The cryptocurrency market is highly volatile and unpredictable. But… what if I tell you that you can stick to the USD and at the same time earn from 8% to 10%? It may sound crazy considering that the average bank pays 0.5% on savings accounts… But YOU can get up to 10% with the platforms below. They are legit and solid.
The volatility of crypto assets is what makes them difficult to trade. Not everyone has the stomach to deal with this volatility. Some investors want some form of ‘stability’. They want something that can hold value over time. This is where stablecoins and stablecoin yields come in!
If you have absolutely no idea what stablecoins are, what you can do with them, or even how to make money with them, then this article is for you. In this article, we will be talking about the best Centralized Finance (CeFi) platforms that you can use to earn interest on your stable coins.
Here, we’ll take it from scratch, so again, if you are new to this space, you have nothing to worry about. And by scratch, it means, you should go grab a coffee!
Let’s get right into it…..
Stablecoins are “stable” coins. Literally! They are designed to have a value that is stable and fixed, and this is because they derive their value from underlying external assets such as the US dollar or the price of gold. This is what makes it different from Bitcoin and other cryptocurrencies. Most cryptocurrencies, including Bitcoin are purely digital assets with no backing whatsoever of any external asset or currency and they are usually ‘mined’ by computers. Stablecoins are totally different from all of these. Stablecoins provides a way of trading crypto assets, in such a way that it reduces the risk of holding such assets.
There are different types of stablecoins, based on what they are linked or pegged to and we’ll just pick the major examples.
> Fiat- collateralized stablecoins — Fiat-collateralized stablecoins are the most popular types of stablecoins. They are pegged to certain fiat currencies, for example, the US dollar, Euro, and the Pound. Stable coins in this category are usually pegged at a 1:1 ratio. This means that 1 stablecoin is equal to 1 unit of currency. A good example of a fiat-based stablecoin is the Tether (USDT) and also the USD Coin (USDC) , which is issued by Coinbase and compliant with US regulations.
Crypto-collateralized stablecoins . These are Stable coins backed by other cryptocurrencies. An example is DAI which is issued by MakerDAO, a Decentralized Autonomous Organization and it’s overcollateralized by Ethereum.
Commodity-collateralized stablecoins . These are coins pegged to other assets such as gold. Examples are DigixGold (DXG) and PaxosGold (PAXG) .
There are so many stablecoins currently in circulation, but the ones below are the most popular.
So in a nutshell, the top 6 stablecoins are Tether (USDT), USD Coin (USDC), Binance USD (BUSD), Dai (DAI), Terra USD (UST), and True USD (TUSD). We can say that all these are pretty solid and proven to be solid. Side note: I think MIM, the Abracadabra stablecoin is missing here considering that it’s also a stablecoin and the market cap is $2 Billion as of Feb. 2022.
USDT, USDC, and BUSD are directly backed by the US Dollars, and have a higher chance of maintaining their peg ratio of 1:1. They are accepted by most crypto exchanges.
DAI is a stablecoin that is collateralized by crypto assets (mostly Ethereum)
By now, you should be aware that the price of a stable coin is ‘stable’. So let’s say you have 100 USDT. How then can you make more money?
One way that crypto investors make money is by borrowing and lending coins. If you have extra stable coins, you can lend them out and then receive ‘Annual Yields’. In fact, one of the biggest applications of Decentralized Finance till date is crypto lending, otherwise known as ‘Yield farming’.
In this article, we will be focusing on Centralized platforms that pay yields on stablecoins. These platforms enable users to earn interest on their digital assets and also borrow funds by using their crypto assets as collateral.
In this post, I’m only considering the Best Centralized platforms that you can earn on your crypto. There are Decentralized platforms (DeFi) as well, but the demand on here usually fluctuates thereby resulting in yields that are volatile. The interest rates of the CeFi platforms are usually more stable and higher, which makes them more appealing to lenders.
By the way, very important: […]
source 10% Yield on your USD Stablecoins? Here are the top 4 options!
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