Yields

USDN’s strength lies not only in its status as a fully decentralized synthetic dollar but also in its ability to offer yield to its holders. Unlike other assets that merely aim to maintain parity with the dollar, USDN enables potential returns through two primary sources: funding rates and staking rewards from a yield-bearing underlying asset.

The first yield driver for USDN is the funding rate, primarily fueled by long positions. Between 2020 and 2024, the annualized funding rates of perpetual contracts on ETH averaged approximately 17.6%, demonstrating the yield potential for the USDN Protocol.

The second source of yield comes from the yield-bearing underlying asset. In the current instance of USDN, the underlying asset will be wstETH which is a token who benefits from ETH staking. The value of the wstETH is increased over time by capturing Ethereum staking rewards. Since October 2021, wstETH has generated an annualized yield of approximately 4.79% in ETH, adding another layer of profitability to USDN.

This unique combination of yield sources positions USDN far beyond a simple synthetic dollar, offering holders a high-performing asset while maintaining decentralization and stability. In the following sections, we will detail these two revenue streams and explain their impact on the USDN ecosystem.