As the market for yield-bearing stablecoins approaches a $50 billion valuation, industry experts suggest a focus on collateral rather than yield, according to Artem Tolkachev, chief RWA officer at Falcon Finance.
By Artem Tolkachev |Edited by Cheyenne Ligon Jul 5, 2026, 1:00 p.m. 4 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred onThe crypto community is currently fixated on the yields offered by stablecoins. In the past year, yield-bearing stablecoins surged by approximately 300%, and 21Shares predicts this market segment will surpass $50 billion by 2026. Regularly, new platforms that previously offered no interest on idle funds are now introducing returns of 3% to 4%. The competition is intensifying.
However, this focus may be misdirected, as yield is easily replicable and can be quickly outdone by competitors. A 3% return on a dollar-pegged token loses its appeal when compared to a tokenized Treasury fund offering similar returns with fewer complexities. If yield is the sole incentive for holding a specific stablecoin, investors will likely shift to whichever option provides marginally higher returns in the coming quarters. While yield may attract attention, it does not necessarily translate into actual usage.
Usage is what holders should prioritize, even if yield initially draws them in. A stablecoin that can only be held without further utility is less valuable. It cannot be used as collateral, transferred between platforms, or leveraged during market fluctuations. A yield that offers no additional functionality is akin to borrowing time without any real benefit.
Artem Tolkachev is the Chief RWA Officer at Falcon Finance, which specializes in collateral-first dollar infrastructure.
The key factor that influences a stablecoin's actual usage is its acceptance as collateral by various trading venues. Can it be used as margin on an exchange? Is there an appropriate loan-to-value ratio in lending markets? Can it be transferred across platforms without incurring significant losses? The distinction between a dollar token that merely sits in a wallet earning interest and one that has active utility in the financial ecosystem is substantial. A parked token represents idle capital, while an accepted collateral token allows its holder to trade, borrow, and hedge without needing to liquidate it, which is the primary advantage of holding a dollar on-chain as opposed to traditional bank dollars.
This crucial variable is often overlooked in current pricing strategies. We are anticipating an influx of tens of billions in new stablecoin supply, mistakenly assuming that increased supply equates to real adoption. This perception is flawed. If this new supply enters the market while risk teams at exchanges and venues maintain their existing collateral frameworks, the outcome will be stranded collateral: billions of dollars that are operational on paper, earning their 3%, but ultimately inactive.
The GENIUS Act's rules are expected to be finalized by July 18, which serves as a deadline for regulators, not issuers. The full implementation will take effect either 120 days after the final rules are published or 18 months post-enactment, likely placing the complete rollout between late 2026 and early 2027. As these regulations are established, numerous issuers will qualify for federal approval and receive the necessary regulatory endorsement. However, achieving this approval does not guarantee that the market will accept these tokens as collateral at competitive loan-to-value rates. Being federally approved indicates legitimacy, but it does not automatically ensure collateral acceptance.
Meeting the secondary criteria involves unglamorous infrastructure work, including standardizing the pricing and redemption processes for tokenized dollars so that market makers can offer competitive quotes without uncertainty. Exchanges and lending platforms need to develop risk management frameworks that recognize high-quality dollar tokens as cash equivalents. This also entails ensuring the seamless movement of collateral across platforms without excessive costs or penalties. Though none of these aspects generate eye-catching annual percentage yields for promotional materials, they are essential for the practical utility of a stablecoin.
This is why I believe the widely observed yield figures are focusing on the wrong competition. The next wave of winners won't necessarily be those who offer the highest yields. Yield is a temporary incentive; it vanishes once a competitor offers a better deal. The real competitive advantage lies in collateral acceptance, which creates a compounding effect: each venue that acknowledges your token as collateral increases the likelihood that others will follow suit. The stablecoins that will hold significance in 2027 will be those that traders can utilize as margin, treasurers can maintain as working capital, and lending protocols can easily underwrite.
The $50 billion mark is imminent. The pressing question remains: how much of this capital will be actively utilized once it arrives?
Note: The opinions expressed in this article reflect those of the author and do not necessarily represent the views of CoinDesk, Inc. or its affiliates.
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Why it matters:
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