Looking for the best interest rates on USDC? MyConstant offers 12.5% APY on USDC and USDT!
Stablecoins are cryptocurrencies pegged to a certain price, often 1 USD. Stablecoins maintain their pegs using a variety of tactics from algorithmic rebalancing portfolios to centralized debt issuance. Each stablecoin comes with its own unique set of benefits and risks, but all of them fetch interest rates far greater than their fiat equivalents. Demand for borrowing in crypto markets is far greater than traditional markets thanks to the volatility. Before you begin your stablecoin lending journey, make sure to understand the unique risks of each stablecoin and lending platform.
Best Interest Rates on USDC
Now that you understand the basics of crypto interest, you may be considering staking your crypto to earn interest. USD Coin (USDC) is a great way to safely enter into the world of staking.
MyConstant: 12.5% APY
MyConstant offers double-digit yields on stablecoins, and the platform comes with a suite of features that help grow a variety of assets in your cryptocurrency portfolio. Stablecoins are pegged to USD, so you don't take on traditional volatility risk. The lending platform is best for USDC, as it lets investors earn 12.5% annual interest. Users can also earn 4% annual interest on their Bitcoin, Ethereum Litecoin, Polygon, and various other cryptocurrencies.
If you don't want to invest in stablecoins whatsoever, you can still use MyConstant to earn higher yields on USD. Instead of earning less than 0.5% on USD in a savings account, MyConstant offers 4% APY on USD. Another great feature for both crypto and fiat currency, MyConstant has no lockup times –– you can access your investments whenever you need.
Hodlnaut: 9% APY
The Hodlnaut interest account lets you put your digital assets to work. You can earn over 12% annual interest on stablecoins, and the platform offers options for Bitcoin, Ethereum, and Wrapped Bitcoin as well. Hodlnaut offers higher rates than competitors, and you don't need to stake another token to unlock the highest rates, which is a requirement on some other exchanges. Rewards from Hodlnaut are paid out weekly.
BlockFi: 8% APR
BlockFi is a great option to begin staking our USDC. It offers a competitive 8% interest rate. It also offers up to $250 in rewards when you sign up. It takes less than 2 minutes to sign up and you can begin earning interest the same day. There is no minimum balance to begin earning interest. Interest is accrued daily and paid monthly. However, it is not insured, so there is a risk of losing funds. BlockFi has a simple interface that allows users to easily navigate the crypto sphere.
Nexo: 12% APR
Nexo is another great option, offering an even higher interest rate of up to 12%. There are no minimums, and payouts are made daily. Nexo also offers the option to be paid in NEXO coin, giving you an extra 2% for choosing to do so. However, to receive higher interest rates, you must stake at least 10% of your account in NEXO coin, and the minimum deposit requirement is $10. Nexo offers up to $375 million in insurance, so your investment is more secure than at other exchanges. Nexo offers some of the highest rates on the market with a smooth and user-friendly interface.
What's more, Nexo currently has a special promotion that gives new users free cryptocurrency for signing up. The bonus starts at $10 in free crypto for users that deposit over $100, $20 for $200, $50 for $500 and a $100 bonus for users that deposit $1,000 or more.
Crypto.com: Up to 14% APR
Crypto.com offers rates of up to 14% on USDC. However, there is a 1-month minimum deposit term. During this time, you will be unable to sell your USDC. Your interest rate also depends on the amount of your deposit. To receive the 14% interest, you must deposit a minimum of $40,000. If you stake less than $40,000, you can earn an interest rate of 10% to 12%. Crypto.com offers high interest rates and is easy to use. However, your funds are not always readily available and higher interest rates require more capital.
Voyager: 9% APR
Voyager is a prominent crypto exchange, offering 9% interest on USDC. It is very easy to make an account, and only $10 is required to begin trading. However, there is a monthly minimum balance of 100 USDC ($100). This is still much lower than the $40,000 required on Crypto.com to receive 14%. Voyager is a great option as it has a low barrier for entry and is beginner friendly.
What Are Stablecoins?
Stablecoins are tokens that are tied to an outside asset, like the U.S. dollar or gold. This allows for the price to be stabilized, as the name suggests. The coins are backed by the outside asset, typically USD, so there is little risk involved. However, some stablecoins are collateralized by other cryptocurrencies, increasing the risk. Stable coins typically do not move very much. In the case of USDC, it does not fluctuate at all. One USDC is always $1 and is backed by several financial institutions. Stablecoins are collateralized coins that offer stability in an otherwise volatile market.
How Cryptocurrency Interest Works
Cryptocurrency interest works similarly to an interest-earning savings account. You give your funds to an exchange, and they use those funds, giving you rewards along the way. This process is known as staking.
However, there are several nuances to crypto interest. Most interest rates are floating, meaning they can change at any moment. For most stablecoins, however, offer interest rates between 4% to 12%, so the fluctuation is not overly dramatic. These interest rates are derived from the supply and demand of the underlying asset. They are paid in crypto, usually in a compounding manner. This means the interest earned is deposited back into the interest pool. Some coins have a lock-up period, meaning you cannot sell your assets for a period of time.
Risks of Stablecoin Interest Rates
While stablecoin interest rates remain within a range, they can always fluctuate. This can change the amount of interest you earn. Crypto interest rates also have much less regulation than typical banks. The exchanges are not required to offer insurance. Also, since you earn interest on a centralized exchange, there is a risk of being hacked.
With no insurance requirements, a hack could permanently destroy your investment, leaving you with nothing. While there are currently very little regulations, governments could step in at any point and attempt to regulate the industry. This means you may no longer be able to earn interest on assets. While stablecoins offer high interest rates thousands of times higher than typical interest rates, it is not entry risk-free.
Cryptocurrency Interest vs. Stablecoins
Cryptocurrency interest differs from that of stablecoin interest. Because cryptocurrencies are much more volatile, exchanges are less willing to loan them out. A cryptocurrency could lose 50% of its value in 1 day, but stable coins hardly move. Because of the increased volatility on cryptocurrencies, exchanges offer stakers lower interest rates on cryptocurrency. This being said, the same applies to the upside; if the cryptocurrency you hold increases, your portfolio will increase, as well as the interest you’ve earned.
Stable coins do not fluctuate much, and are a much safer way to store value in crypto. Exchanges are willing to offer users much higher interest rates on stablecoins. For instance, most interest rates on a cryptocurrency, like Ethereum, hover around 5% to 8%. However, stablecoins, such as USDC, can easily offer interest rates surpassing 12%. Stablecoins are a safer option, so exchanges are able to offer higher interest rates.
Is Earning Interest on USDC Worth It?
Earning interest on USDC can be a great option to begin earning interest on crypto assets. Interest rates are much higher than those of typical saving accounts, giving investors much higher returns. However, risks of hacking and insurance pose a threat to your investment, so it is not entirely secure. If you can tolerate the risks and are looking to begin earning interest on crypto assets, stablecoins like USDC are a great option.
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