Three years after we warned of a silent vampire attack on crypto, the debate at Davos proves the extraction has only grown. A new model, yield streaming, could finally break the cycle.
Stablecoin issuers and crypto-friendly banks were extracting billions in interest income from an ecosystem that received nothing in return. TradFi and DeFi had entered a parasitic relationship: centralized stablecoin operators captured the yield generated by assets held on behalf of users who bore the risks and shared none of the rewards.
Last week at Davos, that vampire came out of the shadows.
Armstrong framed it as consumer rights and global competitiveness: “People should be able to earn more on their money.”
Villeroy dismissed yield-bearing tokens as a systemic risk to traditional banking.Standard Chartered CEO Bill Winters sided with crypto: “As a store of value, tokens are much less interesting if they don’t carry a yield.”
Yield is the central battleground for DeFi in 2026.
The scale of extraction
When we wrote the original piece, interest rates had just climbed to roughly two and a quarter percent. We estimated that stablecoin operators would capture hundreds of millions annually.
It turns out that we underestimated.
In 2024, Tether reported profits of approximately thirteen billion dollars. Those profits were derived almost entirely from Treasury bill yield on reserves held by users who received nothing.
Circle, PayPal, and a constellation of fintech platforms have built empires on the same model.BCG analysis shows Tether achieving roughly five hundred thirty-five million dollars in revenue per employee — an extraction efficiency that dwarfs any bank in history.
With more than one hundred billion dollars in reserves earning four to five percent annually, Tether captures four to five billion dollars in risk-free interest income.
The DeFi protocols that create demand for USDT subsidize the issuer’s profits.The parasitic relationship we identified in 2022 has metastasized. Hyperliquid, one of the most successful crypto-native trading protocols, holds approximately six billion dollars in USDC.
That position generates an estimated two hundred forty to three hundred million dollars annually in Treasury bill yield for Circle and Coinbase. Hyperliquid receives nothing, at least as far as we can tell from the outside.
Applications and chains creating demand for stablecoins remain unpaid liquidity hosts for issuers who capture the economic surplus.This is the oldest play in the finance playbook: Hold other people’s money, invest in safe assets, and keep the spread.
Banks have done it for centuries. Insurance companies built empires on it. Gift card issuers, payroll processors, and marketplace platforms all operate variations of the same float economics.
The promise of stablecoins, as an extension of cryptocurrencies, was disintermediation.
What we built were new intermediaries more extractive than the ones they replaced.
The irony of safe assets
The assets backing these stablecoins — Treasury bills, money-market instruments, high-quality liquid assets — are attractive precisely because of their stability and safety.
These are the safest investments in the global financial system, offering modest but reliable returns.
When users deposit dollars into stablecoins backed by these assets, issuers capture all of the upside. Users hold instruments that pay nothing. In other words, users get the peg while issuers get the yield.
Villeroy’s position at Davos reveals the stakes.
Traditional finance views yield distribution to users as a threat because it undermines the intermediation model banks depend on. Mike Cagney, founder of Figure Markets and former CEO of SoFi, made this exact point when launching YLDS, the first SEC-registered interest-bearing stablecoin:
“If I can hold this, if I can self-custody this, if it pays me interest, and I can actually use it to transact, what do I need a bank for?”
Four models, one question
The Davos debate reflects a market fracturing along yield lines.
Four distinct models now compete.
The extractive model: Issuers capture all reserve yield as compensation for infrastructure and compliance.
The competitive sharing model: Platforms pass through yield to users in competitive deposit markets.
The securities model: Yield-bearing tokens registered as securities and paying interest directly to holders.
The ecosystem distribution model: Yield flows to the applications and protocols that create demand.
This fourth model — yield streaming — is the most significant opportunity for DeFi in 2026.
Yield streaming: from extraction to alignment
Yield streaming inverts the extractive model.
The protocol tracks where stablecoins sit: which applications hold them, how much, and for how long. Yield is distributed proportionally based on the value hosted.
At one billion dollars in ecosystem TVL earning roughly four percent Treasury yield, forty million dollars flows annually. Under the extractive model, that value goes to a single issuer.
Under yield streaming, the majority of that value could instead flow to applications proportional to the balances they host. An application with one hundred million dollars in deposits captures more than one with ten million.The more value an application creates, the more yield it captures.This structure creates alignment the extractive model cannot.
Applications become compensated ecosystem participants. Developers gain incentives to integrate and retain stablecoin balances. Users see upside on cash-like transactions.
The relationship shifts from parasitic to symbiotic.
A call to action
Interest-bearing stablecoins are essential for consumer benefit and U.S. competitiveness.
But the opportunity extends beyond paying yield to individual holders. The DeFi community can build infrastructure that shares economic value with the ecosystem that creates it.
The silent vampire attack we identified in 2022 has grown into a multi–billion-dollar annual extraction engine.Awareness is not enough. Builders must implement yield streaming at the protocol level.
Applications must demand yield distribution as a condition of integration.
Users must recognize that non-yielding stablecoins represent a transfer of value to issuers. We should go further.
The question is whether the entire ecosystem — developers, applications, and autonomous agents — should share in the value created by safe-asset reserves.
