Stablecoins Are No Longer Just for Payments. How Can Businesses Unlock Value from Idle Balances?

Many people are familiar with stablecoins as digital assets pegged to fiat currencies such as the U.S. dollar, commonly used to transfer money or make payments faster and more efficiently than traditional financial systems.

But as stablecoin adoption grows, the questions being asked by banks, fintech companies, and neobanks are beginning to change. Instead of asking “How can we support stablecoins?”, they are increasingly asking “Now that stablecoins are sitting on our platform, what else can we do with them?”

Because when large amounts of stablecoins sit idle in accounts or wallets, they are not creating additional value. Reid Cuming, CEO & Co-Founder of Ground, compared this to keeping money under a mattress — except in this case, it is a “digital mattress.”

This was one of the key ideas discussed in “The Yield Layer for Platforms: Turning Stablecoin Balances into Revenue, Retention, and Onchain Products,” a session featuring Cuming that explored how businesses can turn stablecoin balances into yield, generate new revenue streams, improve customer retention, and build new types of financial products.

Here are some of the key takeaways from the session.

1. Stablecoins Are Evolving from Money You “Spend” to Money That Can “Work”

Stablecoins initially gained traction as a store of value, particularly by giving users access to dollar-denominated assets. They later evolved into a payment rail for cross-border transfers, payments, and faster settlement.

Today, stablecoins are entering another stage of their evolution: becoming an operational tool that businesses can use across financial services, balance sheets, and even payroll.

But Cuming believes there is still significant untapped value sitting within these stablecoin balances.

When stablecoins simply sit in an account, they do not generate additional value. Blockchain technology, however, makes it possible to put those assets to work through yield-generating opportunities, lending, and other onchain financial products.

The opportunity, therefore, is to transform idle balances into active balances — turning assets that would otherwise remain dormant into assets capable of creating additional value.

2. Yield Is Not Just About Revenue. It Can Also Drive Acquisition and Retention

As fintech companies and neobanks accumulate more stablecoin balances, another question emerges: What should businesses do with the yield generated from those assets?

There is no single answer.

Some companies may pass the yield back to customers, making their products more attractive and using it as a tool for user acquisition.

Others may use yield to improve retention, giving customers a reason to keep their balances and activity within the platform — especially in a fintech landscape where switching to a competitor can be relatively easy.

Other companies may treat yield as a new revenue stream, retaining part of the value generated and reinvesting it into product development or R&D.

The market is currently in a period of experimentation, as platforms explore different approaches based on their users, business objectives, and risk tolerance.

3. The Best User Experience May Be One Where Users Never See the Complexity Underneath

One of the biggest challenges of bringing DeFi into mainstream financial products is complexity.

If users need to choose a blockchain, connect to different protocols, manage private keys, or understand every technical step before they can earn yield, these products become much harder to bring to a broader audience.

One example discussed during the session was Coinbase's integration with the DeFi protocol Morpho.

Instead of requiring users to navigate multiple integrations, seed phrases, and private keys, the complexity can be abstracted into a much simpler experience, allowing users to access stablecoin lending and yield without having to understand everything happening behind the scenes.

This points to a broader principle: a good financial product does not need to expose all of the complexity of blockchain to its users.

Users might simply see an option to earn yield, while the underlying system manages protocols, blockchains, and other infrastructure on their behalf.

4. Businesses Shouldn't Have to Rebuild Blockchain Integrations Every Time

Complexity is not only a problem for end users. It is also a challenge for the fintech companies and banks building these products.

Integrating onchain finance can require connecting to multiple protocols and blockchains, normalizing data, building automation and monitoring systems, and managing security and compliance.

The challenge becomes even greater because crypto markets evolve quickly. A protocol or yield source that makes sense for a business today may not be the best option several months from now.

This is the problem Ground is trying to address by building an API that acts as a unified interface, allowing platforms to access different onchain functions and adjust their configurations without rebuilding every integration from scratch.

In a market that is still experimenting with what products work best, the advantage is not simply being able to integrate blockchain technology.

It is being able to adapt quickly when user needs and market conditions change.

5. High Yield, High Liquidity, and Low Risk Rarely Come Together

Another important consideration for businesses building yield products is that returns do not come without risk.

Some businesses may prefer lower-risk opportunities with returns closer to the Federal Funds Rate or SOFR. For them, the real appeal of blockchain may be features such as instant settlement, 24/7 availability, and high liquidity.

Others may be willing to move further up the risk curve in exchange for potentially higher returns.

Cuming explained that businesses may sometimes want double-digit returns, instant liquidity, and low risk all at once. In reality, there are trade-offs, and such conditions are generally difficult to sustain indefinitely.

One approach is to adopt a portfolio strategy rather than relying on a single yield source. Businesses can diversify across different options, continuously monitor them, and establish risk parameters appropriate for both the platform and its users.

6. The Future of Yield Could Combine the Best of TradFi and DeFi

Today's yield sources can broadly be divided into two categories.

Crypto-native yield includes lending protocols, liquid staking tokens, and structured products built directly on blockchain infrastructure.

Tokenized offchain yield, meanwhile, comes from assets originating in traditional finance that are tokenized and brought onchain.

Cuming sees the latter as an increasingly important opportunity because it allows financial products to combine characteristics from both worlds.

On one side are the safeguards and structures associated with traditional finance. On the other are the capabilities of blockchain, including speed, 24/7 availability, and programmability.

The future of yield products, therefore, may not be about deciding whether TradFi or DeFi is better.

Instead, it could be about combining assets and infrastructure from both worlds to build products suited to different users, objectives, and risk profiles.

From Payment APIs to Yield APIs?

The rise of payment APIs allowed businesses to integrate payments into their products without having to build an entire financial infrastructure from scratch.

Embedded yield could follow a similar path.

As blockchain complexity becomes increasingly abstracted away, businesses may no longer need to think about which protocols to integrate, how assets should move across chains, or how many separate integrations they need to maintain.

In the longer term, Cuming envisions a world of programmable money, where assets no longer need to sit idle in bank accounts, wallets, or brokerage accounts. Instead, they could continuously be put to productive use and generate value for their holders.

This could represent the next stage of stablecoin adoption: moving beyond technology that simply helps money move faster toward financial infrastructure that enables money to work all the time.

Watch the full session: https://youtu.be/-itiRZtDmUo?si=06h3tEROVVc2bFWN

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Source:
This article was written, compiled, and analyzed based on the session “The Yield Layer for Platforms: Turning Stablecoin Balances into Revenue, Retention, and Onchain Products,”