Trezor has integrated native stablecoin yield functionality into Trezor Suite, the hardware wallet provider’s desktop and mobile application, which could make earning yield on stablecoins more accessible to users who traditionally avoid decentralized finance due to its complexity and security risks.
Announced on Thursday, the feature comes through an integration with Morpho, a decentralized lending protocol built on Ethereum. The integration allows users to deposit USDT (USDT) and USDC (USDC) directly into pre-selected Morpho Vault through the Trezor Suite without connecting an external wallet or using separate DeFi applications.
According to Trezor, deposits, withdrawals and reward claims are signed directly to users’ hardware wallets through the company’s clear-signature interface, which displays transaction details in human-readable form on the device screen.
Source: trezor
At launch, Trezor features two Morpho Vaults curated by Steakhouse Financial – USDC Prime and USDT Prime. The company said the yield arises from demand for lending on Morpho rather than token incentive programs.
Trezor is one of the largest crypto hardware wallet providers and is considered the second largest player in the market after Ledger.
Wallet providers have recently been placing a widespread emphasis on incorporating decentralized finance functionality directly into custody products while reducing the complexity traditionally associated with DeFi protocols.
Ledger already offers native stablecoin yield through Ledger Live using Kiln-powered integration with protocols including Morpho, Aave, and Compound.
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Stablecoin yields attract growing interest – and scrutiny
Stablecoin yield strategies have become one of the fastest growing use cases in DeFi, allowing users to earn returns on dollar-pegged assets by lending through on-chain protocols.
According to CoinMarketCap data, USDC yields can vary widely across different platforms and market conditions, with some protocols offering double-digit annual returns. Proponents say stablecoin yield products offer crypto holders a way to generate passive income.
However, the strategies also involve risks, including smart contract vulnerabilities, liquidity issues, and exposure to centralized stablecoin issuers or counterparties.
Ethereum co-founder Vitalik Buterin recently made a distinction between decentralized finance and the many yield-focused stablecoin products currently on the market. In a recent post, Buterin said that many “USDC yield” strategies rely too heavily on centralized issuers, while failing to adequately address counterparty risk.
Source: vitalik buterin
Buterin proposed two alternative models that he more closely aligned with the decentralized ethos of DeFi: ether-backed algorithmic stablecoins and overcollateralized real-world asset-backed stablecoins.
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