I think the issue at play with UST is that they juiced the returns with their own money to attract holders hoping that due to market cap alone their stable coin

I think the issue at play with UST is that they juiced the returns with their own money to attract holders hoping that due to market cap alone their stable coin would eventually gain adoption on the exchanges and be embraced by traders. The reality is that these juiced returns were not sustainable and in the end made it even harder for them to defend the peg of their poorly designed pegging mechanism. You can't compare the returns in the crypto space to the banking sector. At the moment leverage on an exchange (Binance) costs 7.3% PA at the moment. The exchange also takes a fixed percentage of your trade as a fee. This is why locking up stable coins on Binance nets you more interest than the average savings account. A bank can't or won't lend you money against crypto. Another scenario is someone who holds say Bitcoin. They have a decent income and want to buy a new car. If they think Bitcoin will appreciate in value instead of selling Bitcoin to buy a new car (which will trigger a capital gains taxable event) they can just borrow against their Bitcoin. The cash or stablecoin for the loan has to come from somewhere. Like I said above banks won't accept Bitcoin for a secured loan.