Just as the name suggests, Tether (USDT) is a stablecoin that keeps crypto valuations tethered to a base value. Tether hovers around $1, stabilizing prices within a volatile market. While Tether does not move much, you can use liquidity pools or crypto lending platforms to earn interest on it, which gives you returns on the asset. In the case of USDT, Crypto.com offers a great combination of high interest rates and a user-friendly interface.
- How Does Earning Interest on Crypto Work?
- Crypto.com Overview
- Crypto.com: 10-12% Interest on Tether (USDT)
- How to Earn Interest on Tether (USDT)
- Other Platforms to Earn Interest on Tether (USDT)
- Risks of Earning Interest on Crypto
- Is Earning Interest on Cryptocurrency Worth It?
How Does Earning Interest on Crypto Work?
Earning interest on crypto is a unique and revolutionary idea that connects users around the world and distributes rewards. Rewards on decentralized exchanges are typically given in terms of interest. Users can earn interest by placing their investments into a liquidity pool, which is a collection of funds used for lending and borrowing. The money in the pool can be used by others, but there are fees involved. These fees are determined by the supply and demand of the underlying asset.
Earning interest through a centralized exchange differs. You give your funds to the exchange, and they use the funds to issue loans to other users. For this service, they pay interest. This is very similar to savings accounts through banks, but centralized exchanges can offer much higher interest rates.
Crypto.com is an exchange created in 2016 to accelerate the formation of blockchain technology. It has since become a leader in crypto exchanges, offering a wide variety of programs and features to support its mission.
Crypto.com provides a simplistic and seamless interface that allows users to easily research and purchase cryptocurrencies. It also offers a selection of personal financial services. It allows for direct deposit so you can be paid directly to your account. It also offers a Visa card, allowing users to stake Crypto.com Coin (CRO) and earn interest.
It also offers a variety of advanced crypto trading features. You can use crypto in coordination with businesses and receive cryptocurrency as payment. It also offers direct access to the blockchain — something not every exchange offers. Perhaps the most important feature it offers is the ability to stake crypto using decentralized finance (DeFi) protocols.
Crypto.com: 10-12% Interest on Tether (USDT)
Crypto.com offers one of the highest interest rates on Tether for those wishing to stake their USDT. Other exchanges such as Binance and Bitvavo offer rates of around 6%, so Crypto.com exceeds its competitors in this regard. It also offers more than 30 different tokens, allowing for lots of options when choosing which coin to stake. But your funds are locked in the pool for the minimum 30-day staking period. The service is also not available in Hong Kong, Switzerland and Malta. You will earn a base of 10% interest on USDT, and an extra 2% if you choose to stake with Crypto.com Coin (CRO.)
How to Earn Interest on Tether (USDT)
Now that you understand the basics of staking and exchanges, you are ready to stake your own USDT. It is very simple, and with just a few easy steps, you will be on your way to earning interest.
Step 1: Open an online account.
The 1st step to being able to stake your USDT is to open an online account. Crypto.com offers both high interest rates and a simple interface. Other platforms such as BlockFi and Bitcoin Meester also offer competitive rates. Make sure the exchange offers staking before creating an account. Exchanges such as SoFi do not currently offer staking. Creating an online account requires minimal effort — usually just an email and password.
Step 2: Purchase cryptocurrency.
Once you have created an account, you must purchase cryptocurrency so you can have assets to stake. This is also fairly simple. Navigate to your account and select fiat wallet. From there you can link your bank account and send funds to your Crypto.com account. Once the funds are in your account, you can use them to purchase Tether. To do this, navigate to Tether’s page and hit the purchase button. Enter in the amount you wish to purchase, and you should now own Tether.
Step 3: Earn interest on your crypto.
Once you have purchased your Tether, navigate to the DeFi Swap section and select Pool. From here, you can select a cryptocurrency to provide funds for, such as Ethereum (ETH) and Dai (DAI) or Aave (AAVE) and USDT. Interest rates can vary depending on the asset you choose. Then select the amount you wish to provide. After, you must select the term of the lock-up time. Crypto.com has a minimum lock-up time of 1 month. During this time, you will not be able to sell your position. Payouts will be made weekly and added into your wallet. Calculators are available to determine the interest you will receive on your investments. However, the interest rates can change, so this is not always an accurate representation of potential earnings.
Other Platforms to Earn Interest on Tether (USDT)
Binance is another platform that offers USDT staking, but the interest rate is lower at 6%. This is still a good option if you are looking to test out staking on different cryptocurrency pairs because Binance offers more currencies in its staking program. Another option is BlockFi, which offers a rate of 7.5%. BlockFi also offers up to $250 in rewards when you join.
Risks of Earning Interest on Crypto
While staking cryptocurrency can be relatively safe, there are still risks involved. One of these is the risk of volatility. A coin’s value can plummet, and you will be unable to sell your investment as the funds are locked up when in the liquidity pool. However, this is not a risk for stablecoins as they are tied to an underlying asset, such as USD.
Another risk is from the custodian, or the exchange, holding your funds. Exchanges have been subject to hacking and cybercrime, so there is not a full guarantee that your investment will return to your wallet safely.
Lastly, staking interest rates fluctuate just like normal interest rates. This means there is a risk that your interest rate could fall dramatically, and you will make smaller returns on your investment.
Is Earning Interest on Cryptocurrency Worth It?
While U.S. bond interest rates hover between 1% and 2%, cryptocurrency interest rates can easily surpass 15%. This provides a much higher return on investment than more conventional lending techniques. It is also easy to use, readily available and is a great option to receive steady returns from an otherwise volatile market.
Remember that after a cryptocurrency is staked, it cannot be traded until it is unstaked. This could be problematic if a dramatic drop in price occurs. Also, recent hacks of companies such as NiceHash have brought into question the security of cryptocurrency. All exchanges are subject to hacks, meaning your investment isn’t completely risk free. While staking crypto has both pros and cons, it can be a great way to earn interest.