What is the point of a stablecoin?
What is the point of a thing that's not a dollar that's worth a dollar? Apart from getting money to a crypto exchange, there is literally no practical legal purpose to a stablecoin. There is no yield, there is no inflation hedge, the whole point is you can trade it back for a dollar, never more than that. But I already have a dollar, so I can just keep my dollar and end up with the same thing.
However, if I'm in charge of a stablecoin, what is the point of a stablecoin? I get to earn the yield on all of the collateral. People come to me to trade me $1 for 1 USDC Token and I charge them a fee for my service, which I keep. You take your USDC Token to trade it somewhere for DOGE, or an NFT, or whatever. While you do that, I buy US Treasuries with the collateral and I keep the income. Right now, there is about $50B in USDC; if they can manage a paltry 0.05% yield that's $25,000,000 per year of income, plus fees collected to convert your dollars in to tokens and back again.
Stablecoins are really basically the world's worst money market funds. Just, unlike Money Market funds, you can take your units (tokens) and trade them on an exchange like they're dollars. The "transparency" sheets available from USDC are just audit letters indicating the auditors checked the bank statements and agree that totals add up. They don't do further due diligence to verify funds and don't publish even a high level overview of the collateral investments. Compare this to the "transparency" of the basic Schwab Money Market fund, SWVXX which publishes detailed holdings monthly.
So, while you may not think it, there's a chance the value of a USDC falls below $1, banks holding CDs may fail, treasuries fluctuate in value, etc. Because it's not just money in a mattress or safe, it's actually treasuries which do fluctuate in price. And, unlike a regular money market fund, you don't share in the yield. The safety of your collateral from various claims is also unclear, you don't get SIPC coverage, etc.
Stablecoin Yield Fund
Now you get to the USDC Circle Yield program. Circle Yield sales pitch on the home page is:
Allocate into a crypto-based investment that is fully secured by bitcoin collateral and earn higher yield compared to traditional bank rates and many fixed income markets.
Now, we're not talking about whether or not USDC is stable, you're actually investing in a lending program. There's no published prospectus; it seems there is a $100,000 minimum investment and if you read the footnotes this is only available to "accredited investors." This is probably why the information available is so anemic.
I'm assuming you are referring to this program and not some other crypto lending scheme that's out there.
It seems the Circle Yield Fund invests in some amount of crypto related institutional financing, though it's not clear what that means. If you want access to institutional banking activity you can invest in bank preferred stock, or an ETF of bank/financial institution preferreds; which is not a recommendation. This fund might present a great risk-reward opportunity but you definitely cannot come to that conclusion without looking at the prospectus.
Maybe you idealistically want to support crypto markets, that's fine. But make no mistake, you're investing in the Circle Yield Fund which has essentially nothing to do with USDC. In fact, I wouldn't be surprised if you could make your $100,000 minimum investment with a regular old bank wire of old-fashioned boring fiat USD.
I think a lot of people assume that things occurring in crypto markets are new ideas, but a lot of the time they're not.