Alea Research said in a report on the third quarter of 2026 that on-chain dollar products widened their yield spread over tokenized U.S. Treasury funds to 1.06 percentage points, double the level seen earlier in the quarter.
The report said the move came from three sources: rising base yields, slow pass-through by benchmark Treasury funds, and token incentives. Of the 0.53 percentage-point increase in the spread, base yield contributed 0.40 percentage points. Roughly half of that came from Treasury funds lagging the 3-month U.S. Treasury yield ahead of the Federal Reserve’s Sept. 16 rate hike, while the rest came from protocol rate resets and the launch of higher-yielding new pools. Token incentives accounted for 60% of the excess return on on-chain dollars versus tokenized Treasury funds.
Tracked on-chain dollar pools reached $39.2 billion
The report framed both on-chain dollar pools and tokenized Treasury funds as ways to sell dollar-denominated yield that stays on-chain, but it drew a clear distinction in how the returns are generated. Treasury funds pass through government bond yields after management fees. On-chain pools pay interest funded by borrowers, minus protocol take rates, including borrowers in Aave’s lending markets, institutional borrowers in Maple’s credit pools, and selected strategies tied to perpetual basis trades and token incentives.
Alea wrote that tokenized Treasuries offer capped but safer returns, while on-chain pools can pay more because their upside is less constrained. The tradeoff is exposure to the credit risk of whoever ultimately pays the yield.
The report tracked $39.2 billion across on-chain dollar pools, more than four times the $8.6 billion combined size of 27 listed tokenized Treasury funds used as the benchmark. On a 30-day rolling yield basis, 82.9% of on-chain dollar products were outperforming Treasury funds at the end of the quarter, up from 65.4% on June 30.
Alea also noted that the spread on surviving pools had swung widely over time, from 1.43 percentage points above Treasuries in early October 2025 to 0.65 percentage points below Treasuries in March 2026. The September reading of 0.40 percentage points sat in the middle of that range. Looking only at base yield, on-chain dollars paid 3.92% on average in September, still 0.17 percentage points below Treasuries, meaning the full lead over Treasuries came from token rewards. For pools that existed in both comparison periods, the spread over Treasury funds widened from 0.52 percentage points to 0.90 percentage points, with new pools supplying the rest of the increase. Since April, a similarly high level had been seen only once, in mid-May, when the spread peaked at 1.13 percentage points.
Aave raised stablecoin rate curves as utilization climbed
The report said lending markets started the period below the “zero line,” meaning borrowing rates were at one point lower than yields on tokenized Treasury funds. That changed as utilization increased and borrowers absorbed higher interest costs.
By late August, USDT utilization on Aave’s Ethereum market had moved above 92%, the inflection point cited by the management team on Aug. 27. USDC utilization was at a similar level. Aave’s management team raised the first slope on both markets on Aug. 27, then again on Sept. 2 and Sept. 9, lifting rates from 4.00% to 4.40% in 13 days. Before the first increase, USDT borrowing had already been rising for two straight months.
The higher rates improved depositor returns and brought in fresh capital. Aave’s USDC and USDT markets on Ethereum grew by a net $470 million during the quarter. Between Aug. 28 and Sept. 13, deposits rose by $355 million and borrowing increased by $185 million. On Sept. 15, TokenLogic paused further first-slope increases and proposed reducing USDT’s target share from 94% to 93%, calling it a temporary step tied to the migration of USDe debt.
Alea said the Ethereum USDC deposit rate rose from 3.15% in June to 3.61% in September. Even so, Aave v3 still paid $9.3 million less than Treasury funds on a pure base-yield basis over the full quarter. Token rewards totaling $11.5 million closed that gap and pushed total returns back above the benchmark.
Benchmark Treasury funds lagged the move in front-end rates
Alea said a large part of the widening spread came from slow repricing in tokenized Treasury funds. The 30-day average yield on 3-month U.S. Treasuries rose by 0.28 percentage points during the quarter, while tokenized Treasury funds rose only 0.07 percentage points. That 0.21 percentage-point lag was identified as a main driver of the spread expansion.
The report said the Treasury market had already started moving higher before the Fed’s 25-basis-point hike on Sept. 16, after July brought a hold despite three votes in favor of a hike. At the same time, the total size of tokenized Treasury funds fell from $9.9 billion to $8.6 billion, dragged lower mainly by redemptions from Circle USYC on BNB Chain, BlackRock’s BUIDL on Ethereum, and one Centrifuge fund. BlackRock still launched two stablecoin reserve funds on Aug. 3.
Alea added that on-chain dollar base yields improved by 0.19 percentage points relative to benchmark Treasuries through lending protocol repricing and the arrival of higher-paying new pools. It also said the 0.21 percentage-point lag in Treasury funds should narrow as those funds rotate into newly issued higher-yielding government debt.
High-yield pools lost capital while lower-yield pools attracted money
Capital did not move in a clean line with spreads. Across 135 pools that were open in both periods and larger than $25 million, Alea calculated a rank correlation of only 0.19 between flows and spread levels. Two major redemptions distorted the pattern.
Pools that were yielding more than Treasury funds on June 30 saw a combined $740 million in outflows during the quarter. Pools yielding at or below Treasury funds added a net $270 million. Two high-yield pools, sUSDS and sUSDe, shrank by a combined $1.29 billion. Other pools in the same high-yield group still added $545 million, led by the Steakhouse Sirloin USDC vault on Base, the Aave USDe market on Plasma, and USD.AI sUSDai on Arbitrum. Token rewards paid roughly half of Sirloin’s yield and most of the yield in the Plasma market. By asset class, USDT deposits fell by $1.18 billion while USDC deposits increased by $630 million.
SparkLend’s USDS market was the biggest capital gainer even though its rate was about 1.2 percentage points below Treasury funds. On MegaETH, the Aave USDm looping market and Spark’s USDT savings vault together lost $977 million.
sUSDS shrank by $880 million for the quarter, mostly in July while Sky kept the rate fixed at 3.60%. A single day, July 13, accounted for $523 million in outflows. The rate fell to 3.52% on July 23, then returned to 3.60% on Sept. 3. On Sept. 23, Galaxy deposited $100 million into sUSDS and accepted it as loan collateral. Spark’s savings vaults lost $651 million, mainly from the USDT vault, while SparkLend’s USDT market shrank by another $244 million. Spark raised the USDT vault rate from 3.25% to 3.5% on Sept. 10, just above Treasury funds. SparkLend’s USDS market, also within the Sky ecosystem, grew by $895 million.
Ethena’s sUSDe pool kept shrinking even as its own 30-day yield rose from 3.86% to 4.23% by the end of August. USDe supply fell from $4.45 billion to $3.85 billion in July, then rebounded to $4.87 billion by Sept. 30, but dollars staked in sUSDe kept declining and hit a quarter-end low of $1.27 billion. Aave’s USDe markets on Plasma and Ethereum expanded by $378 million over the quarter. ENA holders unanimously approved a fee-switch proposal on Sept. 2. Under the plan, the switch activates when USDe supply reaches $7.5 billion, directing 5% of net revenue to ENA buybacks, and scales up to 25% once supply reaches $25 billion. Four weeks later, on Sept. 30, Ethena ended token incentives for USDe.
Whale-sized positions gained ground relative to smaller allocations
The gap between small and very large positions narrowed over the quarter. On June 30, a $1 million position yielded 2.09 percentage points more than a whale-sized position. By quarter-end, that gap had narrowed to 1.49 percentage points. Alea defined core pools as pools larger than $100 million, with at least six months of history, and with base yield making up at least 80% of total yield.
The biggest change came in $1 billion-sized whale positions. Their spread over Treasury funds jumped from 0.69 percentage points in June to 0.97 percentage points by quarter-end. Alea said large allocations benefited as core exposures were repriced. Maple’s USDC pool, sUSDe, and Aave markets all paid higher rates in September than they did in June. At quarter-end, a $1 billion portfolio still carried a 0.97 percentage-point spread, equal to an extra $9.7 million in annual net income. Alea said pool-wide rates would need to fall about 22% to erase that premium.
Maple led on native yield without token incentives
Among the six largest funding protocols by supply, Maple delivered the highest pure base yield over Treasury funds without using token incentives. Its three core pools paid $14.4 million more than Treasury funds in the third quarter, with an average spread of 1.43 percentage points.
After including rewards, Morpho vaults paid $15.8 million more than Treasury funds, though only $3.4 million of that came from native base yield. Aave v3 trailed Treasury funds on native yield but moved ahead after rewards. SparkLend remained below Treasury funds even after incentives.
Alea said four of the six largest protocols outperformed Treasury funds on every day of the quarter. Aave v3 beat the benchmark on 63% of trading days, including an uninterrupted stretch from Aug. 19 to Sept. 16. SparkLend did so on only 4% of days. SparkLend’s main USDS market kept 31% of reserves idle, and token incentives made up 34% of the yield it actually distributed.
Maple, which focuses on what the report described as “fixed-rate, overcollateralized commercial loans” to institutional borrowers, beat Treasury funds on all 92 days of the quarter across its three dollar pools without any help from token rewards. Deposits went through two large reallocations. The syrupUSDC pool lost $872 million from its July 15 peak to July 24, though its base rate stayed close to 4.8%. The pool ended the quarter at $2.87 billion, down $141 million from June 30. syrupUSDT shrank by $434 million over the quarter, mostly in September, while syrupUSDG, which qualifies as collateral for the Earn vault, expanded to $441 million. The three pools together posted a net decline of $213 million.
In a Sept. 17 memorandum, Maple added three new strategies: direct lending backed by rated securities, asset-backed securitization, and cash-and-carry basis trades. Each strategy was capped at 5% of deposits until a sufficient history is built. The report said withdrawals are normally processed instantly, with a maximum withdrawal term of 30 days under the product terms. It also said syrupUSDT saw $313 million in redemptions between Sept. 5 and Sept. 18, concentrated on Sept. 9, Sept. 11, and Sept. 17.
Robinhood Chain and Monad drew flows while MegaETH unwound
New chains were another source of movement. Robinhood Chain launched its mainnet on July 1 and started from zero. Total value locked on Monad more than doubled. Aave deployed on Monad the day after launch and secured a one-year, $15 million incentive commitment from the Monad Foundation. Alea said most of Monad’s incremental capital came from those new markets. On Sept. 11, Aave’s management team raised the first slope on Monad to 5.00%.
The picture on MegaETH moved in the opposite direction. The Aave USDm looping market fell from $568 million in supply to just $6 million. Net deposits on the chain, after subtracting borrowing, dropped from $101 million to $22 million. Most of the money left on July 9 and July 10, when a levered stablecoin arbitrage tied to Ethena was unwound in a cascade.
Circle’s Arc chain launched its mainnet on Sept. 16 and integrated Aave V4 and Morpho on day one. Its pools only opened in the final two weeks of the quarter, so Alea said they were not fully reflected in Q3 yield statistics. Pools on Monad peaked at $995 million on Aug. 18 and ended the quarter at $871 million. Robinhood Chain climbed steadily in September, while MegaETH saw capital drained in July.
Robinhood Chain’s $566 million in parked capital sat mainly in the Earn vault, which provided bridge financing to Ethena and Maple positions. The USDe market funded by that vault held $342 million in late September, with borrowing costs staying near 4%. Ethena’s 5% reward on USDe collateral effectively covered that cost, though the incentive ended on Sept. 30. Token incentives made up 45% of total pool yields on Robinhood Chain, 22% on Monad, and 11% on Ethereum mainnet.
Across all chains, selected managed vaults added a net $781 million on the same basis. Coinbase Lend passed $500 million in early September through Steakhouse vaults on Morpho. Uniswap launched Earn, a vault yield product run by Gauntlet, in late July. Two early Steakhouse USDC vaults on Base lost $312 million, including $213 million that left on July 29 during Steakhouse’s migration to a second-version vault. The replacement Sirloin vault took in a net $341 million.
Regulatory and governance risks also surfaced
The report said SEC Commissioner Hester Peirce stated on July 22 that automated vaults could fall under securities law depending on their structure and operation. On Aug. 23, a malicious governance proposal took control of Term Finance’s Meta vault and caused about $8.5 million in losses. During the attack, about $6.8 million was urgently withdrawn from Morpho’s Parity Core ETH vault, after part of Term’s ETH Meta vault assets had been parked there.
Base yield still matters even after stripping out incentives
Alea concluded that the on-chain spread doubled in the third quarter and that the most persistent change came from base yields moving closer to Treasury yields through protocol repricing and the launch of higher-return pools. Token incentives still contributed 60% of the excess spread on on-chain dollars, but the report stressed that protocols can shut those incentives off unilaterally, as Ethena did on Sept. 30.
Even with all token incentives removed, Alea said on-chain dollars still carried a 0.49 percentage-point premium in pure native base yield over tokenized Treasury funds.
