Stablecoin Yield Calculator

Why stablecoin yield is different

Most crypto yield calculations have to wrestle with price volatility: a position can earn 8% in staking rewards and still lose 40% on the underlying asset. Stablecoins remove that variable by design. Because the token is intended to track a reference currency roughly one for one, the yield is close to fiat-denominated, and the arithmetic behaves like interest on a deposit rather than a return on a volatile asset.

That similarity is where the usefulness ends. The yield is paid by lending protocols or trading platforms rather than banks, it carries no deposit guarantee, and the peg that makes the comparison work is an assumption rather than a certainty. The sections below cover each of those in turn.

How the math works

The final balance is the principal multiplied by one plus the periodic rate, raised to the number of periods: principal times one plus the rate divided by the compounding frequency, all raised to the frequency times the years. On the loaded figures, 10,000 at 5% compounded daily across two years reaches 11,051.63, of which 1,051.63 is interest.

One detail decides whether that number is right for a given quote, and it turns on what the rate actually represents. A quoted annual percentage yield already includes compounding, so entering it here with a compounding frequency above one compounds it a second time. At 5% with daily compounding the calculator produces an effective annual yield of 5.1267%, not 5%. Setting the frequency to 1 treats the figure as a true annual yield and returns 11,025.00 across two years, which is 10,000 times 1.05 squared. Monthly sits between the two at 11,049.41. The gap is small over two years, at 26.63, but it grows with time and rate, and the correct setting depends on whether the platform quotes a yield or a nominal rate.

Where stablecoin yield comes from

Three sources produce most stablecoin yield, and they carry different risks rather than different amounts. Lending protocols pay interest funded by borrowers who post collateral, which makes the yield a function of borrowing demand and exposes the position to smart-contract failure. Centralised platforms pay interest funded by lending deposits onward to institutional clients, which adds the platform itself as a counterparty. Delta-neutral strategies earn funding rates from perpetual futures markets, which ties the yield to derivatives positioning rather than to lending demand.

None of these is a bank deposit, and the distinction is regulatory as well as economic. In the European Union, tokens of this kind are regulated under the Markets in Crypto-Assets framework as asset-referenced tokens or e-money tokens, with authorisation, disclosure and reserve requirements attached to their issuers. That is a different regime from deposit protection, and it governs the issuer rather than the platform paying the yield.

The peg risk that makes stablecoins not-quite-fiat

A stablecoin trading at its peg functions like cash. One trading at 0.92 functions like an 8% loss on the entire position, yield included. De-peg events do happen: large collateralised stablecoins have traded meaningfully below their peg during banking and market stress, and several algorithmic designs have broken permanently. The Committee on Payments and Market Infrastructures examined the risks these arrangements pose at scale, finding implications that run well beyond the holder of the token.

The arithmetic is worth seeing rather than describing. Two years of yield on the loaded figures turns 10,000 into 11,051.63. A de-peg to 0.88 on that balance leaves 9,725.44, which is below the original principal: a 12% break wipes out more than two years of a 5% yield. That asymmetry is the whole risk picture in one line, and the calculator models none of it.

Yield levels to expect

Yields on these positions move with broader fixed-income rates rather than independently of them, because the lending demand behind them is priced against the same alternatives. When central-bank rates sit around 5%, lending yields on major stablecoins have typically clustered a few points above that. When rates sit near zero, the yields compress toward the low single digits. The spread over short-dated government paper is compensation for platform, smart-contract and peg risk rather than a free premium.

Unusually high yields are the informative case. A figure far above the prevailing spread generally indicates something specific: a new protocol buying deposits, a strategy with concentrated derivatives exposure, or a platform funding the shortfall from token emissions rather than from revenue. The calculator will happily project any rate entered, so the input is where judgement belongs, not the output.

How stablecoin yield compares to savings accounts

The mathematical resemblance is close and the practical differences are large. A regulated deposit account carries a national deposit guarantee up to a stated limit and a supervised institution behind it. A stablecoin position carries neither: the issuer may be authorised under a crypto-asset regime, but that is not deposit protection, and the platform paying the yield is a separate party again with its own solvency.

The premium between the two is the price of those differences. Whether it compensates for them is a judgement about a specific protocol, a specific issuer and a specific holding period, and it is not a question this arithmetic answers. What the calculator does is make the yield side precise, so the risk side can be weighed against a real number rather than an impression.