How USDX Achieved a 28% Annualized Return Over 4 Years in the Stablecoin Yield Race

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The stablecoin landscape is undergoing a seismic shift. Once dominated by simple, low-yield designs, the sector now thrives on innovation—especially in generating sustainable returns for users. At the heart of this transformation is USDX, a stablecoin protocol from Stable Labs that has quietly delivered an average annualized return of nearly 28% over four years, outperforming even legendary investors like Warren Buffett.

With Tether (USDT) pulling in $13 billion in net profit during Q2 2024 alone, it's clear that stablecoins are not just digital cash—they’re powerful financial instruments. But unlike traditional models where profits go solely to issuers, new protocols like usdx.money are redefining value distribution by sharing yields directly with users.

This article explores how USDX achieved such high returns, its innovative Delta-neutral investment strategy, and what sets it apart in an increasingly competitive market.

The Rise of Yield-Generating Stablecoins

Stablecoins now represent approximately $200 billion in market capitalization, making up nearly 6% of the total crypto market. As bridges between traditional finance (TradFi) and decentralized ecosystems (DeFi), they enable seamless transactions, lending, and yield generation.

Tether’s dominance—controlling over 75% of the stablecoin market—is built on investing user deposits into short-term U.S. Treasuries and other liquid assets. However, these returns are retained entirely by the company, leaving holders with zero yield.

Enter next-generation protocols like Ethena, Usual, and usdx.money, which aim to disrupt this model by offering native yield to users. Among them, USDX stands out for both performance and accessibility.

👉 Discover how top-tier DeFi protocols generate high-yield returns with cutting-edge strategies.

Behind the Numbers: 28% Annualized Returns Since 2020

Stable Labs, founded by a team of DeFi veterans, began running its core investment strategy during the 2020 DeFi Summer. From June 2020 to September 2024, their protocol delivered:

These figures are not theoretical—they reflect real on-chain performance data from the usdx.money protocol.

Recently, Stable Labs raised **$45 million in funding** at a $275 million valuation, with backing from Dragonfly Capital, NGC Ventures, BAI Capital, and UOB Venture Management—further validating its technical and economic model.

But how does it work?

Delta-Neutral Strategy: Earning Yield Without Market Risk

Unlike most stablecoins tied to fiat reserves or over-collateralized crypto assets, USDX generates yield through a Delta-neutral investment approach—a sophisticated hedging technique commonly used in traditional finance.

How It Works:

  1. Multi-Asset Spot Purchases: The protocol buys a diversified basket of cryptocurrencies (e.g., BTC, ETH, XRP).
  2. Perpetual Contract Hedging: Simultaneously, it shorts equivalent amounts via perpetual futures contracts on major exchanges.
  3. Neutral Exposure: This creates a market-neutral position—gains from spot appreciation are offset by futures losses, and vice versa—eliminating directional price risk.

The real profit comes from the funding rate arbitrage between spot holdings and perpetual contracts. When funding rates are positive (common in bullish markets), long positions pay shorts—a steady income stream captured by the protocol.

Why Multi-Asset Beats Single-Asset Models

While Ethena uses a similar Delta-neutral model, it limits exposure to only BTC and ETH—the most liquid assets but also the most competitive. By contrast, usdx.money supports a broader range of assets, including XRP, SOL, and others.

This flexibility unlocks higher yields:

Note: Actual yields vary based on market conditions, funding rates, and asset liquidity.

However, scale brings constraints. Analysts estimate that once USDX surpasses $5 billion in circulating supply, its yield advantage may converge with Ethena’s due to order book depth limitations in derivative markets.

Currently, USDX reports a live APY of 37%, compared to Ethena’s 29%, giving early adopters a significant edge.

FAQ: Understanding USDX’s Model

Q: Is USDX a stablecoin?
A: Yes. USDX is a dollar-pegged stablecoin backed by yield-generating strategies rather than direct fiat reserves. Its value stability is maintained through hedging and risk controls.

Q: How does USDX maintain its peg?
A: While not over-collateralized like DAI, USDX relies on Delta-neutral positioning and reserve buffers. The protocol also employs insurance funds to absorb negative carry events.

Q: What happens if funding rates turn negative?
A: During bearish periods, shorts pay longs—reducing or reversing yield. In such cases, the protocol’s insurance fund covers shortfalls to protect sUSDX holders’ principal value.

Q: Where are user funds stored?
A: All assets are held in audited, non-custodial smart contracts or with trusted custodians like Fireblocks and Ceffu, ensuring transparency and security.

Q: Can I lose money with USDX?
A: While designed to be low-risk, smart contract exploits, custodial failures, or extreme market dislocations could pose risks. Always conduct due diligence.

Simple Access: Just Two Steps to Earn

Despite its complex backend, USDX is designed for ease of use.

Step 1: Swap Stablecoins

Users convert USDT, DAI, or other stablecoins into USDX via the usdx.money platform. These incoming funds are securely stored on-chain and mirrored across top-tier exchanges for trading activity.

Step 2: Stake for sUSDX

To earn yield, users stake USDX to receive sUSDX, a receipt token representing their share of the Delta-neutral strategy pool.

Key features:

This dual-token system enables rich composability in DeFi—future applications could include using sUSDX as collateral or splitting yield streams into fixed-income and variable-return tokens.

👉 Start earning high yields on your stablecoins using advanced DeFi strategies.

Beyond Yield: Building a Global PayFi Infrastructure

Stable Labs envisions USDX as more than just a yield vehicle—it aims to become foundational infrastructure for PayFi, the convergence of payments and finance in Web3.

Inspired by BitMEX founder Arthur Hayes’ vision of decentralized TradFi banks, Stable Labs takes a different path: focusing on financial inclusion and cross-border payment efficiency.

Targeting underbanked populations, the team plans to launch localized versions of USDX integrated with mobile wallets and remittance networks—enabling fast, low-cost international transfers without traditional banking access.

Future developments may include:

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Final Thoughts: A New Era for Stablecoin Innovation

While Tether dominates through scale and simplicity, emerging players like usdx.money prove that innovation still thrives in the stablecoin space. By combining advanced financial engineering with user-centric design, USDX delivers:

✅ Market-leading yields
✅ Low exposure to price volatility
✅ Transparent operations
✅ Scalable infrastructure

As the line between TradFi and DeFi continues to blur, projects that prioritize both performance and accessibility will lead the next wave of adoption.

Whether you're a seasoned DeFi user or new to crypto finance, USDX represents a compelling opportunity to earn sustainable returns—without betting on market direction.

👉 Learn how you can start generating high-yield returns today with innovative DeFi protocols.