DeFi Stablecoin Deposit Yields Struggle to Rise Amid U.S. Rate Hike

The Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75%-4.00% on September 16 (local time), but CryptoSlate analysis suggests DeFi stablecoin deposit yields may struggle to rise in tandem. On the same day, the yield on one-year U.S. Treasury bonds rose to 4.45%, raising the benchmark for cryptocurrency deposit yields. According to CoinMetrics, Aave's USDC deposit yield has averaged 31 basis points lower than one-year U.S. Treasuries this year and trailed the bond yield in 78% of the survey period.

Sentora co-founder Anthony DiMartino noted that the correlation between the U.S. short-term interest rate indicator SOFR and the on-chain borrowing rate indicator CDOR is very low, suggesting the Fed's rate hike may not significantly lift on-chain rates. He explained that DeFi deposit yields are more influenced by cryptocurrency market loan demand and deleveraging than monetary policy.