How Can a Protocol Earn Yield on Stablecoin Treasury Holdings Safely?

Protocols can earn yield by depositing stablecoins into audited, blue-chip lending protocols (like Aave or Compound) or by staking them in decentralized exchanges as liquidity. The safest approach is to use highly collateralized lending platforms with a proven track record.

Yield must be balanced against the smart contract risk and potential impermanent loss associated with the yield-generating strategy.