Stablecoins Seem Unattractive as the Gap Between 3pool's APY and Treasury Yields Widens

The annualized percentage yield from providing stablecoin liquidity on Curve's 3pool, also known as DeFi's savings bank account, is nearly 250 basis points less than the yield on the 10-year U.S. Treasury note.

AccessTimeIconJan 31, 2023 at 8:40 a.m. UTC
Updated Jan 31, 2023 at 3:39 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global event for everything crypto, blockchain and Web3.Register Now

The difference between the returns received by depositing stablecoins on decentralized exchange Curve's 3pool and the yield from U.S. government bonds continues to widen, highlighting the growing attractiveness of traditional fixed-income markets.

Curve's 3pool is a liquidity base pool that provides crypto traders a capital-efficient means of swapping between the top three stablecoins – USDT, USDC and DAI.

3pool, also known as Tri-pool, started as a decentralized finance (DeFi) savings bank account during the 2021 bull run. Large traders parked their stablecoin holdings on the pool in return for an annualized percentage yield (APY). The APY comprises a share in trading fees and supplemental fee income via Curve's governance token CRV.

At press time, the seven-day moving average of 3pool's APY stood at 0.98%, or 250 basis points less than 10-year U.S. Treasury yield, which stood at 3.54%, according to data sourced from DeFiLlama and crypto services provider Matrixport.

"A year ago, the spread between treasury yields and stablecoins was negligible. Investors were indifferent in 'parking' their assets in either 'low' yield product. There was no opportunity cost," said Matrixport's head of strategy and research, Markus Thielen.

The 10-year yield has nearly doubled year on year, thanks to the Federal Reserve's aggressive liquidity tightening cycle. The central bank has raised the benchmark interest rate by 425 basis points to 4.25% in less than a year with interest rates expected to further rise to nearly 5% later this year.

Meanwhile, DeFI yield's have crashed from their lofty double-digits range in early 2021 as the liquidity-powered crypto bull market started running out of steam in mid-2022.

The spread between APY offered by Curve' 3 pool consisting of USDT, USDC and DAI and U.S. Treasury yields. (Matrixport Technologies, DeFiLlama)
The spread between APY offered by Curve' 3 pool consisting of USDT, USDC and DAI and U.S. Treasury yields. (Matrixport Technologies, DeFiLlama)

The dollar-pegged stablecoins and Treasury yields offered nearly similar yields at the beginning of 2022. At the time, analysts were optimistic that the Fed rate hikes would boost demand for all assets linked to the greenback, including stablecoins.

However, since August 2022, stablecoin yields have dropped relative to treasury yields, disapproving of the strategy of parking money into stablecoins.

The gap is unlikely to narrow in favor of stablecoins anytime soon, considering the Fed plans to lift the benchmark rate above 5% this year and keep it there for some time.

Prospects for the global economy are improving, according to the latest forecast by the International Monetary Fund (IMF). The optimistic growth expectations are likely to keep longer-duration bond yields elevated.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.