🚀 Polygon Discusses Earning Yield from Stablecoin Reserves
posted 13 Dec 2024
The Polygon community has proposed a new liquidity program to deploy DAI, USDC, and USDT stablecoin reserves into yield-generating pools.
The proposal submitted by DeFi risk management provider Allez Labs, along with protocols Morpho Labs and Yearn Finance mentions that Polygon’s PoS Bridge currently holds around $1.3 billion in stablecoins, making it one of the largest, yet idle, holders of stablecoins on-chain.
The authors noted that not using the three major stablecoins could result in $70 million a year in lost potential earnings at current lending rates. Meanwhile their use in yield strategies could create new incentives and grow the DeFi ecosystem, the proposal mentions.
This is a Pre-Polygon Improvement Proposal (Pre-PIP), meaning it’s still in the early stages before becoming an official proposal after discussions.
The idea is to gradually add stablecoins into an ERC-4626 vault, a type of smart contract for yield-bearing assets. Each asset will have its own separate proposal (PIP) with more detailed information.
Polygon is an Ethereum scaling solution launched in 2020. According to DefiLlama, it’s among the top 15 largest chains, with a TVL of over $1.1 billion.
The chain has its native coin, POL (formerly MATIC), which currently trades at around $0.6. POL is the 30th largest cryptocurrency by market cap and is used for payments and rewards.
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