7. Empirical Yield Analysis for Stablecoin-to-Stablecoin Liquidity Pools

7.1. Introduction

One of the core pillars of the UST Protocol is its ability to generate sustainable yield by deploying collateral (USDC/USDT) into stablecoin-to-stablecoin liquidity pools. This chapter presents real-world data and historical metrics illustrating how much yield these pools can produce under varying market conditions. By examining empirical evidence from live decentralized exchanges (DEXs)—such as Uniswap V3—and aggregated data, we aim to demonstrate the feasibility of achieving attractive APRs in low-volatility, stablecoin-focused environments.

7.2. Historical APR Data Overview

Below is a high-level summary of the yields captured in three distinct stablecoin-to-stablecoin pools, as evidenced by the provided charts:

7.2.1. Pool A (e.g., USDC–USDC on Uniswap V3)

• Historical APR Range: ~2% to ~10% on average, with occasional spikes exceeding 20%.

• Current APR: ~2.21% at a Total Value Locked (TVL) of $17.88 million.

• Observations: This pool exhibits relatively stable yields but experiences short-term APR surges correlated with sudden increases in trading volume or volatility.

7.2.2. Pool B (e.g., another stablecoin pair on Uniswap V3)

• Historical APR Range: Often fluctuating between ~5% and ~40%, with periodic peaks near or above 70%.

• Current APR: ~29.60% at a TVL of $311k.

• Observations: Although the TVL is smaller, higher APR is occasionally observed during periods of heightened trading activity. The volatility in APR underscores the importance of monitoring liquidity depth and volume.

7.2.3. Pool C (aggregated stablecoin pool data)

• Historical APR Range: ~1% to ~80%, heavily dependent on market conditions and liquidity depth.

• Long-Term Trend: An average APR often stabilizing around the 10–20% range over extended periods, with spikes during high-volume trading windows.

• Observations: This data underscores that stablecoin-to-stablecoin pools can periodically deliver outsized returns, albeit with short-lived peaks.

7.2.4. Numerical breakdowns of APR trends across multiple DEXs and stablecoin pairs

Key takeaways:

• Average Sustainable Yields: Over a 6–12 month horizon, many pools consistently yield in the 10–20% APR bracket, especially in times of moderate trading volume.

• Volatility in Short-Term Spikes: APR spikes often coincide with sudden liquidity inflows or arbitrage opportunities. While these surges can be lucrative, they are typically short-lived.

• Liquidity Sensitivity: Pools with higher TVL generally exhibit lower volatility in APR, but smaller pools can produce more dramatic yield fluctuations—both higher peaks and sharper troughs.

7.3. Factors Influencing Yield Fluctuations

The observed yield variations are shaped by several market and protocol-level dynamics:

Trading Volume & Volatility:

• Stablecoin pairs experience heightened fee generation when large trades or rapid price movements in correlated assets occur, temporarily boosting APR.

Liquidity Depth:

• Pools with higher TVL often see more stable APR, whereas smaller pools can generate larger short-term spikes but also face greater vulnerability to rapid capital inflows/outflows.

Arbitrage & Market Efficiency:

• Temporary mispricings between stablecoins (e.g., USDC and USDT) can invite arbitrage activity, elevating trading volume and thus yield.

DEX Fee Structures:

• Each DEX sets its own fee parameters. Pools on platforms with higher fee tiers can see more pronounced yield swings, especially if volume is sporadic.

Market Sentiment & External Events:

• Broader crypto market conditions, regulatory announcements, or sudden liquidity migrations can cause abrupt shifts in APR.

7.4. Relevance for the UST Protocol

These empirical yield metrics validate the foundational premise of the UST Protocol:

Sustainable Yield Potential:

• Historical data shows that stablecoin-to-stablecoin liquidity pools can produce meaningful APRs (often 10–20% on average) with relatively low volatility compared to non-stable pairs. This aligns with USTD’s target yield model and mitigates risk by focusing on “apples-to-apples” collateral (fiat-backed stablecoins).

Automated Harvesting & Airdrops:

• The periodic yield surges, while short-lived, can be captured by an automated system that continuously monitors pool performance. The UST Protocol’s smart contracts can harvest these yields and distribute them to USTD holders via automated airdrops, amplifying user returns without manual intervention.

Collateral Optimization:

• By analyzing liquidity depth and yield patterns, the protocol can dynamically allocate collateral to pools with the most favorable risk–reward profile at any given time, thus maximizing yield generation in a relatively stable environment.

7.5. Conclusion

Real-world data from stablecoin-to-stablecoin liquidity pools consistently demonstrates the feasibility of generating sustainable yields. Although APR can fluctuate due to trading volume and external market factors, historical evidence supports the UST Protocol’s strategy of focusing on low-volatility, stablecoin-centric pools. This data-driven approach reinforces the viability of delivering reliable yields to USTD holders, all within a framework that minimizes exposure to the price volatility common in non-stable assets.

In summary, the historical APR charts and spreadsheet data confirm that stablecoin-to-stablecoin liquidity pools can be a robust source of yield. The UST Protocol is uniquely positioned to leverage these pools, capturing consistent yields and distributing them automatically to users—thereby fulfilling its core promise of simplicity, stability, and sustainable returns.