What should a digital treasury look like in 2025? That’s the question many institutions, DAOs, and Web3-native treasurers are now asking. As capital rotates out of risk-on positions and into safer yield-bearing assets, treasury managers are reassessing where to place idle cash. Until now, stablecoins have been the default.
But a new contender is quickly gaining traction: tokenized money market funds. Think the Franklin OnChain U.S. Government Money Fund (BENJI) or the UBS USD Money Market Investment Fund (uMINT). These regulated, yield-bearing real-world assets are being reimagined on-chain—offering the stability of TradFi with the composability of Web3.
In this guide, we compare stablecoins and tokenized money market funds across three core dimensions: stability, yield和 risk.
Understanding the Instruments
Stablecoins like USDC, USDT, and FDUSD are digital tokens designed to maintain a 1:1 peg with fiat currencies, typically the U.S. dollar. This peg underpins their role as digital cash equivalents. Widely used across DeFi, trading, and payments, stablecoins offer liquidity and interoperability—but don’t generate native yield.
Money Market Funds (MMFs) are mutual funds that invest in short-term, high-quality debt instruments—like U.S. Treasury bills, repurchase agreements, and certificates of deposit. They’ve long been used by banks, corporates, and asset managers to preserve capital while earning modest, stable returns.
Tokenized MMFs bring these portfolios on-chain. For example, the UBS uMINT token—issued by UBS Tokenized, managed by UBS Asset Management, and distributed via DigiFT—gives digital asset holders access to a portfolio of AAA-rated, regulated money market instruments directly through the blockchain.
Stability
Despite their name, stablecoins are not immune to volatility. While designed to maintain a 1:1 peg, many have experienced depegs due to market panic or concerns over opaque reserves.
USDT, the most widely used stablecoin, has repeatedly faced scrutiny over its opaque reserves, which previously included commercial paper and other riskier assets. During times of stress, such as in May 2022, USDT briefly fell to $0.95 amid market uncertainty. In April 2025, another stablecoin, FDUSD, also dropped to $0.87 after insolvency rumors spread via social media—highlighting the fragility of trust and how quickly stablecoins can depeg when confidence erodes.
Tokenized MMFs are backed by short-term, high-credit quality assets such as U.S. Treasuries. While both stablecoins and tokenized MMFs derive value from real-world assets, their mechanisms differ. Stablecoins rely on maintaining a market-based peg to fiat currencies—often influenced by issuer credibility and redemption mechanisms.
Tokenized MMFs, on the other hand, reflect the net asset value of regulated portfolios composed of short-term, high-quality debt instruments , which directly determine their price and yields. For instance, the UBS uMINT token is backed by an AAA-rated portfolio of short-duration, high-credit instruments.
Historically, U.S. MMFs have maintained a stable net asset value (NAV) of $1 per share, with only a few “breaking the buck” in crises. Even during stress events like the 2020 COVID liquidity crunch, institutional prime MMFs became more liquid and saw considerably low outflows in dollar terms.
Yield
Stablecoins do not generate native yield. To earn returns, holders typically stake, lend, or pool their stablecoins on third-party DeFi platforms—exposing them to smart contract vulnerabilities, counterparty risks, and potential protocol failures.
Popular DeFi platforms for stablecoin yield generation include Aave, Compound, and Curve. As of the second quarter of 2025, staking yields for USDC and USDT on these protocols range between roughly 0.1% to 30% APY, depending on utilization rates and incentives.
While newer stablecoins now offer “natively yield-bearing” features—such Mountain Protocol’s USDM or Ethena’s USDe—U.S. regulatory proposals like the STABLE Act may restrict stablecoins from distributing yield unless issued by licensed banks.
Tokenized MMFs offer regulated, yield-bearing exposure by investment in short-term government and corporate debt. Unlike staking protocols, returns are earned through conversative fixed-income strategies—not token inflation or liquidity incentives.
Over the last two years (2023-2024), U.S. MFFs have returned stable yields of 4.2% – 5.3% APY, with minimal price volatility. For instance, the UBS uMINT token distributes daily income based on the performance of its underlying instruments—offering a predictable and transparent yield that reflects real-world interest rates. In volatile conditions, uMINT has been shown to continue generating daily returns with minimal price fluctuation—providing real-world income without staking or risk layering.
Risk
Stablecoins are often seen as low-risk instruments—but their safety depends on how they’re structured and backed. Some of the common stablecoin risks are:
- Custodian Risk: Fiat-backed stablecoins like USDC and USDT rely on centralized custodians to manage reserves. If these custodians become insolvent or fail to act transparently, user funds may be at risk. Some issuers only offer periodic attestations rather than real-time audits, compounding opacity concerns.
- Redemption Risk: While stablecoins are designed to be redeemable 1:1 for fiat, redemption can be delayed or restricted during periods of market stress. In past episodes of panic selling or insolvency rumors, issuers have paused redemptions or struggled to maintain liquidity. One of the biggest failures occurred during 2022 downturns, when Celsius—a global cryptocurrency platform—became insolvent and froze the assets of their 1.7 million users.
- Smart Contract Risk: Stablecoins operating on decentralized protocols rely on smart contracts to maintain peg and supply integrity. Bugs or exploits can result in funds being stolen, excessive minting, or depegging events—as seen in numerous DeFi incidents.
Tokenized MMFs are not risk-free—but their risk profile differs:
- Backed by short-term, high-credit instruments (e.g., U.S. Treasuries), MMFs are less volatile and better equipped to preserve capital.
- MMFs are exposed to interest rate risk and issuer creditworthiness within the portfolio. However, most MMFs hold short-duration assets, reducing sensitivity to rate changes.
- Blockchain operational risks (e.g., smart contract vulnerabilities) remain, but regulated issuance and third-party custody reduce these risks substantially.
Unlike stablecoins, tokenized MMFs like the UBS uMINT token operate under institutional-grade frameworks—with full transparency, third-party audits, and daily liquidity designed to withstand both market volatility and redemptions.
For users seeking yield from their stablecoins without layering on protocol risk, one increasingly viable strategy is to convert stablecoin holdings into tokenized MMFs through a licensed platform (such as DigiFT)—enabling access to regulated, real-world income while staying fully on-chain.
Use Cases
Stablecoins remain the go-to asset for settlement in Web3, powering DeFi liquidity, decentralized trading, and peer-to-peer payments. But when it comes to managing cash, treasury yield, and capital efficiency, tokenized MMFs are quickly gaining favor among:
- DAOs seeking capital preservation
- Crypto-native funds optimizing idle balances
- Institutional allocators demanding regulated, transparent on-chain assets
| Use Case | Stablecoins | Tokenized Money Market Funds |
|---|---|---|
| Settlement | Real-time and liquid | Not used for direct settlement |
| Treasury Management | No yield unless staked | Built for capital preservation and yield |
| Risk Diversification | Peg risk and counterparty exposure | Exposure to short-term, diversified debt |
| Collateral | Widely used | Low volatility, increasing protocol adoption |
| Institutional Access | May be limited due to regulatory grey zones | Regulated and issued by top-tier institutions |
A New Chapter in Treasury Design
Stablecoins remain essential for on-chain settlement and liquidity. But for capital preservation and sustainable yield, they’re no longer enough. Tokenized MMFs like the UBS uMINT token offer a different value proposition: capital preservation, institutional trust, and real-world income—brought natively on-chain. They’re an upgraded foundation, battle-tested in TradFi.
For DAOs, treasuries, and institutional allocators looking to rebalance away from idle assets, the question isn’t whether to hold stablecoins—but how to complement them with better, safer, yield-bearing solutions. The future of digital treasuries isn’t pegged. It’s structured.
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