Profitable stablecoins: how on-chain credit works and who will be the big winners (Part 2)

In Part 1, we clarified why yield-bearing stablecoins are not just another trend, but a logical evolution of how capital is starting to work on-chain.

If you haven’t read Part 1: Yield-bearing stablecoins: why on-chain credit will be the big topic of the next few years (Part 1)

Now comes the more important part.

👉 How does this market actually work, where is yield created, and which models have a real chance to dominate?

To understand this, we need to look at the three key components behind every successful yield-bearing strategy.

1. Risk management: who bears the risk and how

Yield without risk does not exist.

The question is not whether there is risk, but who takes it and how it is structured.

In yield-bearing stablecoins, we see several different approaches:

- Protocol-level management: risk is managed through rules, code, and automatic limits

- Hybrid models: a combination of on-chain mechanisms and human oversight

- Decentralized governance: decisions are made through DAO structures

The key point here is one thing:

👉 the most resilient models do not rely on “wow” solutions, but on a conservative structure and damage limitation in negative scenarios.

The market is already mature enough to know what does not work.

Overly aggressive risk almost always ends badly.

2. The core of yield: where returns actually come from

Yield-bearing stablecoins are not all the same.

Each uses a different strategy to generate returns.

Broadly speaking, they can be divided into several categories:

- Lending and borrowing

The classic model: capital is lent out in exchange for interest.

This remains one of the most sustainable sources of yield.

- On-chain arbitrage and liquidity

Exploiting differences in prices, rates, and conditions across different protocols.

Here, blockchain infrastructure provides a major advantage through speed and automation.

- Structured strategies

More complex models that combine multiple sources of yield with the goal of:

- more stable results

- lower correlation with the market

- better risk management

This is exactly where we expect to see the greatest innovation in the coming years.

3. Infrastructure: the invisible but decisive factor

One of the most underestimated aspects is where the strategy is built.

Not all blockchains and protocols are equal.

Infrastructure determines:

- how efficiently capital can be allocated

- how quickly risk can be addressed

- how easily a product can scale

The winners in this sector will not simply be those offering the highest short-term yield, but those with:

- a solid technical foundation

- proven security

- a long-term vision for scale

Secondary effects: why this changes the entire market

When yield-bearing stablecoins begin to grow at scale, several important things happen:

- Capital becomes less speculative and more long-term

- New financial products are built on top of them

- Volatility in certain segments decreases

- On-chain credit starts to directly compete with traditional financial products

The most interesting part?

👉 Yield-bearing stablecoins are no longer just something you hold.
They are increasingly being used by other protocols as part of their own products.

For example, a protocol may hold yield-bearing stablecoins to better distribute risk and achieve more stable returns.

The more protocols that do this, the faster the entire sector will grow.

Who will be the biggest winners

Historically, in new financial markets, the winners are not those who promise the most, but those who:

- manage risk best

- survive difficult market conditions

- grow even when sentiment is negative

Yield-bearing stablecoins fit this profile perfectly.

They do not rely on a constant inflow of new buyers, but on demand for yield.

And that makes them one of the strongest long-term solutions in crypto today.

Credit is no longer entirely off-chain.

Yield is no longer reserved only for banks and funds.

And capital can now work globally, 24/7, without intermediaries.

👉 Yield-bearing stablecoins are the clearest expression of this shift.

They are not an “alternative investment”.

They are a new financial foundation on which the next generation of products, protocols, and business models will be built.

And as is often the case in crypto, the biggest opportunity comes before it becomes obvious to everyone.