Investing in Stablecoins can provide consistent returns with low risk and ease of access to your funds. Personally, stablecoins are now used as my emergency fund for me to earn passive income (8%) on my cash (USD) that I can access anytime within 72 hours.
Previously bonds and CDs (certified deposits) served as a great way to earn a little bit of return for a highly stable investment that could be counted on to repay your original investment. Today, some bonds are returning negative interest rates and the US 10 year treasury is only returning 0.65%. This is down from 2.2% last year and isn’t predicted to go up in the near future.
So where can investors look for reliable returns with price stability?
Enter the US dollar backed Stablecoin, USDc. There are many stablecoins in existence today, but my current favorite is the USDc cryptocurrency which is backed by one US Dollar for every 1 USDc.
By taking US Dollars and buying USDc then holding them in Coinbase or another crypto provider such as Blockfi you can earn from 1.25% to 8.6% APR on my US Dollars.
How does a digital ‘bank’ pay 8% interest on the US dollar when banks can only pay up to 1.6% APR now on a savings account?
According to the Block “the reality is there currently still exists outsized demand from institutional investors to borrow dollar or USDC to buy bitcoin spot and capture basis arbitrage trades between spot and derivative exchanges. Enough demand that actually outstrips the total cash supply available to market-makers to take advantage of these opportunities themselves… simple supply and demand amid attractive risk-reward opportunities is helping to drive these higher yields” for digital banks.
Blockchain and digital native companies do not have the same costs as traditional banks. With less costs in physical locations and focusing on technological innovation, these web3 companies share the returns from using the end users (customers like you and me) funds. This is a win-win in my perspective as I’m able to have my money secured and insured while also earning more than sitting in a bank account or under my bed.
How do I learn more?
Check out these resources below to get started with earning interest in your US dollars.
What is USDc? Getting Started with Coinbase
Buying Stablecoins with Trust Wallet (an open source wallet sponsored by Binance)
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