Stablecoins play an essential role in the cryptocurrency space, and for some years now, there has been an explosion in available liquidity and trading volume. New use cases for stablecoin are coming up daily, such as interest accounts, loans, and margin funding. In this article, we will see the best platforms to earn interest on stablecoins and thus get the most out of them.
Stablecoins are seen as some of the best alternatives for traders to hodl their Cryptocurrency gains in situations where the market is highly volatile. Each of these coins is able to maintain a fiat peg using its own unique mechanisms and incentives.
How to Earn Interest on Stablecoins?
Some of the major crypto banks and other cryptocurrency platforms offer fantastic yields on stablecoins which has very close parity to the US dollar.
There are several ways to earn or save your crypto assets; it is left for you to choose the right one for you.
Why These Platforms Pay You Interest?
The platforms pay higher interest because they are even charging higher lending rates on the lending side. Also, the demand for stablecoins is increasing because it is a way to borrow BTC and profit from the arbitrage no-brainer trade between Spot markets and derivatives.
A popular platform, Genesis, believes that Bitcoin arbitrage trade offered 15% annual returns which are very huge. So, it is safe to say that as long as people are interested in borrowing digital dollars to engage in this kind of crypto arbitrage, the demand for stablecoin will keep growing and thus leading to high interest rates.
Furthermore, there is a high demand for stabecoin from both traders and investors who use it to pay for various services. So, these platform searches for users who will deposit. In turn, they lend out the stablecoin at a higher rate to those in need of it.
What Platforms Do With Stablecoins and How They Generate Profits so They Can Pay You Interest?
These platforms take the stablecoins deposited and loan them out to people who need them as a medium to store their assets.
Invariably when the market is not stable, stablecoin provides an inflationary hedge for them to reduce loss.
These platforms set interest rates for lenders and borrowers. It is the avenue where they make the money, they use to maintain their platform and also to pay lenders.
The Best CeFi Platforms to Get Interest on Your Stablecoins
As the global interest rates get closer to zero, more people are now looking into the cryptocurrency market as an alternative way to generate additional income.
A major way to earn passive income is through interest accounts and lending platforms.
Let’s look at the best Cefi (Centralized Finance) platforms to get interested in your stablecoin.
Nexo is one of the unique platforms that allows you to earn interest in your cryptocurrency investments. Your interest rate is determined by the distribution method and the cryptocurrency. But you can expect to earn between 6% and 12% APR on your investment.
The NEXO platform gives you access to loans based on the amount of cryptocurrency in your account without having to sell your coins and buying them back. The interest rates for loans start from 5.90% APR.
Although users are not allowed to buy and sell cryptocurrencies via the Nexo platform, they offer a high yield method for investors to earn money on idle coins and fiat.
Nexo allows users to earn interest on over six unique stablecoins and more than eleven altcoins. Most of the supported coins are Bitcoin, Ethereum, Tron, and Stellar Lumens.
The Annual percentage yield (APY) begins at 6% for altcoins and 10% for stablecoins. But you can earn up to 12% interest when you elect to take your distributions in Nexos proprietary token instead of in the same type of token you used to accrue it.
Youhodler is an EU and Swiss-based cryptocurrency lending platform. It allows users to earn interest rates as well as borrow funds against your crypto deposits.
The platform enables borrowers to quickly get cheap loans in fiat money like USD, EUR, CHF, GBP by using cryptocurrency as a form of collateral.
Also, lenders earn guaranteed returns immediately when they deposit funds on their interest-bearing accounts.
The platform also allows for crypto/fiat and crypto/crypto conversions. This means that if you are still new to cryptocurrency, you can also take advantage of this high yield saving account by depositing your fiat currency.
Youhodler offers 12% interest in stablecoins and up to 8% in other cryptocurrencies. Below are most of the stablecoins interest rates per year in Youhodlers:
- They offer 12% APY on the following stablecoin: USDT, TUSD, USDC, DAI, HUSD.
- PAX – at 8.2% APY
- LINK – at 6.2% APY
- BTC – at 4.8% APY
- ETH, XRP, XLM – at 4.5% APY
- HT, BNB – at 3% APY
Crypto.com is a Hong Kong-based crypto exchange which offers a wide range of services. The platform allows the trading of more than 70 cryptocurrencies. It also provides a service called Crypto Earn.
This service will enable users to deposit their tokens and earn up to 8% interest on their investment. Crypto.com also has online and mobile applications that efficiently help users to move tokens between wallets and crypto Earn.
Users are also the stakeholder of their own digital currency MCO. This comes with the advantage of lower interest rates by up to 2% and bonuses when exchanging your tokens for MCO.
You can earn interest in stablecoins, CRO, or your favorite cryptocurrencies like BTC and ETH.
Crypto.com Earn rates are:
- TUSD, TAUD, TCAD, PAX, DAI, USDC, USDT – At 12% APY
- BTC – At 6.5% APY
- ETH – At 5% APY
- LTC, XRP – At 4% APY
BlockFi is a New Jersey-based crypto asset management company. They offer services to customers worldwide, including 47 US states with interest-earning accounts and low-cost USD loans backed by crypto.
The platform permits users to earn interest up to 8.6% annually on their cryptocurrencies. That’s more than 8X the best savings account rates.
One of the benefits of BlockFi is that you can borrow against your coins. That is, instead of selling them when you need funds, you can take them as a loan from the platform. This helps users to avoid selling their cryptos when the market is down.
BlockFi also allows users to trade cryptocurrencies on the platform. You can trade BTC, ETH, LTC, USDC, etc.
The company presently offers up to a 50% Loan To Value ratio on your crypto. For example, if you want to get $5000 worth of loaned assets, you will need to put down $10,000 worth in collateral.
Here is the BlockFi interest rate on stablecoins and other cryptocurrencies.
- USDC, GUSD, BUSD, PAX- At 8.60% APY
- USDT- At 9.30% APY
- PAXG- At 5.0% APY
The Best DeFi Platforms to Get Interest on Your Stablecoins
There are many platforms that will offer you interest in your stablecoin. These platforms will allow you to lend out your crypto to earn interest income. Also, if you are an investor looking for an instant credit line, you can offer your crypto as collateral and take a loan.
Let’s see most of these platforms.
Yearn.Finance is an ecosystem of protocols developed to streamline user interaction with popular DeFi protocol.
It maximizes the annual percentage yield (APYs) of cryptocurrencies stored in Defi. It also allows users to optimize their earnings on crypto assets through lending and trading services.
The platform provides its services using only codes, thereby removing the need for a financial intermediary like a bank. However, to achieve this, it built a system of automated incentives around its YFI cryptocurrency.
YFI is the governance token of the Yearn.Finance ecosystem protocol. It is an ERC 20 Token. Users earn this token by interacting with various protocols.
The Yearn.Finance automatically moves user’s funds between Defi and lending protocols like Aave, dYdx, and compound in search of higher APY. Yearn.Finance offers as high as 40% Annual percentage Interest (APY) for stablecoins. However, the Earn product offers much better returns.
Like AAVE and Compound, Yearn’s Earn products offer better yields for stablecoins. Where the Earn differs is it farms your deposit out across multiple Defi protocols to constantly harvest the best yield.
It supports the following stablecoins, USDC, DAI, TUSD, sUSD, etc. What the platform does is convert your stablecoin into an equivalent amount of ytokens. These tokens might be used as YFI tokens and are known as Yield optimized tokens.
Venus.Finance is a decentralized finance application running on the Binance Smart Chain (BSC). It offers users an algorithmic-based money market system to utilize cryptocurrencies. Venus uses the BEP20 standard token for its stablecoin, VAI.
One of the unique features that differentiate Venus from other money market protocols is the ability to use the collateral supplied to the market not only for asset borrowing but also to mint stablecoins.
Venus also allows users to earn interest on their stablecoin. It does this by allowing users to take already held stablecoins like USDT or USDC and lock them up to earn an interest rate.
For instance, locking up USDT would give 15.7% APY (depending on the current rate). Also, when tokens are locked up in Venus.Finance, the access to liquidity, is available in much the same way as the Ethereum dapp compound.
Autofarm.Network is another decentralized finance app on Binance Smart Chain (BSC) for yield optimization.
The name was gotten from the word “Auto,” which means “Self,” and “farm,” which means “To Grow.” Thus, Autofarm is a protocol that allows you to grow crops automatically.
Autofarm is a yield farming aggregator which is running on BSC and Huobi ECO chain with over $1 billion total value locked into its farming pool.
The network incorporates both yield optimization and DEX aggregation into one product. Thus, making it easy for Defi users to have access to many services from one single platform. In other to achieve this, it offers two products which are Vaults and Swaps.
Vaults allow users to lock their crypto in a smart contract and earn interest on it. The Autofarm vault utilizes a dynamic harvesting optimizer to generate a high yield while saving time and effort.
There is a small fee in place when entering a vault that can be up to 0.3% on deposit. However, there are no fees attached to withdrawal. Also, there are over 30 liquidity pools with substantial APYs in the platform. The highest APY so far is 558.3% which is the WBNB AUTO LP. However, besides APY, you can still farm auto token, the native token of Autofarm.
Compound is an open-source, autonomous protocol built for developers. It enables algorithmic efficient money markets on Ethereum. It is a blockchain-based borrowing and lending dApp.
Crypto lenders are allowed to lend their tokens to earn interest or deposit cryptocurrency to the Compound smart contract as a form of collateral to borrow against it.
Compound is a permissionless lending and borrowing platform which was created on the Ethereum network.
The Compound protocol uses smart contracts to monitor ownership and interests across various lending pools. The platform also offers some of the Ethereum based stablecoins like DAI and USDC, which they prioritize over other currencies when paying back currency or accepting loans.
Users also earn interest on balances held in the application. Also, users earn APY when they deposit in the platform.
For example, when you deposit USDC, you earn 3.62% distribution APY. This means that you will earn 3.62% of your deposit amount back.in COMP token.
Compound also offers APY for other stablecoins. There APY for stablecoin lending and depositing ranges between 2 – 10%.
Curve is a decentralized exchange for stablecoins that uses an automated market maker (AMM) to manage liquidity.
The Curve DAO will permit liquidity providers to make decisions on adding new pools, changing pool parameters, adding CRV incentives, and many other things to the Curve protocol.
The Curve’s main objective is to allow users and other decentralized protocols to exchange stablecoins (USDC to DAI) through it with low fees and low slippage.
Unlike other crypto exchanges that match buyer and seller, the Curve is entirely different. It uses liquidity pools like Uniswap. To achieve this, the Curve needs liquidity (tokens) which is rewarded by those who provide it.
However, the developers do not have access to your token because the Curve is non-custodial.
There are three main features of the Curve; cryptocurrency lending (Defi), cryptocurrency exchanges, and Decentralized exchanges.
There are seven pools in the Curve. The first five are for stablecoins. The pools earn interest from trading fees.
Some pools also earn interest from lending, and there are also pools with incentives. Users can also receive CRV when they provide liquidity to Curve finance.
Each liquidity gauge gets a different amount of CRV based on how much the DAO allocates to it.
The Curve APY is gotten from the fees collected from the protocol which comes from trading 50% of all trading fees on Curve as well as any other fees.
Thus, a higher trading volume on Curve results in a higher APY for stakes.
These platforms allow investors to grow their wealth by taking advantage of these crypto lending platform services and earn passive interest on their Bitcoin, crypto, and stablecoin holdings.
Long-term crypto digital asset holders now have the flexibility to generate additional profits without selling or liquidating their portfolios.
Also, using most of the platforms is easy. New and existing users can access their services easily. If you are a believer in the future of cryptocurrency, opening a crypto savings account is a good way of diversifying your investment.
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