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Stablecoin Taxonomy & Money Supply (Part I)

  • Apr 3
  • 18 min read

Updated: 7 days ago


Foreword: Over the past decade, stablecoins have evolved from simple, “vanilla” designs into more complex and composable monetary systems. The current landscape spans a wide range of structures and hybrids, each with different economic behaviors and risk profiles. This rapid innovation has expanded what stablecoins can do, but also made them more difficult to analyze without a coherent classification framework. In this report, we aim to bring structural clarity to different stablecoin “flavors,” and the conditions under which each operates and behaves in practice.


Table of Contents


Part I: Stablecoin Taxonomy


Executive Summary

Introduction


Stablecoin Functions

1.1. Overview

1.2. Price Stability

1.3. Benefits

1.4. Use Cases

1.5. Payments vs. Savings


Stablecoin Taxonomy

2.1. Overview

2.2. Classification Tree

2.3. Classification Table

2.4. Tokenized Deposits/MMFs & CBDCs

2.5. Stablecoins vs. Yieldcoins

2.6. Stablecoin & Yieldcoin Risks


References


Executive Summary


Stablecoin design has direct implications for money supply expansion, credit formation, and systemic risk. However, classical stablecoin taxonomy no longer provides a sufficient framework to analyze these dynamics, particularly as newer designs combine multiple elements without clear prior precedents. This report presents a more precise taxonomy that distinguishes stablecoins by their underlying backing, issuance structures, and stabilization mechanisms, alongside a monetary framework that extends beyond traditional aggregates to include composable meta-money supply.


💡 Key Insights


  1. Stablecoins are not homogeneous; their behavior is primarily determined by whether the backing mechanism is exogenous, endogenous, or a hybrid of both. A top-down taxonomy is therefore more accurate than traditional bottom-up approaches for classifying new stablecoin designs.


  2. Proponents of “yield-bearing stablecoins” (YBS) often miss the distinction between payment money and savings money. Some projects even position their YBS as a medium of exchange and credit like regular stablecoins, despite being structurally ill-suited for either purpose. “YBS” is also a misnomer; these tokens are technically not stablecoins from a taxonomy standpoint and should instead be collectively referred to as “yieldcoins.”


  3. Fiat reserve-backed stablecoins dominate more than 90% of the market, while the second largest category belongs to stablecoins backed by crypto or CDPs (collateralized debt positions). On the other hand, yieldcoins now equal ~6.5% of stablecoin market size.


  4. Reserve-backed stablecoins (RBS) operate under a full-reserve structure where token issuance and credit formation are separated, unlike fiat systems where money and credit are created within the same layer. Additionally, credit expansion in RBS systems can contract base reserves and circulating supply, creating monetary dynamics that are structurally inverse to fiat money and fractional-reserve banking.


  5. CDP-backed stablecoins (CDPS) are structurally closer to fiat banking systems, as both create money (tokens) and credit through debt issuance at the primary layer without secondary market intermediation, differing mainly in the timing of collateralization.


  6. Stablecoin monetary aggregates can be defined analogously to fiat systems (M0-M3), but differ structurally in that expansion is limited by exogenous reserves, market liquidity, and pre-funded credit supply rather than reserve ratios.


  7. DeFi composability enables the formation of a meta-money supply (MM1+), consisting of layered claims on base assets, unlocking additional leverage and capital efficiency as well as systemic risk on top of fully reserved systems, potentially resembling fractional-reserve dynamics.


  8. Combined stablecoin broad money multiplier is nearly four times lower than fiat, mainly due to underdeveloped credit markets, while full-reserve constraints further limit expansion by requiring pre-funded deposits to enable intermediation rather than endogenous credit creation.

Introduction


Stablecoins are often referred to under an umbrella term, but in practice they represent a heterogeneous set of digital monetary instruments. While these assets are designed to maintain a stable unit of account, typically pegged to a national currency such as the U.S. dollar (USD), each stablecoin can differ significantly in terms of design, operation, market dynamics, and risk exposures.


Historically, stablecoins have been classified using a bottom-up taxonomy based on collateral type: fiat-backed, crypto-backed, or algorithmic. However, this framework reflects an earlier stage of market development that no longer captures emerging designs. As the industry evolves, stablecoin classification should shift toward a more granular, top-down approach that differentiates between fundamental backing types, issuance models, collateral composition, and stabilization mechanisms. A more economically grounded taxonomy framework, in turn, provides a consistent basis for evaluating different stablecoin models and their implications on money supply expansion, credit creation and intermediation, as well as systemic risk and dependencies within the broader financial system.


Currently, the largest category under classical stablecoin taxonomy belongs to centralized fiat-backed stablecoins, also known as payment stablecoins, many of which operate under official regulatory frameworks such as the U.S. GENIUS Act and the E.U. MiCA framework. They are legally required to be backed on a 1:1 basis by liquid reserve assets such as cash or cash equivalents, including money market funds and short-term government securities (e.g., T-bills). As of March 2026, fiat-backed stablecoins account for 91% of the entire market, led by Tether’s

USDT and Circle’s USDC, with ~58% ($184 billion) and ~25% ($78.6 billion) market share, respectively. [1]


On the other hand, roughly 9% of global stablecoin supply consists of USD-pegged tokens backed by non-fiat assets, including cryptocurrencies, commodities, credit positions, and delta-neutral strategies. Sky’s USDS ($8.4 billion) and Ethena’s USDe ($5.9 billion) are the current leaders in this category. Additionally, partially-backed or algorithmic stablecoins make up less than 0.2% of global stablecoin supply, led by Frax Finance’s LFRAX ($210 million), [1] which has been deprioritized in favor of frxUSD, its new flagship stablecoin designed for GENIUS alignment. These non-fiat-backed tokens remain largely unregulated and may also be referred to as “synthetic dollars.”


Figure 1. Global stablecoin market capitalization. Source: DefiLlama, as of March 2026. [1]
Figure 1. Global stablecoin market capitalization. Source: DefiLlama, as of March 2026. [1]

Stablecoin Functions


1.1. Overview


A stablecoin is a blockchain-based financial instrument designed to maintain a fungible, divisible, and price-stable unit of account while functioning simultaneously as an openly transferable medium of exchange, credit, and store of value. The majority of stablecoins are backed by, and redeemable for, underlying reserves such as cash and cash equivalents, which serve as reference assets anchoring the token’s denomination and intrinsic value.


  • Blockchain means an internet-based network that utilizes distributed ledger technology (DLT) to record and maintain transactions in a shared, immutable ledger, validated through cryptographic mechanisms and network consensus.


  • Unit of account means prices, contracts, and debts can be denominated in the stablecoin, making it a reference unit for economic activity.


  • Price stability means the stablecoin is designed to maintain a consistent value relative to a reference or backing asset, thereby minimizing volatility in its purchasing power.


  • Fungibility means each unit of the stablecoin is interchangeable with any other unit of the same denomination, regardless of its transaction history or origin.


  • Divisibility means the stablecoin can be divided into smaller units without losing value.


  • Open transferability means the stablecoin can be transferred freely between users onchain without permission from a central intermediary, enabling borderless transactions and global access from anywhere with an internet connection.


  • Medium of exchange means the stablecoin can be used to make payments, settle transactions, and transfer value efficiently between parties.


  • Medium of credit means the stablecoin can be lent and borrowed to create debt, facilitating credit expansion, leverage, and financial intermediation.


  • Store of value means the stablecoin can preserve or grow its purchasing power over time.


ℹ️ Note: Stablecoins issued on permissioned or private blockchains may not have open transferability, though the majority of global stablecoin supply is issued on public networks.


1.2. Price Stability


A stablecoin’s price stability is determined by how closely its market price tracks the value of its reference asset, typically a fiat currency. While market prices are influenced by external forces such as liquidity and arbitrage activity, they ultimately reflect market confidence in the stablecoin’s backing, credibility, and redeemability. As a result, modern stablecoin issuers naturally maintain a high degree of transparency around reserve composition, custody, and redemption processes in order to reinforce market confidence and peg stability, such as engaging third-party accounting firms to publish periodic reserve attestations.


More than 99% of global stablecoin supply is pegged to the U.S. dollar. When users mint and redeem USD-pegged stablecoins directly with the issuer on a 1:1 basis, a hard peg is established at $1. This primary minting and redemption mechanism allows market makers and arbitrageurs to maintain a soft peg on exchanges, keeping the token’s market-traded price close to its reference value.


If there is insufficient arbitrage to maintain stability in the secondary market, the issuer (or its affiliates) can intervene through open market operations, similar to central banks. In doing so, it acts temporarily as a liquidity provider of last resort to support peg stability.


Soft Peg-Keeping Process


  • Price Trades <$1: Market makers and arbitrageurs buy stablecoins at a discount on exchanges and redeem them at par with the issuer to capture arbitrage profits (net of any redemption fees). This process helps restore price stability by reducing the circulating supply. If arbitrage activity is low, the issuer may buy back stablecoins in the market at a discount and redeem them, acting as a buyer of last resort to absorb excess supply and support the peg.


  • Price Trades >$1: Market makers and arbitrageurs mint stablecoins at par with the issuer and sell them on exchanges at a premium to capture arbitrage profits (net of any minting fees). This process helps restore price stability by increasing the circulating supply. If arbitrage activity is low, the issuer may sell stablecoins directly into the market at a premium, acting as a seller of last resort to increase supply and bring the price back toward the peg.


Figure 2. Stablecoin soft peg-keeping process. Source: Hiro. [2]
Figure 2. Stablecoin soft peg-keeping process. Source: Hiro. [2]

Stablecoin Peg Classification


Table 1. Stablecoin peg classification.
Table 1. Stablecoin peg classification.

ℹ️ Note: The existence of minting or redemption fees may cause the stablecoin to deviate from its peg, as market participants typically price those fees into the token’s exchange rates.


1.3. Benefits


Stablecoins represent a new technological form through which money can circulate with higher velocity in an increasingly digital economy. Much as the 20th century saw the emergence of electronic payment networks and real-time gross settlement (RTGS) systems, blockchain-based financial instruments like stablecoins are now transforming how value is transferred, settled, and integrated across global markets.


Figure 3. Top cited benefits of stablecoins. Source: Fireblocks, as of March 2025. [3]
Figure 3. Top cited benefits of stablecoins. Source: Fireblocks, as of March 2025. [3]

Unlike traditional banking rails, which depend on centralized intermediaries and limited operating hours, stablecoins operate continuously on blockchain networks that coordinate transactions through distributed ledgers, enabling structural advantages such as:


Table 2. Stablecoin benefits.
Table 2. Stablecoin benefits.


1.4. Use Cases


Stablecoins currently serve numerous use cases in TradFi (traditional finance), CeFi (centralized finance), and DeFi (decentralized finance), extending the reach of “crypto dollars” into both the real economy and the onchain economy.


  • In retail contexts, stablecoins enable faster, cheaper, borderless payments and remittances via a digital dollar equivalent that is unconstrained by traditional banks. Hundreds of millions of users in developing countries are also “dollarizing” through stablecoins as an alternative store of value to hedge against local currency devaluation, inflation, and general socio-economic instability.


  • In business and institutional settings, stablecoins can be used for programmable transactions, global payments/settlements, payroll, treasury operations, and financial market activity to improve transparency/auditability, capital efficiency, settlement time, and transactional costs. Merchants and businesses that accept stablecoins, for example, can slash payment processing fees by 95% or more compared to traditional methods.


  • In both CeFi and DeFi, stablecoins dominate activity across crypto exchanges and decentralized protocols, where they function as a natural fiat on/off-ramp conduit as well as a primary medium of exchange, credit, and store of value, providing the onchain economy with efficient access to fiat-denominated liquidity.


  • In AI applications, stablecoins enable efficient and autonomous transactions, including micro- transactions, between agents, APIs, and AI ecosystems without relying on traditional rails. This makes stablecoins a natural financial primitive for the emerging agentic economy, including M2C (machine-to-consumer), M2B (machine-to-business), and M2M (machine-to-machine).


Figure 4. Top stablecoin business use cases in North America. Source: Fireblocks, as of March 2025. [3]
Figure 4. Top stablecoin business use cases in North America. Source: Fireblocks, as of March 2025. [3]

1.5. Payments vs. Savings


Monetary systems often distinguish between money used for spending and money used for savings. Payment money optimizes for liquidity, while savings money optimizes for yield. A monetary system becomes impractical when it tries to combine both payment and saving properties into a single currency.


Stablecoins can function effectively as media of exchange and credit because they are inherently non-yield-bearing. When money itself carries yield, spending or borrowing it introduces an opportunity cost, which distorts credit pricing and transactional usage, leading to lower money velocity.


Yield vs. Stablecoin Functionality


Table 3. Yield vs. stablecoin functionality.
Table 3. Yield vs. stablecoin functionality.

For users looking to save instead of spending or borrowing money, stablecoins can function separately as a store of value, similar to fiat currencies. They can also be deployed productively into capital markets to generate external yields, allowing users to offset inflation and earn potential returns on idle capital.


Stablecoin backings may generate internal yield as well, and issuers are increasingly sharing this float income with their users. However, due to regulatory prohibitions on yield-bearing stablecoins worldwide, issuers typically do not embed yield within the token's architecture. Instead, they strip internal yield from the stablecoin and distribute it separately as activity rewards, allowing the token to remain yield-free by itself. As a result, "yield-forwarding" has become a common industry practice. For example:


  • Circle forwards internal yield from its reserve as rewards to traders who use Circle’s USDC on Coinbase. USDC users outside Coinbase do not receive these rewards.


  • Similarly, Ripple forwards rewards to Ripple’s RLUSD users in certain markets, including liquidity providers and lenders in DeFi protocols. Idle RLUSD holders do not earn these rewards.


A few projects also utilize rebasing mechanisms to distribute internal yield to stablecoin holders. “Rebasing” is when the stablecoin’s smart contract automatically adjusts the number of tokens in each user wallet to reflect internal yield accrual. However, rebasing is less common in DeFi because it impairs composability and creates accounting complexity for protocols.


Stablecoin Taxonomy


2.1. Overview


Stablecoin classification should start with how it is backed, not just surface-level labels of what backs it. Historically, stablecoin implementations have been anchored by exogenous reserves or collateral, endogenous protocol liabilities, or a hybrid of the two, with each model exhibiting different properties, market dynamics, and risk profiles.


Exogenously-backed stablecoins further fall into three sub-classes:


  • Reserve-backed stablecoins (RBS) are issued on a 1:1 basis against a pool of liquid reserve assets that is held offchain (e.g., cash, T-bills) and/or onchain (e.g., yieldcoins, LP tokens). Centralized RBS are the most common type, but decentralized varieties also exist. Their peg stability is enforced through direct redemption and natural arbitrage forces, ultimately depending on the integrity, liquidity, and redeemability of underlying reserves as well as issuer credibility.


  • CDP-backed stablecoins (CDPS) are created by locking onchain collateral into smart contracts, where borrowers open a collateralized debt position (CDP) to mint decentralized stablecoins. Peg stability depends on over-collateralization, liquidation mechanisms, and natural arbitrage between debt repayment and secondary market pricing, alongside sustained market confidence in the protocol’s risk parameters and collateral integrity.


  • Strategy-backed stablecoins (SBS) are supported by actively managed or programmatic yield strategies, such as delta-neutral positions or basis trades, where volatile backing assets are hedged with derivatives to synthesize stability and capture funding rates. Collateral may be held onchain and/or offchain under centralized or decentralized frameworks. Peg stability depends on strategy solvency, collateral integrity, redeemability, and natural arbitrage, as well as market confidence in the issuer and its underlying strategy.


Endogenously-backed or algorithmic stablecoins, by contrast, do not rely on external collateralization or reserve backing. Instead, they maintain peg stability through smart contract-based supply and demand adjustments, token conversions, and other protocol mechanisms. These decentralized models are structurally more reflexive, as their pegs lack strong arbitrage support and depend heavily on sustained market confidence as well as the effectiveness of their stabilization mechanisms in the absence of final settlement liquidity from external collateral or reserves.


Contemporary designs outside regulated payment stablecoins are increasingly incorporating elements from multiple models, resulting in hybrid structures that may blend different exogenous models or even combine them with endogenous mechanisms. Such designs can potentially improve capital efficiency and scalability, but may also introduce additional risk vectors that are not always immediately observable until the system experiences stress.


2.2. Classification Tree


Figure 5. Top-down stablecoin classification framework.
Figure 5. Top-down stablecoin classification framework.

2.3. Classification Table


Table 4. Stablecoin classification table.
Table 4. Stablecoin classification table.

2.4. Stablecoins vs. Tokenized Deposits, Tokenized MMFs & CBDCs


Payment stablecoins are sometimes confused with tokenized deposits, tokenized money market funds (MMFs), and central bank digital currencies (CBDCs). While these assets may share similarities in blockchain-based infrastructure and digital money functionalities, they differ fundamentally in terms of permissions, use cases, and regulatory treatments.


  • Payment stablecoins are digital claims on underlying collateral that are issued by regulated bank or non-bank institutions, fully backed by segregated, off-balance sheet reserves. They must also comply with full-reserve regulatory frameworks designed to ensure redemption rights, reserve integrity, and public transparency. Because they operate primarily on public blockchains, stablecoins are openly transferable, programmable, and composable, allowing them to integrate directly with wallets, exchanges, and decentralized applications.


  • Tokenized deposits are digital representations of commercial bank deposits, structured as bank liabilities recorded on the bank's balance sheet and governed by existing banking regulation and supervision frameworks. They may also be eligible for deposit insurance, depending on the jurisdiction. Unlike stablecoins, tokenized deposits are implemented on permissioned blockchains or as permissioned smart contracts on public blockchains, allowing only closed-loop transfers within banking networks in order to meet strict compliance, security, and risk management standards. Hence, tokenized deposits function primarily as bank money with limited blockchain benefits rather than as fully interoperable onchain assets.


  • Tokenized MMFs represent fractional ownership in a portfolio of short-term, interest-bearing instruments such as U.S. Treasury bills, repos/reverse repos, and commercial papers, issued as onchain tokens by regulated asset managers. Unlike payment stablecoins, which are designed to maintain a fixed $1 par value for transactional use, tokenized MMFs are investment products whose value may fluctuate slightly (or maintain a stable NAV with accrued yield) and explicitly pass through interest income to holders. They are typically offered within permissioned or semi-permissioned environments due to securities law requirements, including investor qualification, transfer restrictions, and fund compliance obligations. As a result, tokenized MMFs function as yield-bearing, wholesale funding instruments rather than as digital payments money, despite increasingly being used as reserves or collateral within stablecoin and DeFi ecosystems.


  • CBDCs are a digital form of sovereign fiat currency issued directly by central banks, representing central bank liabilities similar to physical cash or reserve balances. They are generally categorized into wholesale CBDCs, which are designed for interbank settlement and institutional markets, and retail CBDCs, which are intended for use by consumers and businesses as digital cash. In most proposed architectures, CBDCs operate within a two-tier financial system, where the central bank issues the currency while commercial banks and regulated institutions distribute and manage end-user access. They are typically designed to function within highly controlled, permissioned payment systems that prioritize financial and monetary stability. While CBDCs may use distributed ledger technology in some implementations, they are not designed for direct interoperability with public blockchain ecosystems, functioning strictly as an official digital extension of the national currency.


2.5. Stablecoins vs. Yieldcoins


Most stablecoins are built under the ERC-20 token standard on Ethereum and EVM networks, while tokenized yield strategies are often implemented as ERC-4626 vaults. These smart contract-powered vaults or “wrappers” allow users to deposit/stake assets like stablecoins into them to mint a yield-bearing receipt token or tokenized vault share, i.e., a “yieldcoin.”


While the concept of tokenized strategies has existed since the early days of DeFi, yieldcoins as a standardized and widely composable primitive are relatively recent, with meaningful adoption beginning in 2024 following the maturation of ERC-4626 infrastructure. As of March 2026, the yieldcoin market has surpassed $23 billion in global capitalization, or ~6.5% of total stablecoin supply. [4] JPMorgan also projected yieldcoins to reach 50% of the stablecoin market’s size in the future. [5]


Figure 6. Global yieldcoin market capitalization. Source: Stablewatch, as of March 2026. [4]
Figure 6. Global yieldcoin market capitalization. Source: Stablewatch, as of March 2026. [4]

An ERC-4626 vault is designed to accumulate yield internally, which increases its NAV (net asset value) and allows users to redeem/unstake more underlying assets per receipt token over time. Vault earnings may come from issuers of the underlying assets and/or from deploying those assets directly into yield strategies, such as onchain lending. As a result, every vault has its own unique risk/reward profile. A vault's performance, solvency, and long-term viability ultimately depend on how well its strategy manages risk across market cycles.


Some yieldcoins are also implemented under ERC-20 or other token standards without vault structures. These tokens typically represent tokenized real-world assets (RWAs), such as T-bills and MMFs. Other yield-bearing RWAs can also be tokenized into yieldcoins (e.g., private credit, mortgages, HELOCs).


ERC-4626 Yieldcoin Examples:


  • sUSDS (Sky): Backed by USDS, a CDPS/RBS hybrid with both on/offchain credit exposures.


  • sUSDe (Ethena): Backed by USDe, an SBS/RBS hybrid with offchain collateral custody and hedge fund-like characteristics.


Non-ERC-4626 Yieldcoin Examples:


  • BUIDL (BlackRock/Securitize) & USYC (Circle): Backed by T-bills, cash, and cash equivalents.


  • JAAA (Janus Henderson/Centrifuge): A tokenized version of Janus Henderson’s flagship AAA CLO fund (high-quality collateralized loan obligations).


A yieldcoin’s market price adjusts over time through arbitrage forces that soft-peg it to the unit NAV (net asset value), similar to stablecoins. The degree to which its market price tracks the underlying value depends on the backing structure’s solvency, collateral integrity, redemption liquidity, and market confidence, as well as the strength of arbitrage activity. Like stablecoins, secondary market liquidity ultimately determines whether the yieldcoin trades at a discount or premium to NAV.


At present, transfer-restricted yieldcoins (i.e., securities) primarily rely on redemption mechanisms to realize value due to limited secondary market infrastructure. In contrast, freely transferable yieldcoins can trade openly on exchanges, allowing holders to sell and realize gains as token prices appreciate over time, reflecting yield accrual within the underlying structure. They can also be supplied into DeFi protocols as collateral or liquidity to increase leverage and capital efficiency through permissionless composability.


While still nascent, yieldcoins represent the emergence of a tokenized savings and credit layer in the onchain monetary system—analogous to interest-bearing deposits in traditional banking. As they continue to mature, yieldcoins could become core programmable savings instruments, enabling users to store value against inflation while supporting credit formation to power the onchain economy.


2.6. Stablecoin & Yieldcoin Risks


Stablecoins are not risk-free. Stablecoins may de-peg or lose value, and they are generally not insured by government agencies. While they aim to maintain price stability, a stablecoin's health ultimately depends on its economic design, core infrastructure, collateral integrity, redeemability, market liquidity, security, transparency, and many other important factors. Historical events in the industry have demonstrated that stablecoins can experience periodic liquidity crises, redemption bottlenecks, collateral shortfalls, governance failures, smart contract vulnerabilities, or market confidence shocks, all of which may disrupt their ability to maintain a stable peg.


Stablecoins may be used to mint yieldcoins, and yieldcoins may be redeemed back into stablecoins, but yieldcoins are technically not stablecoins. Regulators may also treat certain yieldcoins as security tokens, depending on their design. As a result, yieldcoins typically function as tokenized investment instruments rather than payment instruments within the broader digital asset ecosystem. Yieldcoins also carry higher inherent risk than stablecoins, particularly when issued in unregulated DeFi environments that are still relatively young compared to traditional financial markets.


Because investors demand more compensation for additional risks, higher yields in DeFi often indicate higher underlying risk exposure rather than simply improved capital efficiency. Thus, yieldcoins should be understood as risk-bearing financial instruments rather than stable stores of value, and they should not be referred to as “yield-bearing stablecoins.”


Stablecoin & Yieldcoin Risk Highlights


Figure 7. TerraUSD Classic (USTC) was the largest algorithmic stablecoin failure in history, wiping out over $40 billion in 2022. Source: TradingView. [6]
Figure 7. TerraUSD Classic (USTC) was the largest algorithmic stablecoin failure in history, wiping out over $40 billion in 2022. Source: TradingView. [6]
Figure 8. Even Circle USDC, the world’s second largest fiat-backed stablecoin, experienced a significant temporary de-peg during the U.S. banking crisis of 2023. Source: TradingView. [6]
Figure 8. Even Circle USDC, the world’s second largest fiat-backed stablecoin, experienced a significant temporary de-peg during the U.S. banking crisis of 2023. Source: TradingView. [6]
Figure 9. The xUSD yieldcoin from Stream Finance collapsed in November 2025 following disclosures of $93 million in internal losses. Source: Coingecko. [7]
Figure 9. The xUSD yieldcoin from Stream Finance collapsed in November 2025 following disclosures of $93 million in internal losses. Source: Coingecko. [7]
Figure 10. Elixir’s deUSD stablecoin and sdeUSD yieldcoin both collapsed in November 2025 due to direct exposure to Stream Finance. Source: TradingView. [6]
Figure 10. Elixir’s deUSD stablecoin and sdeUSD yieldcoin both collapsed in November 2025 due to direct exposure to Stream Finance. Source: TradingView. [6]

Potential Risks (Non-Exhaustive)


Table 5. Non-exhaustive list of stablecoin and yieldcoin risks.
Table 5. Non-exhaustive list of stablecoin and yieldcoin risks.

Any risks mentioned above, as well as other unmentioned or unforeseen risks, could potentially lead to total loss of funds. Consequently, users should conduct their own due diligence, fully understand these risks, and seek appropriate advice from licensed professionals before interacting with DeFi protocols and digital assets, including stablecoins and yieldcoins. The information contained herein is intended for educational purposes only, not financial advice. Past performance is not indicative of future results.



End of Part I. See Part II for continuation.


References


[1] DeFiLlama, Stablecoin Market Capitalization, Supply & Peg Data.


[2] Hiro Systems, How Do Stablecoins Work: The Mechanics Behind Crypto Stability.


[3] Fireblocks, State of Stablecoins 2025.


[4] Stablewatch, Yieldcoins Overview.


[5] JPMorgan Global Research (Panigirtzoglou et al.), 2025 (internal research note; cited in The Block).


[6] TradingView, Price Charts (USDCUSD, USTCUSD, DEUSDUSD).


[7] CoinGecko, Staked Stream USD (xUSD) Price Chart.


About Us


Stably is a stablecoin technology and advisory firm from Seattle, Washington. The company specializes in infrastructure development and strategic consulting for stablecoin issuers, financial institutions, and DeFi protocols. Stably issued the world’s fifth USD-backed stablecoin in 2018, pioneered Stablecoin-as-a-Service (SCaaS) in 2019, powered one of the first gold-backed tokens in 2021, and developed the first decentralized stablecoin with interest rebates in 2024. Since inception, Stably has supported over 20 stablecoin launches with battle-tested infrastructure and 8+ years of industry experience. Learn more at stably.io


Contributors


Kory Hoang | Co-founder, CEO Background: 10+ years of financial industry experience, with prior backgrounds at PitchBook & Bank of America. Kory leads strategy, operation, advisory & stablecoinomics at Stably.


David Zhang | Co-founder, CTO Background: 10+ years of tech & product experience, with a previous background at Amazon. David leads engineering, AI integrations, product development, risk management & security at Stably.


Disclaimer


This document is provided solely for informational and educational purposes and does not constitute financial, investment, legal, tax, accounting, regulatory, or other professional advice. Nothing contained herein should be interpreted as a recommendation, solicitation, or endorsement to buy, sell, issue, hold, or transact in any digital asset, stablecoin, yieldcoin, security, derivative instrument, or financial product.


The material presented in this document reflects the authors’ views, interpretations, and analytical frameworks regarding stablecoins, decentralized finance (DeFi), digital monetary systems, and related financial infrastructure. These views may evolve over time and may differ from those held by regulators, financial institutions, academic researchers, or other market participants. Certain frameworks, terminology, and taxonomies described herein may represent conceptual interpretations or emerging industry perspectives that are not yet formally recognized or standardized within regulatory, academic, or financial literature.


This document may contain forward-looking statements, projections, or hypothetical scenarios regarding financial systems, blockchain networks, or digital asset markets. Such statements involve known and unknown risks, uncertainties, and assumptions, and actual outcomes may differ materially from those described. No representation or warranty is made regarding the completeness, accuracy, reliability, or timeliness of any information contained in this document.


Digital assets, including stablecoins and yieldcoins, involve significant risks, including but not limited to market volatility, liquidity risk, credit risk, counterparty risk, smart contract vulnerabilities, cybersecurity threats, operational failures, regulatory changes, and potential loss of funds. Stablecoins may de-peg or lose value, and digital assets are generally not insured by governments, central banks, or deposit insurance schemes. Participation in blockchain networks, DeFi protocols, or digital asset markets may expose users to technical, financial, and legal risks that may not be fully understood.


The information contained herein is derived from publicly available sources, industry data, protocol documentation, and analytical interpretations believed to be reliable at the time of publication. However, the authors and publishers do not guarantee the accuracy or completeness of such information and assume no obligation to update or correct it as circumstances change.


Nothing in this document should be interpreted as an offer to issue or purchase securities, stablecoins, yieldcoins, cryptocurrencies, or other digital assets, nor as a representation regarding the regulatory status of any token, protocol, or financial structure described herein. Regulatory treatment of digital assets varies by jurisdiction and continues to evolve. Readers are strongly encouraged to seek advice from qualified legal, financial, tax, and legal professionals before making any decisions related to digital assets or blockchain-based financial systems.


 
 
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