The fluctuations in US Treasury yields are increasingly impacting the returns of crypto market yield products in a direct way. This transmission isn’t just an indirect mapping—it happens through three main channels: underlying asset holdings, changes in funding costs, and institutional allocation behavior. For users focused on stable returns, understanding this transmission mechanism helps clarify the sources and dynamics of yield changes in on-chain yield products.
The Federal Funds Rate Remains the Benchmark Anchor for On-Chain Yields
As of May 28, 2026, the Federal Reserve’s target range for the federal funds rate is 3.50% to 3.75%, with the effective federal funds rate around 3.63%. This rate forms the fundamental reference point for the global cost of dollar funding. On-chain stablecoin lending rates, staking product yields, and various DeFi protocol funding rates are all fundamentally tied to this benchmark.
The March 2026 FOMC meeting maintained rates unchanged with an 8-to-4 vote, marking the most divided decision in over thirty years. The Fed’s dot plot median indicates only one rate cut in 2026 (25 basis points), another in 2027, and a year-end federal funds rate forecast of 3.4%. April’s CPI rose 3.8% year-over-year, significantly higher than March’s 3.3%, directly reinforcing market expectations for continued Fed tightening. The market has fully priced in expectations for sustained high rates; as of May 27, New York close, the 2-year US Treasury yield was 4.0349%, and the 10-year yield was 4.48%. The close correlation between short-term Treasury yields and the federal funds rate means that all dollar-denominated fixed-income products—whether in traditional finance or on-chain—are influenced by this rate curve.
Stablecoin yield products don’t generate returns in isolation. When short-term Treasuries offer around 4% risk-free yield, on-chain stablecoin products must remain competitive; otherwise, capital will naturally flow toward higher yields. This arbitrage mechanism ensures a strong correlation between on-chain yields and dollar interest rates.
How US Treasury Yields Influence On-Chain Yield Products
Interest rate changes in traditional financial markets impact on-chain yield products through three layers.
First Layer: Synchronized changes in underlying asset yields. Yield products like GUSD hold highly liquid assets such as US Treasuries as their underlying collateral. When Treasury yields rise, interest income from these assets increases, supporting the product’s reference annualized yield. Conversely, declining Treasury yields reduce underlying asset returns and put downward pressure on product yields. This is a direct and immediate transmission channel.
Second Layer: Profit transmission from stablecoin issuers. According to Grayscale research, a high-rate environment significantly benefits stablecoin issuers holding large interest-bearing asset reserves. Grayscale’s research director Zach Pandl estimates that each 25-basis-point increase in short-term rates boosts stablecoin issuers’ annual income by about $190 million. While regulatory constraints prevent issuers from directly paying interest to users, ecosystem yield products can return part of these earnings to users through mechanisms like Launchpool or Earn, forming an indirect transmission.
Third Layer: Migration of institutional capital risk pricing. As of April 2026, Aave V3’s USDC deposit rate was about 2.7%, lower than the federal funds rate at 3.5% and the 10-year Treasury yield at 4.3%. CoinDesk reported that by early May, the stablecoin lending annualized rate on Aave had dropped to 5% or lower, down sharply from the previous abnormal period’s 13–14%. Tesseract Group’s asset management head noted Aave V3 USDC rates rebounded to about 3.86%, Morpho’s vault rates ranged from 3.5% to 5.4%, and Sky USDS savings rates were around 3.65%. This yield gap drives institutional capital to favor on-chain yield products with transparent underlying assets over DeFi protocols relying solely on on-chain supply and demand. This trend is directly fueling rapid growth in the RWA sector.
Why Stablecoin Yield Products Are Linked to Dollar Interest Rates
As assets pegged to the dollar, stablecoin yield products are tightly linked to dollar interest rates—not by coincidence, but through the combined effects of arbitrage, asset custody, and competitive pricing.
Arbitrage is the core driving force. The essence of stablecoin yield products is allocating user-deposited stablecoins to underlying interest-bearing assets. When dollar rates rise, returns from traditional tools like short-term Treasuries and repo agreements increase, expanding the yield potential for stablecoin products. If on-chain products fail to reflect these changes, users can arbitrage by minting, redeeming, or transferring funds across platforms until the yield gap closes.
Asset custody structures reinforce this correlation. Products like Gate Earn cover more than 800 digital assets, and their large-scale asset management requires integration with traditional income-generating tools, whose returns are anchored by dollar rates. Gate’s USDT yield products adjust reference annualized yields based on market rates and lock-up periods, reflecting this linkage.
Competitive pricing is a market-level driver. In an environment with efficient rate transmission, on-chain yield products that lag behind traditional dollar yields lose competitiveness; conversely, if they significantly exceed traditional yields, it may indicate additional risk premiums. This competitive dynamic keeps stablecoin yields closely aligned with dollar rates over the long term. As Grayscale notes, dollar-denominated fixed-income yields now generally surpass comparable DeFi products. If crypto investors achieve higher returns on tokenized bonds, more assets will migrate on-chain.
GUSD’s Yield Logic: On-Chain Note Products Backed by US Treasuries
GUSD is a flexible, principal-protected yield product launched by Gate. Users mint GUSD by depositing USDT or USDC at a 1:1 ratio and receive yield certificates. Unlike traditional stablecoins, GUSD is closer to an on-chain dollar note—backed by low-risk real-world assets like US Treasuries and Gate ecosystem income. It accumulates yield during holding and settles principal and interest upon redemption.
As of May 28, 2026, GUSD’s reference annualized yield is 3.00%. This yield is reasonably priced against the current 2-year Treasury yield of 4.0349%, with the spread reflecting product structure, liquidity premium, and risk adjustments. GUSD’s design introduces the "maturity yield" concept of traditional notes to on-chain cash management, aligning it more closely with the operational logic of bonds or notes.
GUSD’s yield comes from both Treasury interest and Gate ecosystem income. US Treasuries, recognized globally as safe assets, provide robust value support for GUSD. Gate ecosystem income supplements this, helping maintain yield stability even as Treasury rates fluctuate. This dual-track yield structure ensures asset security and supports sustainable returns.
How the RWA Narrative Is Reshaping On-Chain Yield Dynamics
Tokenization of real-world assets (RWA) saw explosive growth in 2026. By May 2026, the total market size for tokenized real-world assets on-chain reached $31–34 billion, up several times from $5.4–6.0 billion at the start of 2025. According to RWA.xyz, the tokenized RWA sector now has over 796,000 holders, with institutional deployments driving most of the growth.
Tokenized US Treasuries are the main growth engine. By May 2026, tokenized Treasury products neared $15 billion, surging from about $3.9 billion at the start of 2025, making them the largest single category in the RWA sector. Including broader representative assets, total tokenized asset volume has exceeded $381.8 billion, with Ethereum holding about 55% market share. Standard Chartered’s global digital asset research director attributes Ethereum’s leadership to its long security track record, broad institutional ecosystem, and mature compliance tools—making it the "defensible default choice" for institutional investors.
Tokenized commodities have a market size close to $6 billion, and tokenized private credit exceeds $4.5 billion, up more than ninefold year-over-year. RWA perpetual contract trading volume hit $52.48 billion in Q1 2026, surpassing all of 2025. These figures show that RWA is evolving from "single Treasuries" to "diversified asset portfolios."
Against this backdrop, GUSD’s positioning becomes clear: it serves as a bridge connecting traditional income-generating assets and on-chain yield demand, representing the RWA narrative’s concrete application for individual users.
How to Build Dollar Yield Portfolios and Stable Yield Structures
In the current rate environment, the key to constructing a dollar yield portfolio is layered allocation—balancing stability and yield flexibility.
Base Yield Layer: Use low-volatility products like GUSD and USDT Earn as portfolio anchors. As of May 28, 2026, Gate’s platform reference annualized yields are: GUSD 3.00%, USDT 4.69%, ETH 4.31%, SOL 8.50%, USDS 2.21%, GT 0.86%. GUSD and USDT products provide stable cash flow and are ideal for idle funds. Gate Private Wealth Management data shows that in April 2026, USDT strategies averaged 5.6% annual yield with a maximum historical drawdown of just 0.01%.
Yield Enhancement Layer: Boost overall returns by participating in fixed-term and promotional products. Gate Earn VIP 30-day yield can reach 4.5% annualized. Gate’s on-chain Spark protocol offers 4.5% reference annualized yield for USDT staking, with an extra 50,000 USDT reward pool during promotional periods.
Flexible Yield Layer: Combine stablecoin yields with other token incentives through activities like Launchpool. GUSD users can enjoy both minting yields and Launchpool rewards. This structure lets users earn ecosystem incentives while keeping stablecoin principal safe.
For portfolio management, diversifying lock-up periods helps respond flexibly to rate changes. When markets expect Fed rate cuts, increasing fixed-term allocations can lock in higher yields; when rates are expected to remain stable, flexible products offer greater liquidity. Note that reference annualized yields are not fixed—they fluctuate daily based on user participation and staking returns. The above content does not constitute investment advice; users should make independent decisions based on their own circumstances.
Conclusion
The connection between the dollar interest rate system and the on-chain yield market is becoming increasingly direct as RWA infrastructure develops. Whether it’s stablecoin yield products, tokenized Treasuries, or on-chain yield products like GUSD, the underlying logic is no longer limited to internal crypto capital flows, but is now deeply integrated with the global dollar liquidity environment.
For users, understanding the transmission relationship between "US Treasury yields—dollar interest rates—on-chain yields" is more important than simply tracking short-term yield changes. As on-chain assets connect to the real-world financial system, yield sources are shifting from purely crypto incentives to a diversified structure supported by Treasuries, notes, and real-world cash flows.
GUSD’s significance lies in offering on-chain users a product that closely follows traditional dollar fixed-income logic. In an environment where high rates may persist, stable-yield on-chain dollar assets are gradually becoming a vital bridge between traditional finance and the crypto ecosystem. As the RWA market continues to expand, the focus of on-chain wealth management will shift from chasing high yields to prioritizing transparency of yield sources, asset security, and long-term stability.
