 |
| Ondo Short-Term US Government Bond Fund (OUSG) | Ondo | 320.4 |
Source: rwa.xyz, tokenized treasuries dashboard, retrieved 28 October 2026. Not every product in this table is a money market fund in the legal sense. Some are private funds, one is a debt note, and the ownership rules differ for each. The safest umbrella term is tokenised treasury and money market products.
What sits inside: T-bills, repo and cash
The assets are the dullest part of the story, which is the point. Franklin Templeton’s on-chain government money fund holds at least 99.5% of its assets in short-term US government securities, cash and repurchase agreements backed by government debt, according to Stellar’s case study of the fund. Ondo’s USDY portfolio, according to its own product page, was about 86.9% US Treasuries and 13% an iShares 0-1 year Treasury ETF, with a small amount of bank deposits, and showed a yield to maturity of 4.08% as of 26 October 2026.
The yield follows the Federal Reserve. On 16 September 2026 the Federal Open Market Committee raised the federal funds target range by a quarter point to 3.75-4.00%, on a 12-0 vote. The Committee met again on 27 and 28 October; its decision was not published when this lesson was written, so check the Fed’s statement before relying on the range above. When the Fed moves, these tokens follow within weeks.
BUIDL: a BVI fund for qualified purchasers
BlackRock’s BUIDL launched in March 2024. Its filings with the SEC tell you more than its marketing does. The fund’s latest Form D, an amended notice filed on 27 July 2026, lists the issuer as BlackRock USD Institutional Digital Liquidity Fund Ltd., incorporated in the British Virgin Islands. It relies on Rule 506(c) of Regulation D, which allows general solicitation as long as every buyer is verified as accredited, and on section 3(c)(7) of the Investment Company Act, the exemption for funds sold only to qualified purchasers: in practice, individuals with at least 5 million dollars in investments and institutions with far more. The filing also states that the fund is not registered under the 1940 Act. You can read it on SEC EDGAR.
Securitize acts as transfer agent and tokenisation platform. On rwa.xyz’s BUIDL page, the minimum redemption is 250,000 dollars, redemptions are processed on business days when tokens reach the redemption wallet before 3:00 pm Eastern time, and the token exists on Solana, Avalanche, Ethereum, BNB Chain, Aptos, Optimism, Arbitrum, Polygon and Tempo. Solana carried the largest share on 28 October 2026, about 865 million dollars.
BENJI: a registered fund that keeps its register on Stellar
Franklin Templeton went the other way. Its Franklin OnChain U.S. Government Money Fund (FOBXX) launched on Stellar in April 2021 as a US-registered fund that uses a public blockchain as its official record of who owns which shares; the share token is called BENJI. Yield accrues continuously and appears in holders’ balances during the day. A wallet must be authorised by Franklin Templeton after know-your-customer checks before it can hold BENJI, so the token cannot drift to strangers. Institutional investors have been able to subscribe and redeem in USDC through Zero Hash since June 2024, and, after an 18-month review with the SEC, retail holders gained peer-to-peer transfers in May 2025, according to the Stellar case study.
USDY, OUSG and USYC: three wrappers, three sets of buyers
Ondo (project page) sells two products to two different crowds. USDY is a note issued by a bankruptcy-remote US entity and offered under Regulation S, which means it is for non-US persons only. It comes in two forms: USDY, whose price rises as yield accrues, and rUSDY, which stays at one dollar while the number of tokens grows. OUSG, by contrast, is sold to qualified purchasers through a Rule 506(c) offering. The token represents limited partnership interests in Ondo I LP, a Delaware fund that relies on the same 3(c)(7) exemption as BUIDL, and its main asset is BUIDL itself, next to USDC and bank deposits. Its product page lists a 5,000 dollar minimum for instant mints and redemptions in USDC, available around the clock (100,000 and 50,000 dollars for non-instant subscriptions and redemptions), fund expenses capped at 0.15% and a 0.15% management fee waived until 1 January 2027.
USYC, owned by Circle, sits at the other end of the spectrum. Circle’s USYC page describes each token as a share of the Hashnote International Short Duration Fund Ltd., a fund registered in the Cayman Islands, with a Circle subsidiary licensed by the Bermuda Monetary Authority acting as token administrator. Shares and tokens are available only to non-US persons. The minimum investment is 100,000 dollars, Circle takes a performance fee of 10% of the yield, and subscription and redemption fees of 0.04% and 0.03% apply only above 1 million dollars of daily volume. Every transaction runs in USDC. DefiLlama tracked about 2.34 billion dollars of USYC on BNB Chain on 28 October 2026, at a yield of 3.62%.
Spiko: the French UCITS version
Europe has its own tokenised funds. Spiko, a Paris firm authorised in France as an investment firm, says its flagship funds are UCITS approved by the French authorities. Its euro fund, Spiko T-Bills EUR (EUTBL), invests in Treasury bills of core eurozone countries, is domiciled in France, approved by the AMF and managed by Twenty First Capital, with CACEIS, a Crédit Agricole subsidiary, as depositary bank. Spiko’s fund page lists a first deposit of 1 euro and a management fee of 0.25%. When it announced a 90 million dollar Series B led by NEA on 6 October 2026, Spiko said 2.7 billion dollars were invested in its funds and that the fund shares are recorded on a blockchain. Because they are UCITS, they can in principle be sold to ordinary European investors, unlike BUIDL or USDY.
Accumulating or rebasing: how the token shows the yield
Tokenised funds pass the yield on in one of two ways. Accumulating tokens, such as USDY, OUSG and Spiko’s euro fund, keep the number of tokens fixed and raise the price, as sUSDS does. Rebasing or distributing tokens, such as rUSDY and BENJI, hold the price near one dollar and add tokens or update balances instead. The economic result is the same. The practical result is not: a rebasing token can break in a DeFi pool that does not expect balances to change by themselves, and tax software may record each balance change as income.
Where the yield really comes from
Every yield-bearing dollar answers one question differently: who is paying, and why would they keep paying?
| Product | Rate on 28 Oct 2026 | Source of the figure | Who pays |
|---|---|---|---|
| sDAI (DSR) | 1.25% | Pot contract, read on-chain | Sky protocol revenue |
| sUSDS (SSR) | 3.80% | sUSDS contract, read on-chain | Sky protocol revenue |
| BUIDL | 3.73% (7-day) | rwa.xyz | US Treasury and repo borrowers |
| USDY | 3.74% | DefiLlama yields | US Treasury borrowers, via Ondo’s note |
| OUSG | 3.97% | DefiLlama yields | Treasuries, mostly through BUIDL |
| USYC | 3.62% | DefiLlama yields | Treasuries and reverse repo |
| sUSDe | 5.08% | DefiLlama yields | Perpetual futures traders paying funding, plus staking |
| Tokenised treasuries, average | 3.74% (7-day) | rwa.xyz | US government |
For the fund family the payer is the US Treasury and banks borrowing in the repo market. That income is about as reliable as income gets in dollars, but it moves with Fed policy, and the token holder receives it after the fund’s fees and, in USYC’s case, a performance fee.
For Sky the payer is the protocol’s borrowers and its own investments, filtered through a vote. The rate can sit above or below market rates for long stretches.
For sUSDe the payer is the derivatives market. Funding can turn negative when traders rush to short, which is why the previous lesson spent so long on Ethena’s reserve fund.
Then there is a fourth, murkier source: leverage and lending run by outside managers. This is where yield-bearing dollars have failed most painfully. In a post on X dated 4 November 2025, Stream Finance said an external fund manager had lost about 93 million dollars of user assets and suspended withdrawals and deposits; its xUSD token, sold as a yield-bearing dollar, fell about 77%, Decrypt reported, and the research group Yields and More counted about 285 million dollars of direct debt exposure across lending protocols. The chain reaction through vault curators is told in our lesson on DeFi composability. xUSD had been marketed as a dollar that earned more than Treasuries; the extra came from strategies its holders could not inspect.
Seven risks of yield-bearing stablecoins, and how each one bites
Rate risk comes first because it is certain. Treasury-backed yields fall when the Fed cuts and rise when it hikes. Governance-set rates can fall for reasons that have nothing to do with the Fed, as the 1.25% DSR shows. Nobody guarantees next year’s rate on any of these products.
Access is the risk newcomers miss. BUIDL and OUSG require qualified purchaser status, USDY and USYC exclude US persons, and BENJI requires a wallet that Franklin Templeton has authorised after identity checks; the Stellar case study states that wallets without authorisation cannot receive the token. Ondo describes USDY as freely transferable, yet its eligibility line still reads non-US individuals and organisations, so anyone buying it on a secondary market should check that they could redeem it in their own name.
Getting out is mostly an operational problem. The underlying government money funds pay out daily, but the token wrapper adds its own conditions: business-day cut-offs, a 250,000 dollar minimum redemption for BUIDL, a single transfer agent through which every redemption passes, and fees above certain daily volumes for USYC. On-chain liquidity on a DEX can be thin, so selling a fund token on the market rather than redeeming it may cost more than the yield earned.
Code can fail too. sUSDS is a smart contract; a bug in the vault or in a contract that integrates it can cost money regardless of what the underlying assets do. Tokens that exist on many chains, like BUIDL on nine, rely on bridging or cross-chain messaging infrastructure that has failed elsewhere before.
Then comes the legal wrapper. A USDY holder owns a claim on a note from a bankruptcy-remote entity; a BENJI holder owns shares of a registered US fund; a USYC holder owns shares of a Cayman Islands fund; an OUSG holder owns limited partnership interests in a Delaware fund. In a failure, those claims are handled under different laws and courts. Permissioned tokens also give the issuer powers over your wallet: Franklin Templeton, for one, can freeze an account and claw back BENJI shares if a court orders it, according to the Stellar case study. Check each product’s documents for the equivalent clause.
Sky adds governance risk. Its rates, collateral rules and even the token that represents your savings can change by vote. That is a feature for SKY holders and a variable for savers.
The last risk travels through lending markets. Yield-bearing dollars are popular as collateral on lending markets: on 28 October 2026 DefiLlama showed about 128 million dollars of sUSDe supplied to Aave v3 on Ethereum and about 58 million of sUSDS on Morpho. When a collateral token loses its peg, liquidations can spread to everyone using it, which is how the xUSD losses travelled.
Interest on stablecoins: what MiCA, the GENIUS Act and the SEC say
Regulators have drawn the same line in both jurisdictions: a stablecoin used to pay must not pay interest. Products that pay interest are pushed into other legal boxes, mainly investment funds and securities.
European Union: MiCA articles 40 and 50
The EU’s Markets in Crypto-Assets Regulation is explained in our guide to MiCA. Two of its articles deal with interest. Article 50 covers e-money tokens, the MiCA category for stablecoins tied to one official currency such as USDC or EURC. Its first paragraph states that issuers of e-money tokens shall not grant interest in relation to those tokens, and the second applies the same ban to crypto-asset service providers, the exchanges and brokers licensed under MiCA. Article 40 copies both rules for asset-referenced tokens, those tied to a basket or to other assets.
The third paragraph of each article closes the obvious workaround. Any remuneration or benefit linked to how long a holder keeps the token counts as interest, including discounts or compensation with an equivalent effect, whether paid by the issuer or by third parties. An exchange in the EU cannot pay you a reward for holding USDC on its platform, whoever funds it.
What MiCA does not do is ban yield-bearing products as such. Article 2(4) excludes financial instruments from its scope; they are covered by the EU’s securities rules (MiFID II and the UCITS directive) instead. A tokenised UCITS money market fund like Spiko’s falls there. A decentralised savings contract like sUSDS is not an e-money token issuer or a licensed service provider in the usual sense; whether an EU-licensed platform that routes customers into such a vault is caught by Article 50 has not been tested, and we found no ESMA guidance on it as of 28 October 2026.
United States: the GENIUS Act and the OCC’s final rule
The GENIUS Act, signed on 18 July 2025, created a federal framework for payment stablecoins. Section 4(a)(11) bars permitted issuers, and foreign issuers, from paying holders any form of interest or yield solely for holding, using or retaining the stablecoin. The ban binds the issuer. The law’s definition of a payment stablecoin also excludes anything that is a security under federal securities law, so tokenised fund shares such as BUIDL or BENJI are not payment stablecoins in the first place. The Act takes effect on the earlier of 18 months after enactment, which is 18 January 2027, or 120 days after regulators issue final rules.
The Office of the Comptroller of the Currency, which supervises national banks and federally chartered issuers, published its final implementing rule in the Federal Register on 23 October 2026, effective 18 January 2027. Its proposal had included a rebuttable presumption that certain payments by affiliates and related third parties were banned yield. The final rule drops that presumption, while stressing that the OCC keeps its power to act against evasion of the yield ban. The OCC says it will instead apply the statute to the facts and circumstances of each arrangement, and it declined to publish a list of allowed or forbidden schemes. Exchange rewards funded by a third party are therefore neither cleared nor banned by the rule; they will be judged case by case.
The SEC has said less. In a staff statement of 4 April 2025, the Division of Corporation Finance said that fully reserved, one-for-one redeemable dollar stablecoins are not securities in its view. Footnote 4 then sets yield-bearing tokens aside: “we do not express a view regarding the application of the federal securities laws to ‘yield-bearing stablecoins’”. The statement reflects staff views, not a Commission rule. In practice, the tokenised funds already behave as securities, filed under Regulation D or Regulation S or registered as funds, which is why they come with accreditation and residency walls. DeFi savings wrappers have no such clarity.
Income from any of these products is generally taxable for US holders, but the timing and character depend on the product: a fund distribution, a rising share price and a protocol reward are not reported the same way. Our guide to crypto taxes in the United States covers the IRS rules that apply to digital assets.
France and Italy in brief
French holders are under MiCA, with the AMF and the ACPR as supervisors. Gains on crypto-assets in 2026 are taxed at the flat 31.4% rate, according to the French tax administration’s crypto Q&A of 17 July 2026, while the tax treatment of DeFi operations such as depositing into a vault remains unsettled. Italian holders face a 33% substitute tax on crypto-asset gains from 2026, with Consob, the Bank of Italy and the OAM register sharing supervision. In both countries a tokenised UCITS fund is a financial instrument, sold under securities rules rather than crypto rules; we found no official guidance on how individuals are taxed on the yield of a DeFi savings token. Our guides to crypto taxes in France and crypto taxes in Italy cover the general rules.
A checklist before holding any yield-bearing dollar
None of this tells you whether to hold one. It tells you what to ask before you do.
- Name the payer. Treasury bills, protocol revenue, funding payments or an outside manager’s strategy: if the documents do not say, stop there.
- Find the legal wrapper. A smart contract, a fund share, a note or a protocol token each give you a different claim in a failure.
- Check that you are allowed to hold it. Residency rules, accreditation tests and wallet whitelists decide who can redeem, and a buyer who cannot redeem holds a token with no exit.
- Read the exit terms. Note the cut-off time, the minimum redemption, any fee above a daily threshold and who processes the redemption.
- Compare the rate with the Fed’s range and the date of that range. A rate well above Treasury yields needs an explanation.
- Look at the chain you would use. Gas costs on Ethereum mainnet can wipe out the yield on a small amount; layer 2 copies depend on a bridge.
- Read the contract before the marketing page. Etherscan, the fund’s SEC filings and the issuer’s legal documents carry the facts that matter.
- Keep records from the first deposit. A rising share price, a rebasing balance and a monthly distribution each create different tax entries.
The next date on the calendar is 18 January 2027, when the GENIUS Act and the OCC’s rule take effect. The following lesson in this path turns to oracles, the price feeds that every yield-bearing token used as collateral depends on.
