# Stablecoins Revitalizing DeFi Market, Catalyzing Growth through Earnings
The economic contributions of stablecoins in the decentralized finance (DeFi) market are once again under the spotlight. According to a report by Keyrock, the share of revenue generated from stablecoin-based activities within the entire DeFi ecosystem was a mere 4.7% as of June 2024 but skyrocketed to 30.8% by June 2025.
This surge indicates that stablecoins are evolving beyond their traditional role as transactional tools to becoming vital instruments for revenue generation within the DeFi economy. Stablecoins are predominantly utilized for leveraging strategies, interest income pursuit, and in liquidity pools (Vaults), with these earnings structures mostly manifesting on Ethereum and Layer 2 (L2) chains. Ethereum and L2 chains respectively generate 25% and 23% of their revenues from stablecoin-based activities, compared to Solana’s 13%. In 2023, loan protocols derived 65% of their revenues from stablecoins, overshadowing decentralized exchanges (DEXs), which stood at 20%. However, by 2025, the gap had narrowed to 15% for loan protocols versus 11% for DEXs.
# Drivers of the Surging Stablecoin Revenue
The exponential growth in stablecoin-based revenue can be attributed to increased supply and shifting market sentiment. Even with the expansions of Tether (USDT) and USDC supplies, 77% of these were absorbed into on-chain environments rather than exchanges, thereby broadening the revenue base for DeFi. The enlarged supply of stablecoins facilitates more lending, liquidity provision, and yield-generative strategies, thereby enhancing the overall capital efficiency within DeFi.
# Market Sentiment and Its Correlation with Stablecoin Revenue
While stablecoins serve as hedging instruments, their contribution to revenue also increases during bull markets, driven by leveraging strategies, stablecoin pair trading, and the proliferation of yield-generative structures. For instance, following the start of a cryptocurrency bull market in January 2024, stablecoin revenue share continually rose.
Historically, stablecoin revenue was strongly correlated with Bitcoin (BTC) volatility. Recently, however, this correlation has weakened, likely due to the stabilization of the VIX index related to the S&P 500, the alleviation of policy risks, and changing investment sentiments.
# On-Chain Interest Rates: A Key Volatility Indicator
On-chain lending rates also serve as a significant indicator of revenue volatility. For instance, USDC borrowing rates on Aave fell from 16% to 6%, directly impacting the stablecoin-based revenue due to reduced demand.
# Chain-Specific Performance of Stablecoin Revenues
The mechanisms by which stablecoins generate DeFi revenue vary by chain. On Uniswap (UNI), the Ethereum network saw stablecoin pair ratios surge during market stress, while Arbitrum (ARB) maintained a stable high proportion of revenue due to its fee structure and user characteristics. On the other hand, Base initially experienced speculative trading but later saw a boost in stablecoin-based revenue due to increased inflows and infrastructure expansion.
The Curve (CRV) protocol, a stablecoin-focused DEX, saw stablecoins account for 40-50% of its total revenue by 2025. Conversely, Solana’s Raydium (RAY) remained predominantly reliant on volatile assets for its revenue, with a lower contribution from stablecoins.
# Evolution of Stablecoin’s Role in Lending Protocols
Historically, lending protocols like Aave have significantly driven stablecoin revenue. However, recently, stablecoin utilization in lending protocols has declined, especially on Ethereum due to high-cost structures, while maintaining higher proportions on Arbitrum due to structural factors. On Base, the rapid increase in stablecoin supply has driven a resurgence in revenue shares.
Solana-based Kamino initially focused on stablecoin strategies, but the meme coin frenzy led to a swell in volatile asset participation and a concomitant decrease in stablecoin revenue share; however, it is now witnessing a rebound.
# Future Outlook and Strategic Implications
Stablecoins have built a structure capable of providing consistent revenue even during market downturns. Consequently, new DeFi protocols should integrate stablecoin-linked strategies (leverage, fixed income, etc.) as central components. Low-fee environments, liquidity provision, and integrations with yield-focused platforms like Pendle, Ethena, and Kamino are poised to emerge as key strategies.
Stablecoin issuers should also evolve beyond mere distribution to focus on revenue-linked structures, DeFi integration strategies, and entering tokenized revenue markets to sustain demand.
In conclusion, stablecoins are becoming a cornerstone of DeFi revenue streams, with their contribution serving as a useful barometer for understanding shifts in market sentiment, activity, and strategic directions within the DeFi landscape.
