# The Expanding Spectrum of Stablecoin Yield Sources in DeFi — definikola | Block Analitica

- Channel: [ETH Belgrade Community](https://streameth.org/eth-belgrade-community)
- Date: 2026-10-06
- Duration: 20:23
- Topics: People & Blogs
- Watch: https://streameth.org/watch/yt-IY2OIsQL6tc
- YouTube: https://www.youtube.com/watch?v=IY2OIsQL6tc

## Transcript

Thank you. Thank you for the warm introduction. Yeah, it's uh actually my fourth time. I should stand here. Okay, cool. Uh it's my fourth time at ETH Belgrade. So, yeah, thanks again for another invite uh to to to have this talk. So, yeah, as as said in introduction, my name is Nicolola. I am a member of block analytica team which was a core risk unit um back in the day of maker maker da uh later um switched to and rebranded to sky ecosystem. So we also kind of spin spin out spin out as a as a risk u team still doing risk management for uh sky ecosystem uh and and of course other clients uh and yeah so today's question uh today's topic uh and questions we're going to answer um are going to be uh the yields across DeFi uh stable coin yields and um the topics will mainly cover the yields coming from the offchain off-chain sources and most importantly the the risk implications one should take into account when um when doing the the actual yield farming. So yeah, the agenda looks pretty much like this. Um we're going to first see what are the all new um offchain yield sources that are being tokenized and used across DeFi uh and how those are being distributed across uh across DeFi this yield. Then we'll cover some disclosure expectations. Um what basically what uh we do usually suggest to either lenders or suppliers or investors um as a as a best practices. what what should you be looking into when it comes specifically to the offchain sources uh as those are way less transparent that what we have uh been used so far uh in DeFi then we're going to touch the topic of pricing those RWAs uh I think it's an important topic because those are are pretty illquid on chain uh and u you know considering the the redemption process is done completely offchain. It is very important to understand how we should or should not price those uh especially in the case if you are um considering lending against or borrowing um against those RWAs that are being increasingly used as collateral in uh in DeFi. Um then we'll go also explore uh some of the liquidation paths uh and how you can basically unwind the RWA position if you are already uh if you already have uh RWA uh CDP. Uh and then to wrap up I'll also cover the Sky ecosystem and its uh own savings product called SUSDS. uh and what exposures currently Sky has and uh what kind of approach we kind of take from a risk perspective when it comes to those exposures. Um and then uh we'll cover the the expanding how can we actually expand the native onchain yield sources in D5 further. So we are uh to avoid getting compress too compressed by uh by the the wave of the offchain yield sources being tokenized and and used on chain. Um okay. Okay. Yeah. So uh first the deal distribution. So there is uh let me see if I Okay. Yeah. Um there is as we can see a lot of different types of offchain yields being tokenized and used um across DeFi. Those being first the basis trade. This is what Athena as a protocol has um pioneered and has proved like a proof of concept. Uh then private credit funds are being tokenized. Uh hedge funds. There is even uh AI infrastructure financing uh being sourced from from onchain. Um there's ODC arbitrage. There there are even delta neutral strategies that also are sourced from offchain and that are being tokenized. And of course um kind of a new primitive in DeFi um which is credit lines or uncolateralized or undercolateralized uh lending. For example, Frigen or Wildcat are are doing this. It's an it's an interesting uh initiative uh which brings more capital efficiency of course but uh with this capital efficiency it um it comes also the the increased risk. Then when it comes to your distribution of those of chain yield sources, there is um one interesting observation I I had um when it comes to distribution uh which is almost all of those projects follow what something that what maker basically pioneered with something called PSM pack stability module. uh in a sense that all of those project have their token of course um which represents the the underlying yield source and then on top of that they have a single contract um which in which you can deposit their token and uh receive like a staked version uh and which is a yield bearing bearing token right so for example maker has USDS and then SUSDS Athena has USD an SUSD free chain for example has USD free and then SUSD free and you you get the point. Um and almost all of those projects have a similar structure. So you have their native token and then uh you have one additional step if you actually want to receive the yield. Of course uh the the underlying yield source that kind of powers uh this yield of the of of the savings product of those protocols uh vary a lot. So the backing is completely different. Um the the the operational risk can be completely different even if the yield source is the same. Um so yeah but the the yield distribution part is pretty much uh has been so far at least done in a similar fashion. Um then as I said uh there are some very important risk implications when it comes to tokenized strategies because those come from offchain and by design are not as transparent as what we have used to uh in DeFi. uh this mainly refers to uh the backing and how um and the operational risk. Uh so those are so I wanted to go over some of the things that um you know an average supplier, lender or investor should look into when uh trying to use the product uh to capture uh to capture this yield by by u buying this yield bearing tokens from the last slide. So first first of all um one should look for uh the incentives being disclosed and the related parties. I think this is something that's is unfortunately still the least transparent part. Um this is mainly to avoid any conflict of interests uh that the protocol or team running it has. Then one should look for limited or ideally no rehypothecation uh meaning collateral is not being reused elsewhere. And the admin risk admin risk um as we may all know has this year been the the hot topic. Uh and I think um there is a reason for it. Uh so yeah this should really be um addressable via proper transparency and speaking of it I try to made to make a waterfall of transparency best practices here that one can um follow. So first of all uh you should look for if all the wallets are public which is obviously the strongest and uh the strongest uh solution what you're basically looking for which is a fully verifiable um uh onchain so you can basically find everything you need within um the product. Then the second thing uh are ZK verification networks uh where the investor is basically putting trust in the network itself. The thing here, the good thing here is that uh you can always the investors can always basically generate a ZK proof proving that the product is um over collateralized or delta neutral or market neutral or u anything you basically need to to prove to yourself before um deciding to um to invest in in such a product. then Oracle stations um a bit um a less strong uh approach because a bit weaker approach because u again the the trust is put into the reporting layer and the attestations are done periodically. So it's not an ad hoc generation of proof you you want to see. Uh then audits um similar to Oracle legistations those are uh usually institutional and are also usually more stale. Um then self-reporting this is [snorts] also unfortunately something we've uh we've been seeing mostly uh so far across D5 when it comes to offchain yield sources being tokenized. Uh and this is like a full issuer trust. So basically putting trust in the same project you are putting your money into. And of course the at the last um lever is uh basically the um no no transparency. So you put the blind trust. Then another interesting topic when it comes to RWAs is pricing of them. So by design those are very illquid on chain which leaves uh almost no option for the market creators and deployers uh than using the redemption price uh for for RWAs while creating some some lending market because of the their illquidity. And then if you decide uh to use the redemption price or some uh net asset value based uh pricing um usually uh what um market creators and deployers do they introduce also some fancy loan structuring on top of it. Um, and then RWA, let's say DPEGs for any of the possible reasons, and it's usually the the off-chain reason, as I like to call it. And then what happens? Well, bad things happen, right? Uh, you have the redemption rate pricing uh for the asset that is being um uh that is experiencing DPEG. So I just went over uh how this impacts different different actors within a within a lending market. So for example, holders, so outside of the lending market are basically wrecked as you're directly holding uh the the RWA. Borrowers on the lending market are kind of okay because they're borrowing against an asset that is still priced by the redemption price. Uh however, loopers which are also the borrowers but they're kind of also uh buying the collateral and supplying the collateral asset um their equity uh gets trapped basically because uh they buy the collateral at the the normal uh price and then during the unwind they need to sell at the deep price which is obviously not good. So the record gets trapped and then lenders uh are also uh wrecked arguably even more than holders. Um since yeah um the the bad depth can accumulate on the lending market and they can basically the lenders can basically be wiped out completely. Then when it comes to liquidations, um yeah, there are there have been so far uh some very interesting approaches when it comes to liquidating RWAs. Um it's a it's a very uh interesting problem to solve because of their liquidity by design. So far for example we have projects like freef which are doing which are offering this exit or unwind uh financing for our WAS they do it um currently just via Morpho so Morpho lenders here basically act as underwriters of the like this those instant redemptions of RWS for of course for a fee then for example there is something uh called basin it's a it's another module within the sky ecosystem that grows move which is um um star or prime agent of uh maker sky ecosystem um that introduced this. So here basically they're are borrowing grove is borrowing from sky and providing um liquidity for instant redemptions for specific assets in this case it's uh J treasury uh from centrifuge and um bele from uh from securityize um so basically provide liquidity for instant redemptions and once uh once the actual redemptions uh fulfill Um on the issuer side, the loan is is paid back uh to Grove and then back to Sky. There are also some options for um having credit lines as a standing liquidity for RWAS. Um and even some more complex systems. Uh but yeah in in in essence you you need to have someone who underwrites this because by design uh the redemptions are not atomic and are dependent on on the issuer or the tokenization platform. Then yeah um as as far as sky ecosystem exposures are concerned and the approach we we take at block analytica when it comes to um powering the susds as um as one of the biggest if not the biggest um savings product on chain currently. Um what this is just an overview what sky currently has as exposure types. So as you can see um some of the most uh popular and liquid RWA such as J Treasury uh Bidd uh Sky also does the the cryptonative lending mainly through Sparkland which is like a product it's an av3 fork u run by by the spark team which is also a sky ecosystem prime agent or star um and through through morpho uh because it offers mostly because it offers isolated lending markets. Um but interestingly uh Sky also does and in um even more increasingly now the OTC lending. Uh there are a lot of reasons uh to why um one of those and what the the main ones are uh taking the full control of the loan structuring uh in a sense that you choose the repayment uh schedule. Um you you define the the market parameters, how the collateral is being uh held and um in what kind of custody and uh there is an increasing number of parties that are now more keen on having their collateral being held in institutional custody even rather than uh the the smart contracts in some cases. Um, hence the demand for DOTC lending and here what Sky aims to do in the long run is to uh keep the full control. Um, since it's uh it's being the main underwriter um and that is something that is something we are we are working on uh right now. Um and yeah to wrap up uh I thought it would be also interesting to hear what we can do to increase like the number of onchain yield sources which are now being uh compressed by the the variety of the offchain uh sources. Uh this is actually something that the EF itself has been vocal about recently and uh so I'm basically just echoing this. So out of the free um out of the this trifecta for um uh sovereignity so there is a consensus storage and compute the free parts of the Ethereum protocol itself where only the transaction ordering or the consensus part uh has been financialized. So currently we just have this part being financialized and it's actually being used uh like uh the staking rewards and the u have been tokenized. Lido is the the probably the main u project to mention when speaking about this and their stake teeth is now being used across defy and it's one of the most popular collaterals. So I think this is a very good example of what uh what else can we do um and by taking a similar approach and for example uh what uh the parts that are still not being tokenized uh are storage and compute. So storage representing the basically the Ethereum protocol uh data availability and the compute being uh the um execution of the actual smart contracts uh on Ethereum. those two parts have not been financialized and I think there is uh I would agree there is a um a chance for those to be uh financialized especially for example if if u we assume that the um the famous agents uh and agentic finance is going to um increase uh when it comes to transaction number of transactions and there is an argument to be made that the agents are um going to need uh less of the transaction ordering ordering and more of the storage and uh and compute and I think this is the part where um where the where we can actually financialize um those two remaining parts of the of the this trifecta and yeah I think uh that will be all thank >> [applause]