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

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.

What Is the Difference between Approving a Token for a Protocol versus Depositing It into a Protocol’s Vault?

What Mechanisms Do DAOs Use to Diversify Their Treasury Assets?

What Are the Most Common Automated Strategies for Yield Farming a DAO’s Treasury Assets?

What Is ‘Impermanent Loss’ in the Context of Providing Liquidity?

Does Staking or Yield Farming Carry the Same Type of Impermanent Loss Risk as Providing Liquidity?

How Is the Concept of ‘Liquidity Mining’ Related to Impermanent Loss?

How Does Providing Liquidity in a Stablecoin-Pegged Asset Pool Reduce but Not Eliminate Impermanent Loss?

How Do Protocols That Offer Single-Sided Liquidity Provisioning Manage the Risk of Impermanent Loss for Their Users?

Glossar

Smart Contract Risk

Vulnerability ⎊ Smart contract risk, within cryptocurrency and derivatives, stems fundamentally from inherent code flaws and systemic dependencies.

Stablecoin Treasury

Composition ⎊ A stablecoin treasury refers to the reserve assets held by an issuer to maintain the stablecoin's peg to a fiat currency, typically the US dollar.