Stablecoins have been around for about a decade, dominated by heavyweights like Tether's USDT and Circle's USDC — which do not pay yield to users and keep all income for themselves. But a new buzz around yield-bearing stablecoins is gaining steam, especially on the back of elevated interest rates.

Earlier this year, Ethena Labs launched a yield-bearing token, sUSDe (a staked version of its USDe "synthetic dollar"), which uses a "delta-neutral" trading strategy involving long and short positions to generate yield. Since then, sUSDe has quickly grown in popularity.

Then last week, Mountain Protocol, the issuer of the yield-bearing USDM stablecoin, raised $8 million in a Series A funding round led by Multicoin Capital. Around the same time, Paxos …