With the world economy taking a turn for the worse.
In recent months.
Two of the world's biggest economies, the United States
and China, are struggling.
and policy, policymakers are asking how the central bank could let this happen.
Many cryptocurrency holders are beginning to take a risk averse approach
to their investments, favoring secure low risk returns over wild speculation.
One of the simplest ways to accomplish
this is by staking Stablecoins to earn a yield.
This helps to minimize volatility, while in some cases allowing investors
to earn inflation beating interest rates without taking on undue risk.
A large number of platforms, including both decentralized and centralized
options, now offer relatively attractive returns on stablecoin deposits.
Unfortunately, due to a men's competition in the Stablecoin
staking space, there's no clear one size fits all platform for investors.
Instead, it's best
to have a broader grasp of the landscape as it stands to find the platform
that best fits your desired risk profile and other requirements that there remains
at least some risk with using any platform that promises to grow your investment.
We found some that have stood the test of time
and that said, it is important to do your own due diligence
before investing with any platforms, since they can vary
considerably in the mechanism by which they deliver their returns.
Moreover, absolute security is never guaranteed.
So are you using a platform to earn a yield?
Let us know in the comments below.
Let's dove in.
First of all, let's talk about decentralized platforms.
Over the last three years, a number of decentralized platforms
have appeared, and each of which allows users
to stake their digital assets to earn rewards being decentralized,
these platforms can generally be accessed by anybody, anywhere at any time
and allow users to retain full control of their private keys.
As often comes at the compromise of lower returns.
So let's first of all talk about curve.
Is an automated market maker or AMD designed specifically for Stablecoins.
Curve is an option among traders looking to exchange one stablecoin
for another with minimal fees and slippage.
Being an AMM the platform allows users to contribute their stablecoins
to one or more liquidity pool known as Curve pools.
And each of these pools currently has a 0.04% fee
on each trade that draws liquidity from it.
And half of this is shared among the liquidity providers.
While the other half is shared among VeCRV holders.
Users also receive rewards in the form of curve tokens
and sometimes additional rewards in the form of an associated project.
Token such as Synthetix or SNX from the USD pool.
And the exact yield provided by each pool varies over time based on trading
volume and TVL, and it can range from less than 0.5% API to well over 10%
higher yields are generally associated with more volatile pools.
Next up, we have Pancakeswap
by far the most popular AMM on the BNB chain by trading volume.
Pancakeswap can be considered
a cornerstone of decentralized finance or DeFi on the platform.
Like most AMMs Pancakeswap allows users to contribute their assets to one
or more liquidity pool to earn a share of the transaction fees they generate.
And though the platform is primarily designed for trading volatile assets,
it also supports a large number of stablecoin specific liquidity pools.
These include USDC to USDT, USDT
to BUSD DAI to BUSD and TUSD to BUSD.
Exact yields vary by pool, but currently range between 1 to 3% API,
and this can actually reach as high as 10% APY during particularly bullish periods.
And these yields are formed by both standard trading fee derived rewards
as well as an additional supplement in the form of cake tokens and Pancakeswap
often changes the multiplier associated with the cake rewarded supplement, which
can significantly increase and decrease total yield for the associated pool.
And then we have Yearn finance.
Yearn finance is different from other options on this list in that
it allows users to optimize the yields they receive from other platforms
rather than directly providing a yield bearing service of its own.
The platform takes advantage of the economies of scale to bundle users
funds together to automatically boost their yields by minimizing transaction
fees and employing both conventional and unconventional strategies.
That could be difficult to achieve manually.
And these include a flash mint to folding strategy for compound, a Tokamak reinvest
strategy, any similar reinvest strategy for Notional Finance.
And these are designed to be low risk, but not risk
free by depositing assets to one or more Yearn finance vaults.
Users give the platform permission to use their funds while executing
strategies associated with the pool.
These strategies can change over time
and as can the yields expected from each vault.
Like most platforms, Yearn.finance supports both volatile and stable assets.
Stable assets tend to provide lower yield with approximately
0.01% to 2% APY expected
during a bear market and roughly 1 to 10% expected during a bull run.
And these fees are net of the 2% management fee and 20% performance
fee applied to each vault.
As an open lending protocol compound allows users to deposit assets to one
or more liquidity pools, which are then used to fund over collateralized loans.
The interest borrowers pay is then shared between liquidity
providers based on their share of the liquidity pool.
The platform supports a wide variety of digital assets, including popular
Stablecoins like DAI trueUSD, USDC and Tether,
each of which provides
a different yield depending
on the amount of supply available and the borrower side demand.
Besides rewards derived from the interest paid by borrowers,
both pools also receive a fraction of the compound or comp token
emission, providing an additional source of returns.
And most of these comp
tokens are currently shared between the DAI and USDC pools.
Compound makes use of a risk management layer known as the controller,
which can subject borrowers to force liquidation
if their collateral ratio falls below acceptable levels.
And this is designed to protect the lenders while ensuring borrowers
are only liquidated if absolutely necessary.
Next up, we have Uniswap as by far the most popular arm by trading volume
on the Ethereum blockchain.
Uniswap is well known for its liquidity pools and efficient trading experience,
since the platform allows
for the creation of two side liquidity pools formed of any two assets.
It allows users to contribute liquidity for whichever assets
they choose and earn a share of trading fees as a result.
In most cases, Uniswap trading fees are set at 0.3%
of the trade size, and however, a handful of additional fee
levels are also available, including a 0.01%.
Typically, stablecoin pools and 1%, which is typically for more exotic payers.
Right now, 100% of the fees are actually shared among liquidity
providers, though
a fraction may be directed to the UNISWAP Reserve if enabled in the future.
As with all AMMs the yield that you can actually expect to earn
as a liquidity provider varies based on the pool.
Total liquidity available at trading volume and fee parameter ERC.
But in general, you can expect to earn between a 1 to 3% APY per year
by contributing to the popular Stablecoin liquidity pools on Uniswap.
Centralized staking platforms though
centralized platforms have gained a great deal of traction in recent years.
Centralized platforms remain the most popular for investors,
largely due to their accessibility and better brand recognition
and oftentimes higher interest rates.
That said, they do generally require users to trust them with the custody
of their funds
and management of their private keys, which some can find unacceptable.
And the first one we have on our list is Nexo.
Currently, the largest crypto loans provider, Nexo has an aim of more
than $15 billion and serves more than 4 million users worldwide.
The platform is known for its high returns that it provides on stablecoin
deposits and a wide variety of assets that it supports.
Like most lenders,
the platform passes the return it receives from its lending businesses
onto its depositors and pockets, a small percentage for its operations.
Nexo currently has a base rate of 8% API on popular Stablecoins like USDT, USDC
and Dai USDP and also provides an 8% interest on fiat deposits, including U.S.
dollars, euros and pounds.
And users have the opportunity to increase these rates further, unlocking up to 10%
interest on stablecoin and fiat deposits by holding the NEXO tokens.
The highest reward tier platinum requires users to hold
at least 10% of their portfolio in NEXO tokens,
such that a $100,000 portfolio would need to include at least $10,000 in Nexo.
Nexo recently introduced a maximum balance limits and lowered yields for deposits
above this limit.
So when it comes to cryptocurrency service providers, Binance's is as multifaceted
as they come.
Given the sheer range of its features it provides, including an exchange
platform, OTC desk, a Launchpad crypto debit card and earn dashboard
finance's earn platform features a wide variety of savings in staking products,
which allow users to earn a yield on both volatile and stable assets.
Due to the large number of assets that it supports
and its competitive interest rates,
it is among the most popular choices for those looking for savings products.
For Stablecoins, Binance's offers a flexible term and a fixed term
investment vehicles, giving users either the freedom to withdraw their assets
whenever they want or commit to a fixed term for a higher APY
whereby the deposits above a specific threshold receive lower returns
and the amount that you can actually expect varies
based on the coin the term in the size of your portfolio.
But in general, between 1 to 10% APY is the standard and these figures
fluctuate based on the supply, demand and market conditions.
Besides, as popular cryptocurrency exchange platform, Coinbase also offers
a non-custodial wallet, a crypto debit card, a derivatives trading platform,
and a brokerage solution.
Coinbase is unusual in that it doesn't provide an independent asset
staking dashboard, but instead allows users to earn rewards
by simply topping up their account with the supported digital assets.
And that said, users
may need to opt into this feature to begin earning rewards on their deposits.
Right now, the platform primarily offers staking rewards on volatile assets
like Ethereum, Cosmos and Tezos, but also supports
Stablecoins like USD COIN or USDC and DAI.
The yield provided varies over time based on a range of factors,
but currently sits at around 0.15% APY for DAI and USDC.
And this counts among the lowest rates in the industry,
one of the longest running cryptocurrency exchange platforms.
Bitfinex has close ties with Tether, which is currently by far the most popular
USD stablecoin in operation since it launched in 2012.
Bitfinex has seen its exchange offering grow in scope and usage, and it now offers
a margin trading platform OTC desk lending service, securities exchange and more.
Like many popular exchanges, Bitfinex allows users to earn a relatively safe
return on their deposited assets by staking for proof of stake assets
or through its lending platform, where users can earn a flash return
rate or RR on their contributed assets.
Or is the interest rate paid by borrowers?
And there is a 15 to 18% commission taken by Bitfinex.
As always, the amount that you can expect
to earn on your stable assets varies based on the supply and demand.
But right now around 2.99% APY is available for USDC deposits.
Crypto.com is a platform that allows users to buy trade
and earn a yield on their cryptocurrencies through a dedicated mobile application.
The platform is known for its crypto powered debit card and cryptocurrency
savings plans,
which allows users to earn a fixed return rate on their deposited assets.
As of this video, Crypto.com savings product supports more
than 40 different cryptocurrencies and stablecoins.
Yields vary from asset to asset, but right now
users can actually expect to earn up to 8% apply on their stablecoins.
Like most cryptocurrency
savings providers, Crypto.com allows users to increase their rewards
by staking the platform's native token at zero and by committing to a fixed term.
It also enforces a maximum quota per user, which depends on the user's
card tier, which is determined by the amount of zero locked.
And right now reward rates for USDC and USDT ranged from 0.4% for flexible
term users, with under $400 in zero staked and up to 8%
for those with over $40,000 in zero staked and committed to a three month term.
As with any investment,
there are risks that you will need to consider
when using a platform to earn a yield on your Stablecoin.
First and foremost is the risk of theft.
While most platforms have several defense mechanisms in place to protect users
such as Binance is principle protection in Nexos Insurance Policy.
These aren't necessarily comprehensive and may not protect all users
under all circumstances.
Likewise, it isn't uncommon for platforms to be hacked or for their business models
to simply fail and potentially leaving your funds at risk.
And because of this, it's important to do your own due diligence
and investigate the reputation and security system of your chosen
platform and potentially take additional protective measures
on your side, such as decentralized insurance or diversification.
Be wary of offers that seem too good to be true
and never invest more than you can afford to lose.