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How to Earn Interest on Stablecoins

How to Earn Interest on Stablecoins? Best Stablecoins and Platforms

Looking to earn some extra income with stablecoins in your portfolio? Find out how to earn interest on stablecoins with our detailed guide.

Crypto trading has become one of the most prominent ways to earn a passive income. However, one cannot overlook the money-making potential of staking stablecoins. If you know the right coin to stake, you can earn really decent interest rates without the time taking process of analyzing the market and without the volatility too.  

Regardless of the stablecoin you choose, you can earn decent interest on stablecoins with a straightforward process. So, without any delay, let’s find out how to earn interest on stablecoins. But first,

What are Stablecoins?

Stablecoins are crypto tokens whose value is pegged or tied to another currency (such as the US dollar), commodity, or financial instrument. As the name suggests, stablecoins bring stability to the otherwise volatile crypto market. 

Even if you are new to the crypto market, you might have heard about Tether (USDT). It is the first-ever stablecoin in crypto history and its value is tied to the US dollar. So, the value of 1 USDT is equal to approx. 1 USD without the ups and downs of like other coins.  

The Rise of the Crypto Interest Markets

The advancement of crypto assets has resulted in the development of the crypto interest landscape. It is made up of decentralized finance (DeFi) and centralized finance (CeFi) lending and borrowing applications that offer higher annual percentage yields (APYs) as compared to money market instruments and fixed income securities. 

Crypto lending is also becoming popular because many crypto investors are planning to earn money from the crypto tokens that they are HODLing. Consequently, a lot of crypto lending platforms are popping up to allow investors to lend and borrow. There are also a lot of lending applications in the DeFi and CeFi markets. 

Stablecoins emerged to tackle the volatile nature of cryptocurrencies, which make lenders lose money even with high-interest rates. As their value is pegged to the US dollar, they are very stable and pay lofty interest rates as high as 4 percent to 12 percent.  

Now that we’ve covered the basics, let’s look at the top platforms where you can earn good interest rates. 

Top Platforms to Earn Interest

A platform to earn interest should be reliable and authentic and therefore, we’ve mentioned only the platforms and exchanges that are trustworthy. Here’s the first one:

1. Aqru

Aqru offers the best interest on stablecoins as it is one of the best platforms for staking crypto. This platform supports USDC, USDT, and DAI and offers a daily interest payout on these tokens for up to 12 percent.   

When you open an account on this platform, you instantly get free $10 in USDT. The account starts to accumulate interest without any input from you and since interest is paid daily, you can earn compound interest on assets. 

The minimum deposit amount is 100 USD, but there is no minimum lockup period. You can withdraw your money anytime you want. Aqru is not available in the US but US-based investors can use BlockFi and Crypto.com (more on these platforms later).  

Pros:

  • Daily interest payouts 
  • Up to 12 percent interest rate
  • No lockup periods
  • $100 minimum deposit 
  • No charge fiat cash withdrawals 

Cons:

  • New in the market 
  • Not available in the US yet 
  • $20 charge on crypto withdrawals 

2. Crypto.com

Crypto.com is a prominent cryptocurrency exchange that supports trading, investing, staking, NFTs, wallets, and more. The interest rate on stablecoins on this exchange is up to 10 percent, but it requires the users to lock up their tokens for a period of three months. 

The ‘Crypto Earn’ program from Crypto.com supports USDC, USDT, TUSD, DAI, and 50 more digital assets and users can earn interest on all these assets along with stablecoins such as Dogecoin, Bitcoin, and more. Although the highest interest earners are Polygon and Polkadot

Also, if you are looking to take a crypto loan, Crypto.com offers this service by keeping your tokens as collateral. You can get 50 percent of your crypto holdings. Just to put things into perspective, a $10,000 investment in stablecoins can get you $2.74 a day on Crypto.com.

Pros:

  • 10 percent interest rate on stablecoins
  • It is also a crypto exchange
  • Offers a metal prepaid VISA card
  • Lends 50 percent of your crypto holdings

Cons:

  • Risk of market tanking during the lockup period 
  • The withdrawal fee is 25 USD

3. BlockFi

BlockFi is regulated by the SEC and functions under it, which is important to the users as it makes the platform safe. Also, it works in favor of the increasingly popular staking and lending space. 

Even though the company started in 2017, it has garnered a good reputation in a short time. Moreover, just like Crypto.com, BlockFi is also a crypto lending platform where you can get crypto loans. However, the earnings on the staking program are subject to tiers. Let’s say you invested $10,000 in stablecoins, you would get $2.19 a day on BlockFi. 

Pros:

  • Offers crypto loans and credit cards
  • Works under SEC
  • No minimum deposit
  • You get one free withdrawal a month

Cons:

  • The interest rate drops after the first $20k
  • Not available in New York

4. Nexo

Nexo is another great place to earn interest on stablecoins as it offers a high APY on both stablecoins and other crypto tokens. Users can earn up to 12 percent on USDC, USDT, Pax Dollar, DAI, TrueUSD, and even on fiat currencies. 

However, you only get high returns if you hold 10 percent NEXO tokens, the exchange’s native coin in your portfolio. Another condition for earning a high-interest rate is that you have to receive your interest in NEXO. Although you can easily convert it to other coins either on Nexo or on some other exchange. If you are a platinum user, you will earn the highest yields and will have five free withdrawals. 

Pros:

  • Supports a wide range of stablecoins and other crypto tokens
  • Has military-grade security
  • Five free withdrawals for Platinum users

Cons:

  • You have to hold 10 percent NEXO in your Portfolio
  • You have to choose NEXO as a payout option 

Top Stablecoin Tokens

We have covered all the great platforms where you can earn interest on stablecoins, but what are some of the stablecoins that are great for earning that juicy reward. Let’s take a look.

Without a doubt Tether (USDT) tops the list with its largest market capitalization of $81.9 billion. Other good options are:

  • USD Coin (USDC): $51.6 billion
  • Binance USD (BUSD): $17.4 billion
  • Dai (DAI) – $9.6 billion 
  • Pax Dollar (USDP) – $940 million
  • TrueUSD (TUSD) – $1.3 billion

There are some of the most commonly staked stablecoins, but Magic Internet Money (MIM) and Fax (FRAX) are also recommended by Coingecko. 

The Verdict

There are several crypto savings accounts that offer interest on stablecoins, but the ones we mentioned Aqru, Crypto.com, BlockFi, and Nexo offer the best interest on stablecoins. Stablecoins offer a good yield to investors as compared to earning 0.05 percent interest on a savings account in a traditional bank. This makes it very appealing to investors all over the world and the stability sure adds to the positives. 

Many investors split their funds, open multiple accounts on different crypto exchanges and therefore earn more interest and take advantage of various bonuses and promos. On this note, we hope we have answered the question of how to earn interest on stablecoins.

Interests on Stablecoins FAQs

1. Are stablecoins a good investment?

Yes, stablecoins are a good investment because they are pegged to the US dollar, which makes them relatively stable. They are not affected much by the volatility of the crypto market. Stablecoins emerged to tackle the volatile nature of cryptocurrencies, which make lenders lose money even with high-interest rates. Even if you are new to the crypto market, you might have heard about Tether (USDT). It is the first-ever stablecoin in crypto history and its value is tied to the US dollar.

2. Which is the safest stablecoin?

Tether, without a doubt, is the safest stablecoin. It is the most transacted and liquid stablecoin, as well as the largest stablecoin by market cap, which is around $82 billion. This makes Tether the 3rd largest crypto token behind Bitcoin and Ethereum. This stablecoin was launched with the goal to keep it pegged to the USD. Tether offers wide usage and liquidity, making it one of the top stablecoins. This stablecoin claims to be supported by cash reserves, commercial paper, and cash equivalents but is often criticized due to its lack of transparency.

3. Why is interest so high on stablecoins?

The reason behind the interest rate being high on stablecoins is simple economics. Usually, the demand for stablecoins exceeds their supply. So, people holding stablecoins lend their coins and charge a premium interest rate. Crypto platforms looking for stablecoins offer high-interest rates to attract new stablecoin lenders. For this reason, stablecoin interest rates are so high.

4. How do I make money with Tether?

Tether (USDT) is a stablecoin, which is pegged to the US dollar. There are several crypto exchanges that offer Tether. There are several crypto exchanges that will pay you interest on stablecoins just for holding them on their platform. However, if you want to earn better yields, you can lend it on platforms such as Aqru, Nexo, BlockFi, and Crypto.com. These platforms offer great yields within a short period of time and some of them don’t even have lockup periods, which makes them even more appealing. USDT earns more interest than any other stablecoin out there.

5. How Does Tether Stay at $1?

Even though Tether is pegged to the US dollar, it has dropped below $1 in the past. It can stay at $1 as long as it keeps on redeeming USDT tokens for 1 dollar each. Also, as long as investors believe in the issuance proceeds and the reserves are full of liquid collateral assets, they can stay at $1.

6. How do you earn interest on USDC?

To earn interest on USDC, you have to open an account with a crypto exchange or lending platform. After opening the account, you have to finish the KYC process and once that is done, deposit USDC to your interest account. After doing that, you can automatically start interest on your USDC deposits.

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