Coinbase pays 3.50% rewards on USDC, while Ethena’s sUSDe has cleared roughly 4% to 30% APY across 2024 and 2025. Both numbers describe “stablecoin yield,” yet they are produced by completely different machines and carry completely different risks.
The headline APY is the least useful thing to compare. What matters is the engine underneath it, because the engine is what tells you what can go wrong. Treat the APY as a direct measurement of the risk a holder accepts: every rate on offer traces back to one of five sources, and reading the source is how you read the risk.
Key Takeaways
- Coinbase pays a 3.50% rewards rate on USDC, available only to Coinbase One members at $4.99/month, and the rate is subject to change and can vary by region.
- Ondo’s USDY, backed by short-duration US Treasuries and bank deposits, paid approximately 4.65% APY across roughly $740 million in supply as of April 2026.
- The Sky Savings Rate on sUSDS sits at 3.60% APY, set by SKY governance vote rather than market utilization.
- Aave and Compound supplier rates are funded entirely by borrower interest and move with pool utilization, typically landing in a 3% to 8% band on USDC.
- Ethena’s sUSDe funding engine averaged roughly 11% APY over 2023 to 2025 but ranged from -6% to +75%, the widest swing of any source here.
Editor’s Choice
- USDC itself pays nothing: Circle does not pass reserve interest through to holders, so every USDC yield is a separate product layered on top of a $74.93 billion circulating supply.
- Tokenized Treasuries track the risk-free rate, making them the lowest-volatility engine at roughly 4% to 5%.
- DeFi lenders on Aave keep custody through non-custodial smart contracts, so a USDC supply position stays under the holder’s control across all 5 sources.
- Sky’s sUSDS, the first DeFi savings product to receive an S&P credit rating, currently pays 3.60% APY.
- Ethena’s sUSDe funding engine has ranged from -6% to +75%, the single widest band of any source compared here.
Where Stablecoin Yield Comes From
Stablecoin yield comes from 5 distinct engines, and only five: a platform passing through reserve interest, a tokenized claim on US Treasuries, interest paid by DeFi borrowers, a governance-set protocol savings rate, and the funding spread from a delta-neutral derivatives trade. Published rates run from Coinbase’s 3.50% USDC reward to a sUSDe cycle average that Ethena puts at approximately 11% APY.
According to Aave‘s documentation, lenders who supply assets to shared liquidity earn passive interest paid by borrowers. At the far end, Ethena’s funding-spread engine draws on the funding and basis spread from delta hedging derivatives positions, a fundamentally different payer from the Treasury or the borrower.
Each engine answers the same question differently: Who is paying you, and why? A yield with no identifiable payer is not a low-risk yield; it is an unpriced one.
The Treasury coupon is paid by the US government. The DeFi lending rate is paid by a collateralized borrower, and the funding spread is paid by leveraged perpetual traders. Once you know the payer, the risks announce themselves.
Why it matters: Any stablecoin yield meaningfully above the short-term Treasury baseline is being financed by borrow demand, incentives, leverage, or strategy complexity. The further a rate sits above that baseline, the more of one of those four ingredients it contains, and each ingredient is a distinct failure mode a holder absorbs.
The published headline rate for each issuer-set engine, drawn from each issuer’s own disclosures, lines up like this:
Aave and Compound are excluded above because neither publishes a rate; their USDC APY is set live by utilization. Read the other way, the APY column doubles as a risk readout, since each step up the ladder is financed by a different, nameable risk.
T-Bill-Backed Reward Programs and CeFi Issuer Rewards
Coinbase pays a 3.50% rewards rate on USDC, available only to Coinbase One members on plans starting at $4.99/month, and it states plainly that the rewards rate is subject to change and can vary by region. This is the most accessible source of stablecoin yield: the platform earns interest on the reserves behind your balance and hands a portion back.
The same reward pattern shows up across the venues tracked in our crypto exchange market data, where programs are layered on top of held balances.
USDC on its own earns the holder nothing. The reserve interest behind USDC is not passed through to holders, so the reward is a separate program layered on top of the token rather than a feature of the token itself. Coinbase reports a $74.93 billion circulating supply for USDC, and notes that each USDC is backed by $1 or an asset of equivalent fair value, held in accounts with US regulated financial institutions.
The catch is custody. The dollars earning that reward sit on the platform’s balance sheet, which means the reward is only as safe as the platform. The 2022 failures of Celsius and BlockFi made this concrete: across our coverage of crypto enforcement, custody risk has never been theoretical; it just goes quiet between cycles.
The scale of that exposure is visible in our cryptocurrency security and fraud statistics, which track the platform failures and exploits behind the largest depositor losses.
Counterparty and custody risk: A CeFi rewards balance is a claim on the platform, not a segregated asset you control. If the platform becomes insolvent, the rewards rate is irrelevant. This is the exact failure mode that wiped out Celsius and BlockFi depositors in 2022.
Pros
Simple to access with no smart-contract interaction- Regulated US custody, since each USDC is held in accounts with US regulated financial institutions
- No lockup and instant access to the balance
Cons
Requires a paid Coinbase One membership, with plans starting at $4.99/month- The rewards rate is subject to change and can vary by region
- Funds sit on the platform balance sheet, exposed to platform solvency
Tokenized Treasuries (Ondo USDY)
Ondo’s USDY paid approximately 4.65% APY across about $740 million in supply as of April 2026, the lowest-volatility engine here because its return is a US Treasury coupon rather than a market rate. USDY is backed by short-duration US Treasuries and bank demand deposits, and each token is a senior unsecured claim on a portfolio held by a Delaware bankruptcy-remote vehicle.
The yield is the weighted-average return on that Treasury-and-deposit portfolio, minus a management fee. Because Ondo sets the rate against the underlying paper rather than against borrowing demand, USDY tracks the risk-free rate closely. Ondo states that APY is set monthly by Ondo in accordance with the USDY governing documents.
Tokenized Treasuries carry less smart-contract surface than DeFi lending and no platform-solvency exposure of the CeFi kind, but they are not riskless. Ondo’s own terms are explicit on this point, and the same Treasury-coupon mechanics underpin the regulated wrappers covered in our explainer on what a stablecoin ETF is.
Issuer and jurisdiction risk: Ondo states that A USDY holder may incur losses, including a total loss of their purchase price. The tokens are not registered under the US Securities Act of 1933 and may not be offered or sold in the US or to US persons. The product is also subject to redemption-fulfilment delays.
The eligibility restriction matters for the comparison: a US-based holder cannot access USDY at all, which narrows the field of yield sources available depending on jurisdiction. For the broader market context on where tokenized and yield-bearing dollars fit, our decentralized finance market statistics page tracks the TVL and adoption curve these products sit inside.
DeFi Lending on Aave
Aave’s USDC supply rate typically lands in the 3% to 8% lending band, and every basis point of it comes from borrower interest: Aave runs a supply-and-borrow model where, in its words, supplier rates are funded by borrower interest and also rise as utilization increases. The 3% to 8% figure is a market observation, not an Aave-published rate; the protocol sets only the curve.
The mechanism is a utilization curve with a “kink” at a target level: below the target, borrow rates climb gradually; above it, they climb sharply to defend the pool’s remaining liquidity. Borrowing on Aave is over-collateralized, meaning borrowers must supply assets of greater value than the amount they wish to borrow, which is what protects suppliers’ funds.
Unlike a CeFi rewards balance, an Aave deposit stays under the holder’s control. Aave describes a non-custodial design, which ensures users always retain control of their assets through permissionless smart contracts. The trade is that the holder now carries smart-contract risk and a variable rate that can compress when borrowing demand dries up.
DeFi Lending on Compound
Compound sits in the same 3% to 8% USDC band as Aave because it runs the same engine, and Compound’s documentation states the relationship directly: the supply and borrow interest rates are a function of the utilization rate of the base asset. Each rate model includes the same utilization “kink” above which the rate increases more rapidly, so a Compound USDC rate and an Aave USDC rate move for the same reason.
One detail separates supplier returns from collateral on Compound: only the base asset earns. The protocol specifies that collateral assets do not earn or pay interest, so a supplier earns yield only on the stablecoin they deposit as the base asset, not on assets posted to borrow against. Interest accrues every second using the block timestamp, compounding continuously rather than at fixed intervals.
Protocol Savings Rates (Sky sUSDS)
Sky pays a 3.60% savings rate on sUSDS, and it is the one source here set by a vote rather than by a market. Sky states the rate is variable and set by SKY governance token holders, not by market utilization or algorithmic adjustment. A holder supplies USDS, receives sUSDS, and that token accrues the rate automatically.
What funds the rate is real protocol revenue. Sky describes sUSDS yield as funded by real protocol revenue, not subsidized by token emissions or unsustainable incentive programs, drawn from diversified, governance-approved yield strategies including Treasury-backed real-world assets and the protocol’s own borrow rate. Sky also notes sUSDS is the first DeFi savings product to receive an S&P credit rating.
This lineage runs deep. The Sky Savings Rate replaced the legacy DAI Savings Rate after MakerDAO rebranded to Sky in August 2024, and Sky kept the older sDAI token live so DAI holders can continue using the DSR without migrating.
Because the rate is a vote rather than a utilization readout, it behaves differently from Aave or Compound: it does not collapse the moment borrowing demand drops, but it can also be cut by governance when protocol revenue capacity falls.
Advanced DeFi Strategies (Ethena sUSDe)
Ethena’s sUSDe pays the highest and most variable yield here because its engine is a derivatives trade, not a loan or a coupon. Ethena runs a delta-neutral synthetic dollar, USDe, and generates three sustainable sources of revenue: the funding and basis spread from the delta hedging derivatives positions, the rewards earned from liquid stable backing assets, and staked ETH assets receiving consensus and execution layer rewards. The funding spread is the headline engine.
That engine is volatile by construction. Funding averaged approximately 11% APY over the 2023 to 2025 cycle but ranged from -6% in the late-2022 bear to +75% in the early-2024 bull, and realized sUSDe APY over 2024 and 2025 cleared roughly 4% to 30%. The yield exists because perpetual traders are usually net long and pay shorts a funding rate; when that flips, so does the engine.
Ethena is explicit that the downside is real. If funding rates are deeply negative for a sustained period, the Ethena reserve fund is designed to bear the cost, and the protocol lists six named risks it is exposed to.
Funding-rate and counterparty risk: Ethena names six risks for sUSDe: smart contract, external platform, liquidity, custodial operational, exchange counterparty, and market risk. The yield depends on perpetual funding staying positive; a sustained negative-funding regime can erode returns faster than the reserve fund replenishes. This is the source that answers why some stablecoins advertise double-digit APY, and the same source that explains the risk behind it.
How the Five Yield Sources Compare
Lined up side by side, the five engines span from Coinbase’s 3.50% reward to Ethena’s sUSDe band that has cleared roughly 4% to 30% APY, with Ondo’s approximately 4.65% USDY and Sky’s 3.60% sUSDS sitting between them. The table below pairs each rate with the specific risk that produces it. The rate alone hides everything that matters; the engine and custody columns are where the real comparison lives.
The table makes the central pattern visible: yield and risk move together, and the type of risk changes at each step. Ethena’s row carries six named risks, including exchange counterparty and custodial operational risk that the Treasury-backed rows simply do not. Two sources can both read 4% and sit on opposite ends of the safety spectrum: a 4% Treasury coupon is a fixed claim on the US government, while a 4% sUSDe print is a snapshot of a funding rate that was -6% eighteen months earlier.
The takeaway: The custody column is the one most readers overlook. Whether the dollars sit on a platform balance sheet, inside a non-custodial smart contract, or in a bankruptcy-remote vehicle determines what a holder actually owns when something breaks, and that distinction does not show up anywhere in the APY.
Verdict by Use Case
Across the 5 sources, no single one wins outright: a 3.50% Coinbase reward suits a holder optimizing for simplicity, while Ethena’s variable band suits one optimizing for upside. The right source depends entirely on what the holder is optimizing for, and the verdict splits cleanly along three lines: accessibility, lowest volatility, and highest tolerated upside.
- Best for capital that must stay accessible: DeFi lending on Aave and the Sky Savings Rate both allow instant withdrawal with no lockup, and Aave’s non-custodial design keeps the assets under the holder’s control while they earn. Both produce mid-single-digit rates without trapping capital.
- Best for lowest volatility: Tokenized Treasuries like USDY track the risk-free rate, so the return moves only as much as short-term Treasury yields do. The trade-off is jurisdictional eligibility, since USDY is not available to US persons.
- Best for highest tolerated yield: Ethena’s sUSDe offers the widest upside, but it pays for that range by carrying funding-rate, exchange-counterparty, and custody risk that the fixed-coupon sources do not. It is the source that answers why a stablecoin can advertise double-digit APY.
The custody model behind each verdict, the single factor that decides what a holder actually owns when something breaks, splits as follows:
- Custody model determines what a holder actually owns when something breaks.
| Yield source | Who holds the dollars | Withdrawal |
|---|---|---|
| Coinbase USDC rewards | Coinbase balance sheet | Instant, no lockup |
| Ondo USDY | Bankruptcy-remote SPV | Subject to redemption fulfilment |
| Aave / Compound | Non-custodial smart contract | Instant, subject to liquidity |
| Sky sUSDS | Non-custodial smart contract | Instant, no lockup |
| Ethena sUSDe | Off-exchange custody providers | Subject to protocol liquidity |
Source: Coinbase, Ondo Finance, Aave, Sky Protocol, Ethena
Are stablecoin yields guaranteed or safe?
No stablecoin yield is guaranteed, and none of the 5 sources here presents itself as risk-free. Coinbase states its rewards rate is subject to change and can vary by region; Ondo warns that a USDY holder may incur losses, including total loss of their purchase price; Sky’s rate is a governance vote that can be cut; and Ethena’s funding engine has ranged as low as -6%.
“Safe” is relative to the engine, and every engine has a documented failure mode. The lowest-risk options track the Treasury baseline, and any rate well above it is financing that excess with borrow demand, leverage, or strategy complexity.
Is DeFi stablecoin yield better than CeFi yield?
CeFi rewards like Coinbase’s 3.50% USDC rate are simple to access but leave dollars on a platform balance sheet, while DeFi lending keeps them in non-custodial smart contracts; neither is strictly better, they relocate the risk. The CeFi path carries the failure mode that erased Celsius and BlockFi depositors in 2022. DeFi lending on Aave or Compound trades that platform-solvency risk for smart-contract risk and rate variability instead.
Conclusion
Stablecoin yield spans from Coinbase’s 3.50% USDC reward and Sky’s 3.60% savings rate up to sUSDe’s variable, roughly 4% to 30% band, and the gap between those numbers is a gap in risk, not just return. Each rate traces to one of five engines: a Treasury coupon, a platform pass-through, borrower interest, a governance-set protocol revenue stream, or a perpetual funding spread. Reading the engine is how a holder reads the risk, because the engine names the payer and the payer names the failure mode.
The market is moving toward more transparent sources, with tokenized Treasuries and credit-rated protocol savings rates giving holders clearer provenance than the opaque CeFi yields of the last cycle. What stays constant is the arithmetic: any rate meaningfully above the short-term Treasury baseline is being financed by demand, leverage, or complexity, and the holder is the one absorbing whichever ingredient produces it. The yield-to-risk table above is the one view worth keeping, because the APY on its own tells you almost nothing.
