eUSD is an overcollateralised, yield-bearing USD stablecoin targeting DeFi’s risk-adjusted rate, with yield from its collateral basket distributed across revenue share programme partners and stRSR holders.
The purpose of this report is to inform and educate the wider Reserve community on eUSD activity, while serving as a reference library for governance and on-chain data. A secondary aim is how this data can drive and direct action amongst stakeholders over the next quarter.
Summary
- Market cap declined from $29.2m to $22.6m (-23%) and TVL from $35.4m to $27.1m (-23%) QoQ following incentive removal.
- Fintech balances increased from $11.7m to $14.0m (+20% QoQ), driven primarily by UglyCash ($10.6m to $12.8m), now representing ~92% of fintech supply, while Sentz remained flat ($1.13m to $1.14m).
- Fintech-held balances ($14.0m) now exceed DeFi supply ($4.0m) by 3.5x, reinforcing fintech-led growth.
- RSR backing fell from 26% to 22% QoQ, while staked RSR remained broadly stable (2.67B to 2.52B tokens).
- RSR staking yield declined from 8.4% to 6.1% (-27% relative) despite the introduction of the 90/10 revenue share model.
- Basket yield declined from 3.6% in Q4 to 2.65% in Q1 (-95bps), reflecting broader DeFi rate compression.
- Mainnet holders increased 22% (406 → 494) while 90d transfers fell 16% (59k → 50k), indicating lower activity per user.
- Morpho supply fell from $14.5m to $1.2m (-92%), with similar contractions across Curve and Aerodrome as incentives were removed.
- The eUSD/LCAP pool TVL increased from $78k to $85k (+9%), highlighting continued sensitivity to targeted incentives.
- Governance execution remained strong, with 5/5 revenue share updates passing alongside the 90/10 adjustment and v4.2.0 upgrade at >100% quorum.
Full Q1 2026 Report
The tables in this report do not include Q4 2025 data or quarter-on-quarter deltas, as I was unable to access or reuse the same data sheets maintained by the previous Champion, Sawyer. There have also been changes to the underlying data points and methodology, which would have made direct comparisons inconsistent. That said, the section summaries do reference and compare Q4 and Q1 data where relevant, though these comparisons are not reflected in the tables. This is a temporary limitation, with aligned datasets and full quarter-on-quarter comparisons to be included in the Q2 report cycle.
eUSD Headline Metrics
As expected following the near-complete removal of incentives across eUSD DeFi markets, Q1 shows contraction in both market cap and total TVL, reversing the incentivised growth seen in Q4. RSR backing declined from ~26% to 22%, largely driven by RSR price weakness, with staked RSR remaining broadly stable at ~2.5B tokens.
The recent Revenue Share Adjustment Proposal, redirecting 10% of fintech yield to stRSR holders, should help stabilize this trend, particularly as UglyCash balances continue to grow.
eUSD balances held by fintechs (~$14m) now dwarf DeFi supply (~$4m), reinforcing the fintech-led growth thesis. As growth continues to skew toward fintech integrations, RSR staking APY has continued to compress, albeit at a slower pace given the revenue share changes.
Current eUSD Collateral Basket
The blended yield profile of eUSD has continued to decline, falling from ~5% in Q3 2025 to ~3.6% in Q4 and 2.65% in Q1 2026. As the basket tracks a broad set of actively deployed stablecoin strategies, this compression largely reflects declining DeFi rates under wider market conditions rather than suboptimal allocation.
That said, with the basket last rebalanced in January 2025, there remains scope for further optimisation across yield, diversification and risk.
Token Holder and Transfer Metrics
As incentives continue to wind down and eUSD transitions away from its dual role as both a DeFi-native stable and a FinTech yield layer toward a more focused FinTech product, on-chain metrics are beginning to reflect this shift. Mainnet activity has declined, with lower 90-day transfer volumes despite continued holder growth, while Base has maintained strong momentum, with 90-day transfers increasing, likely supported by attractive yield opportunities such as the eUSD/LCAP pool on Aerodrome. This divergence suggests a structural shift in usage, with Mainnet evolving into a holding layer and Base remaining the primary venue for active DeFi deployment. This trend is expected to persist as the transition toward a fintech-led model continues.
Supply Held by FinTechs
Fintech balances have continued to grow into Q1 2026, increasing from $11.7m in Q4 to $14.0m (+20% QoQ). This growth has been driven almost entirely by UglyCash, which expanded from $10.6m to $12.8m, further consolidating its position as the dominant fintech integration (~92% of total fintech supply). Sentz remained broadly flat over the same period ($1.13m → $1.14m). Overall, this reinforces the trend of fintech-led growth, with concentration risk increasingly centred around a single primary integrator.
DeFi Integrations
As expected, the near-complete removal of eUSD incentives has driven a broad contraction across DeFi markets, with declining yields leading to the exit of mercenary capital. The most notable shift is within Morpho, where supply has fallen sharply from ~$14.5m to ~$1.2m, now concentrated entirely in the Gauntlet eUSD vault on Mainnet following the sunset of the Re7 vault.
A similar contraction is observed across Curve and Aerodrome venues. One exception is the eUSD/LCAP pool on Aerodrome, which continues to benefit from targeted incentives, with TVL increasing modestly from ~$78k to ~$85k.
Morpho (Mainnet)
Curve (Mainnet)
Curve (Base)
Aerodrome (Base)
Governance
Ongoing - eUSD FinTech Revenue Share Update x 5
Summary: Biweekly proposals required in order to accurately pair FinTech revenue share against the eUSD balances they hold. The terms of this agreement are outlined in the original FinTech Revenue Share Programme proposal and the more recent Revenue Share Adjustment Proposal (Q1 2026).
Governors remained extremely efficient this quarter as all 5 update proposals hit quorum and passed despite changes to eUSD stewardship and the aforementioned Revenue Share Adjustment Proposal completing its governance cycle this quarter.
Revenue Share Programme - FinTech Revenue Share Adjustment
Summary: This proposal updates the eUSD Revenue Share Programme by moving from a 100/0 revenue split in favour of participating fintechs to a 90/10 split, with 10% of revenue generated on fintech-held balances redirected to eUSD RSR stakers.
RFC: 3 unique commenters. Poll: 7 FOR / 0 AGAINST
IP: Passed with 113% quorum. Vote: 8 FOR / 0 AGAINST
eUSD 4.2.0 Upgrade
Summary: Upgrade all eUSD core contracts and assets from version 3.4.0 to version 4.2.0. This new version of the software includes updates from 4.0.0, 4.1.0, and 4.2.0.
RFC: 2 unique commenters. Poll: 5 FOR / 0 AGAINST
IP: Passed with 140% quorum. Vote: 6 FOR / 0 AGAINST
Implications for Governors
eUSD is entering a transition phase, with growth now driven by fintech integrations rather than incentive-led DeFi activity. For governors, the focus should shift toward supporting this model while managing its trade-offs. This includes monitoring concentration risk across key fintech partners, ensuring the revenue share framework remains competitive for both integrators and stRSR holders, and identifying high-quality DeFi venues where liquidity can be sustainably maintained to further support stRSR yield. In parallel, there is a need to revisit the collateral basket to improve yield and risk efficiency, particularly in a lower-rate environment, to preserve eUSD’s positioning as a benchmark for DeFi’s risk-adjusted rate. Although any work here will have to be balanced against FinTech regulatory constraints.
Conclusion
Q1 marks a transition phase for eUSD, moving away from incentive-driven DeFi growth toward a more sustainable and sticky, fintech-led model. While this shift has resulted in near-term contraction across TVL, yields and DeFi activity, underlying fintech adoption remains intact. The key challenge going forward will be balancing this structural pivot with sufficient yield generation and RSR incentives to maintain staker alignment, although the recent adjustment to the Revenue Share Programme which redirects 10% of FinTech revenue to stRSR goes a long way to remedy this.