The supply of yield-bearing stablecoins has surged since the United States’ passage in July of the GENIUS stablecoin bill, which prohibits issuers from offering yields on stablecoins.

Data shows the biggest beneficiaries have been Ethena USDe (USDe) and Sky’s USDS (USDS), which provide a yield when the tokens are staked in their respective protocols.

Since July 18, the circulating supply of USDe has increased by 70% to 9.49 billion, placing the market capitalization in third place among all stablecoins.

Meanwhile, the USDS circulating supply increased by 23% to almost 4.81 billion, placing its market capitalization in the fourth spot across all stablecoins during the same period, according to DefiLlama.

The huge increase in supply of USDe has caused the price of ENA, Ethena’s governance token, to rally by nearly 60% since mid-July, with the current price standing at $0.58, according to CoinGecko.

Yield-bearing stablecoins are GENIUS Act winners

“Surprising winners in a post-GENIUS era - yield bearing stablecoin supply up a TON despite GENIUS disallowing them in the US, “ co-founder of analytics firm Artemis, Anthony Yim, said in an X post on Monday.

Related: State of stablecoins after GENIUS Act: Expert weighs in

Julio Moreno, CryptoQuant's head of research, told Cointelegraph that tokenholders are increasingly flocking to USDe and USDS as they provide yield by staking the tokens in their respective protocols.

“Precisely because the GENIUS act banned issuers from providing yield directly to holders, investors are turning to yield-bearing stablecoins or staked stablecoins to get yield,” Moreno said.

“This is why you see stablecoins like USDe and USDs expanding in supply, because they pay yield in a more native way (by staking inside their own protocol).”

Stablecoin supply could hit $300 billion by year end

The overall stablecoin market has grown from $205 billion at the start of the year to $268 billion at the time of writing, an increase of 23.5%, according to DefiLlama.

Morena said total stablecoin supply “could approach $300 billion by the end of year, if the growth trend continues.”

Still, Temujin Louie, CEO of Wanchain, said that tokenization efforts by traditional finance players may hinder the growth of stablecoins. Tokenization “enables money market funds to adopt the speed and flexibility that previously made stablecoins unique, without sacrificing safety and regulatory oversight,” Louie said.

A July report indicates that the demand for decentralized finance applications on the Ethereum network could rise in the aftermath of the GENIUS Act barring yield-bearing stablecoins.

Inflation-adjusted return

Stablecoins can generate yield through staking, lending or utilizing real-world assets such as US Treasurys, which generates passive income for their tokenholders.

Yield-bearing stablecoins allow tokenholders to earn a real rate of return on their asset. A real rate of return is the inflation-adjusted rate a tokenholder receives.

The current headline inflation rate in the US for the month of June stood at 2.7%.

In comparison, staked USDe (sUSDe) provides an annual percentage yield (APY) of 10.86%, while staked USDS (sUSDS) provides an APY of 4.75%, which equates to a real rate of return of 8.16% and 2.05% respectively.

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