Problems
There are three major structural problems facing the stablecoin and onchain lending industries today: float revenue capture, supply centricity, and capital inefficiency. These problems originate from the concentration of economic benefits at the token issuer level and among passive supply-side market participants.
1. Float Revenue Capture
As of Q2 2026, annual float revenue (reserve yield) generated by stablecoin issuers has surpassed $10 billion, largely dominated by Tether and Circle. However, the majority of float revenue remains internalized, creating a structural disparity in economic benefits between issuers and end users.
2. Supply Centricity
Supply centricity refers to traditional yield distribution models employed by stablecoin and yieldcoin projects, where float revenue-funded yield or rewards are allocated to token holders, stakers, liquidity providers (LPs), and lenders, i.e., supply-side market participants. As a result, borrowers are structurally under-incentivized on the demand side.
3. Capital Inefficiency
DeFi capital inefficiency is most apparent in lending protocols, where:
- Supply-side incentives do not create the marginal credit demand needed to sustain utilization. While they may increase the supply of lending liquidity, they do not improve a borrower’s unit economics. As a result, incentivized stablecoin deposits often accumulate as idle capital rather than productive credit.
- Borrowing yieldcoins carries higher net interest expenses because yield-bearing assets embed a greater cost of capital. As a result, yieldcoin loans are naturally more expensive than stablecoin loans, causing yieldcoins to be used primarily as passive collateral rather than as a medium of credit.
- Borrowing demand remains concentrated in non-yielding stablecoins, reinforcing a structural separation between assets used for yield generation and those used for credit intermediation.
Solution
dTRINITY addresses these structural inefficiencies through a novel design: using idle yieldcoins as reserve backing to issue a demand-centric, borrower-friendly stablecoin. Float revenue is then externalized as rebates to subsidize interest expenses, rather than as yield to the supply side.
By subsidizing borrowing costs with float revenue, dTRINITY shifts the credit demand curve outward, increasing borrower activity even at higher gross interest rates. This moves the market toward a new equilibrium with higher utilization and lending yields. Borrowers can pay lenders more in gross interest while still benefiting from competitive net borrowing costs, creating a positive-sum outcome for both sides of the market.
