USDe consistently earns more yield than USDC – but it carries more risk. In current market conditions, staking USDe into sUSDe returns approximately 5% APY, while USDC lending across major protocols yields 3-8% APY. During bullish crypto markets, sUSDe has reached 25%+ while USDC lending rarely exceeds 10%. The difference comes down to how each stablecoin generates that yield, and whether the extra return justifies the additional risk layers.
USDe yield comes from crypto derivatives funding rates. USDC yield comes from borrower interest payments on DeFi lending protocols. These are fundamentally different mechanisms with different risk profiles, and understanding that distinction is the key to choosing between them – or using both.
How USDC Yield Works
USDC lending is the simpler of the two. You deposit USDC into a protocol like Aave v3, Compound, or Morpho Blue. Borrowers take collateralized loans from the same pool and pay interest. That interest flows to you proportional to your share of the pool.
The mechanics are transparent and well-understood:
- Supply and demand set the rate algorithmically – when more people want to borrow USDC, your rate increases
- Borrowers must overcollateralize their loans (typically 150%+ of loan value), which protects you if they default
- You can withdraw anytime, though very high utilization periods may temporarily delay withdrawals
- Your principal stays denominated in USDC – a dollar-pegged asset backed by cash reserves and short-term US Treasuries held by Circle
USDC lending rates across Aave v3, Compound, and Morpho Blue currently range from 3-8% APY. During periods of high borrowing demand – usually in bull markets when traders are leveraging up – rates can temporarily spike above 10%. During quiet markets, rates compress toward 2-3%.
For a complete walkthrough of USDC lending mechanics and where to find the best rates, see the USDC lending guide.
How USDe Yield Works
USDe is Ethena's synthetic dollar. Unlike USDC, which is backed 1:1 by fiat reserves, USDe is backed by a delta-neutral hedging strategy that simultaneously generates yield.
Here is where USDe yield comes from:
- ETH staking rewards: A portion of Ethena's collateral is liquid staked ETH (stETH, cbETH), earning the base Ethereum staking yield of roughly 3-4% APY
- Perpetual futures funding rates: Ethena holds short perpetual futures positions against its ETH collateral. In a net-bullish market, longs pay shorts – and Ethena collects those payments
When you stake USDe into sUSDe, you receive both yield streams. The sUSDe token appreciates relative to USDe over time as rewards accrue – similar to how Lido's stETH works for ETH staking.
sUSDe yield is variable and tied to crypto derivatives market conditions. In 2024, sUSDe averaged approximately 11% annualized. In more recent conditions, that figure has moderated to approximately 5% APY as funding rates cooled. During peak bullish sentiment, yields have exceeded 25%.
USDe's total supply sits around $6.3 billion, making it one of the largest stablecoins by market cap. Ethena maintains a reserve fund that absorbs losses during periods when funding rates flip negative – historically, the longest streak of consecutive negative funding days was 13.
Yield Comparison: Where the Numbers Land
Rather than presenting static rates that will be outdated by tomorrow, here is how the two yield sources have performed across different market environments.
During bullish crypto markets (high leverage demand):
- sUSDe yield: 15-25%+ APY as funding rates surge from longs paying shorts
- USDC lending: 6-10% APY as borrowing demand spikes across protocols
- Spread: sUSDe typically earns 2-3x more than USDC lending
During neutral or moderate markets:
- sUSDe yield: 5-10% APY
- USDC lending: 3-6% APY
- Spread: sUSDe earns modestly more, but the gap narrows
During bearish markets (negative funding rates):
- sUSDe yield: 0-5% APY as funding rates compress or turn negative. Ethena's reserve fund absorbs negative periods, but sustained bear markets erode returns
- USDC lending: 2-4% APY as borrowing demand drops
- Spread: Can narrow to near-zero. In extreme conditions, USDC lending may actually outperform sUSDe
The pattern is clear: USDe outperforms USDC in bullish conditions and can significantly underperform when markets turn. USDC lending provides steadier, more predictable returns across all environments.
For current rates on both assets across every supported protocol, check the Discover page on Superlend – it shows USDC lending rates and USDe/sUSDe market rates side by side.
Risk Comparison: What Can Actually Go Wrong
This is the section that matters most for making a decision. USDe and USDC have meaningfully different risk profiles.
USDC Risks
Smart contract risk: Your USDC sits in a lending protocol's smart contracts. A bug or exploit could result in loss of funds. Major protocols like Aave v3 and Compound have years of battle-testing and billions in TVL, which reduces but does not eliminate this risk.
Utilization risk: If borrowing utilization reaches near-100%, you may temporarily be unable to withdraw. This is usually short-lived – protocols raise rates sharply at high utilization to incentivize repayment – but it can be stressful during market volatility.
Stablecoin issuer risk: USDC depends on Circle maintaining its fiat reserves and regulatory standing. USDC briefly lost its peg in March 2023 when Silicon Valley Bank (which held part of Circle's reserves) collapsed. The peg recovered within days, but it demonstrated that even fiat-backed stablecoins carry counterparty risk.
What you do not face with USDC lending: funding rate risk, depeg risk from complex hedging strategies, or multi-protocol smart contract stacking.
USDe Risks
USDe carries all the risks that come with a more complex yield mechanism.
Funding rate reversal: sUSDe yield depends on perpetual futures funding rates being positive. In a sustained bear market where shorts outnumber longs, funding rates turn negative and Ethena's positions pay rather than collect. The reserve fund provides a buffer, but a prolonged negative period would drag sUSDe returns to zero or even slightly negative.
Depeg risk: In October 2025, USDe briefly traded at $0.65 on Binance due to a Binance-specific oracle issue. On-chain, the peg held on decentralized venues like Uniswap. This was an exchange-level problem, not a protocol failure – but it demonstrated that price dislocations can happen, and any leveraged positions using USDe as collateral are especially vulnerable to such events.
Multi-layer smart contract risk: Using sUSDe means trusting Ethena's staking contract plus the lending protocol you deposit into. That is two separate smart contract systems compared to one for simple USDC lending. Each layer adds its own audit surface and potential vulnerability.
Centralized exchange dependency: Ethena's hedging strategy relies on holding short perpetual futures positions on centralized exchanges. Counterparty risk from those exchanges is a real consideration – though Ethena uses off-exchange custody solutions to mitigate this.
Liquidity and exit risk: During market stress, sUSDe liquidity can thin out. Unwinding a large position during a panic may involve slippage or delays.
For more on evaluating these types of risks, read Is DeFi Lending Safe?.
When to Use USDC Yield
USDC lending is the right choice when:
- Capital preservation is the priority. USDC's peg is backed by auditable fiat reserves. The risk layers are fewer and better understood.
- You want predictable, steady returns. USDC lending rates fluctuate, but within a tighter band (3-8%) compared to sUSDe's wider swings.
- You are newer to DeFi. USDC lending on a single protocol like Aave v3 is one of the simplest yield strategies in DeFi – deposit, earn, withdraw. No staking, no derivatives, no secondary tokens.
- You need liquidity flexibility. USDC withdrawal from lending protocols is near-instant in most conditions. No unstaking period, no DEX swaps required.
USDC lending is also the building block for more advanced strategies. Once you are comfortable with simple lending, you can explore rate optimization through protocol comparison or automated vaults.
See the stablecoin yield strategies guide for a full breakdown of approaches ranked by complexity.
When to Use USDe Yield
USDe yield makes sense when:
- You want higher returns and accept the additional risk. sUSDe outperforms USDC lending in most market environments, sometimes significantly.
- You have a bullish market outlook. Funding rates – and therefore sUSDe yield – are highest when the market is bullish and leveraged long positions dominate.
- You understand derivatives mechanics. Knowing how perpetual futures funding rates work helps you anticipate when sUSDe yield will rise or fall, and when to rotate out.
- You are comfortable with multi-protocol risk. Using sUSDe means trusting both Ethena and whatever lending protocol you deposit into.
USDe yield can also be amplified through looping strategies – depositing sUSDe as collateral, borrowing stablecoins, buying more USDe, and restaking. This can push effective APY into double or triple digits during favorable conditions, but it layers on liquidation risk and leverage risk. For a detailed breakdown, see the Ethena USDe loop guide.
The "Both" Strategy: Barbell Allocation
Most experienced DeFi users do not pick one or the other – they use both, allocating based on market conditions and risk tolerance.
A common approach:
- 60-70% in USDC lending as the conservative base. This portion earns steady 3-8% with minimal complexity. It is the capital you are not willing to risk on more exotic strategies.
- 20-30% in sUSDe as the yield-seeking allocation. This portion targets the higher returns from Ethena's funding rate yield, accepting the additional risk layers.
- 0-10% in leveraged USDe strategies (looping) for users who want maximum yield and fully understand the liquidation risks involved.
This barbell structure means a bad outcome on the USDe side – a sustained funding rate reversal or depeg event – only affects the smaller allocation. Meanwhile, the USDC base continues earning steady yield regardless of what happens in derivatives markets.
You can rebalance between the two based on market signals:
- Funding rates rising? Increase sUSDe allocation to capture higher yield.
- Funding rates compressing toward borrow costs? Rotate back to USDC lending where the risk-adjusted return is better.
- Major market uncertainty? Go heavier on USDC lending until conditions clarify.
How Superlend Makes This Easier
Superlend is a non-custodial DeFi lending aggregator connecting users to 350+ money markets across 11+ chains. For comparing and executing USDe and USDC strategies, Superlend helps in three specific ways.
Side-by-side rate comparison. The Discover page shows USDC lending rates across Aave v3, Compound, Morpho Blue, Euler v2, Fluid, and other protocols – alongside USDe and sUSDe market rates. Instead of checking each protocol individually, you see the full picture in one view.
Cross-chain visibility. Both USDC and USDe markets exist across Ethereum, Arbitrum, Base, and other chains. Rates vary by chain – L2 deployments often have different supply/demand dynamics than mainnet. Superlend surfaces rates across all supported chains so you can find the best opportunity regardless of where it lives.
One-click vault strategies. For users who want exposure to USDe looping without managing the multi-step process manually, Superlend offers Loop Vaults in the Vaults section. Deposit once, and the vault handles borrowing, swapping, restaking, and health factor management automatically.
Quick Decision Framework
Choose USDC lending if: You prioritize simplicity, predictable returns, and minimal risk layers. You are satisfied with 3-8% APY and want to sleep well at night.
Choose sUSDe if: You believe funding rates will remain positive, you understand derivatives risk, and you want to target returns above what simple lending offers. You accept that yield is more volatile and risk is higher.
Use both if: You want to optimize risk-adjusted returns across your stablecoin portfolio. Weight toward USDC for stability, tilt toward sUSDe when market conditions favor funding rate yield.
Amplify with looping if: You are an experienced DeFi user who fully understands leverage, liquidation risk, and is willing to actively manage positions – or use automated Loop Vaults to handle execution.
The right answer depends on your risk tolerance, market outlook, and how actively you want to manage your positions. There is no universally correct choice – only the allocation that matches your situation.
Compare current rates for both USDC and USDe across all supported protocols on Superlend.
Risks and Disclaimers
Rates are variable and subject to change. Past performance does not guarantee future results. The yield figures referenced in this article reflect historical and approximate current conditions – actual rates fluctuate continuously based on market dynamics.
Not financial advice. DeFi involves risks including smart contract vulnerabilities, stablecoin depeg events, and loss of funds. USDe carries additional risks related to derivatives counterparty exposure and funding rate reversals. Leveraged positions carry additional risk of liquidation. Only use funds you can afford to lose. DYOR.