Where to stake stablecoins and earn passive income while sleeping? In this guide an exclusive view on the best places to stake stablecoins and gain interest over it!
Since the start of 2021, the entire cryptocurrency market is in a fierce bull run. For instance, there is an increasing demand from bigger investors like Microstrategy and Tesla combined with a growing interest from mainstream retail investors.
Also, the cryptocurrency market has evolved into a new asset class where DeFi has taken a big part. In addition, investing in crypto doesn’t mean that you have to invest in the bigger ones like BTC, ETH, or LTC anymore and wait when your portfolio goes ‘to the moon’.
Nowadays, the market shows numerous other opportunities for earning a passive income or make a good profit out of your crypto portfolio.
A good example of earning a passive income without any risk is ‘staking’ stablecoins or earning interest over it. In this article, I’ll explain to you the 12 best places to stake stablecoins. Also, a deeper insight into lending crypto’s like USDT or DAI and earn interest over it.
Best places to stake stablecoins: Quicktake
Where to stake stablecoins and earn interest over it while just holding your coins in a crypto wallet? Below is the table where I’ll give you the 12 best options that allow you to earn interest ranging from 2.9% to 12%.
All this depends on the type of stablecoin you are planning to stake or hold.
|Binance||Exchange(📊)||4.2 %– 4.5%||10% discount||Centralized|
|Poloniex||Exchange(📊)||4 – 7.1%||Centralized|
|Nexo||Lending platform(💳)||12.00%||$20 discount||Centralized|
|Celsius||Lending platform(💳)||8.88%||$50 discount||Centralized|
|Compound||Smart contract(📑)||2.9 – 3.5%||Decentralized|
|Aave||Smart contract (📑)||1.9 – 4%||Decentralized|
|dYdX||Smart contract (📑)||1.9 – 4%||Decentralized|
|Fulcrum||Smart contract (📑)||2.49 – 9.38%||Decentralized|
|Ledger Nano||Hardware wallet(🔐)||3.7 – 7.3%||Offline|
Can I stake Stablecoins?
In technical terms, most stablecoins can’t be staked as they aren’t a cryptocurrency or PoS coin that has a use case in the entire blockchain ecosystem. However, in practical terms, there is no difference between holding USDC in a wallet and earning interest over it or staking ADA(Cardano) in a wallet.
Therefore, most platforms like Binance, Poloniex, Nexo, or Celsius always offer to hold stablecoins in combination with other PoS coins. Additionally, holding stablecoins(USDT, DAI) or crypto(ADA, ETH) in a wallet will give you the possibility to earn passive income over your wallet holdings.
Why should I stake stablecoins?
In particular, staking or holding stablecoins and earning interest over it is a zero-risk exercise, why? With stablecoins everything keeps simple and manageable where the volatility component of crypto is being removed by pegging them to the USD dollar.
For instance, staking USDC for 12% APY on Nexo is the expected outcome if you hold this stablecoin for 1 year on their platform. In other words, an initial $10000 investment into USDC will give you a guaranteed 12% result minus platform commissions.
On the other hand, if you were staking ADA for 8% APY and the coin will lose 30% of its value because of market turbulence. In addition, this loss will give you a negative result for that year even though you acquired more ADA. Therefore, staking stablecoins will always give you the expected result in $ value.
Where to farm stablecoins?
If you are familiar with DeFi platforms like Compound, Aave, or Uniswap then you must have heard of the term yield farming. Yield farming is also a very lucrative way to earn passive income, however, like staking stablecoins this isn’t without risks. In short, yield farming explained:
‘Yield farming is another strategy to put your cryptos at work by providing liquidity to a liquidity pool. In return, you will earn rewards in a newly mined token or LP token.‘
In most cases yield farming requires you to provide liquidity in crypto’s like ETH or BNB but also stablecoins are very popular. Additionally, if you like to take some risks then it’s possible to put your stablecoins at work at Curve.
Yield farm stablecoins with Curve
Notably, Curve has a long list of stablecoin pools pegged to fiat currency (mostly USD) with decent APRs. Curve also maintains strong APRs between about 1.9% (for liquid tokens) and 32%. Particularly, stablecoin pools are safe as long as the tokens don’t lose their peg. Because their prices won’t change dramatically compared to each other, impermanent loss can be completely avoided. Like all DEXes, using Curve comes with the same risks — impermanent loss (though it’s less likely in many Curve pools) and smart contract failure.
Where is the best place to stake stablecoins?
At the beginning of the article, I have shown you a list of the best places to stake stablecoins, the possible rewards, and also what stablecoins to use. Next in this guide is a more detailed summary of all platforms and how staking stablecoins work there.
Binance is a very famous crypto trading platform that is is founded by Changpeng Zhao, a well-known blockchain industry expert, and expert in setting up trading systems.
Additionally, based on daily(24h) trading volumes, Binance is the biggest cryptocurrency exchange in the world. Also, it has millions of cryptocurrency traders using its platform on a daily basis.
Lending a stablecoin like USDT on Binance is very flexible where you have two options. The first one is ‘Flexible savings’ where you can transfer USDT and also redeem any time you need the coins(about 5.77% interest).
Besides this, you have ‘Locked savings’ where you can transfer stablecoins and lock for 7, 14, 30, or 90 days. In addition, you will get rewarded with an average interest from 6 – 7% depending on the period.
Finally, trading a Binance can be done with almost zero fees(0.075%) and you can use this link when signing up. It will give you an additional 10% discount on fees for life 🙂
Kucoin is another famous cryptocurrency exchange that also offers crypto lending as a service.
Compared with Binance described above, Kucoin is probably a modern platform for trading any cryptocurrency. In addition, this platform was founded by a group of cryptocurrency enthusiasts from Asia aiming to offer comfort and security to your mighty assets.
As of writing the platform ranks at position 12 on the list of exchanges which is based on trading volume for the past 24 hours. In addition, the platform specializes in offering trading cryptocurrencies, margin trading, trading futures, and also staking cryptos.
Spot trading cryptos can be done at a fee of 0.1% and it is also important to note that withdrawals from the platform can be done at zero fees.
How to Lend USDT on Kucoin
To lend your USDT on Kucoin can be very profitable(up to 20%). However, it’s also very risky because you have to enable ‘Margin trading’ and your position can be liquidated anytime. Here is how it works:
- Create a at Kucoin
- In the upper menu choose ‘Finance’ and ‘Crypto lending’
- Click ‘Enable margin trading’
- For USDT lending select USDT on the left
- Give amount of USDT and the days(7, 14, or 28) under ‘Terms’
- Press ‘LendUSDT’
Last but not least in the list of exchanges, there is Poloniex, a crypto trading platform from the early days that is founded back in 2014. Furthermore, it’s a US-based exchange that became famous for offering crypto trading over the years.
In the past, crypto investors could use the Poloniex platform as a crypto-to-crypto trading platform. As of today this platform has extended its services and can be considered as a one-stop shop for crypto trading.
Additionally, based on daily(24h) trading volumes, Poloniex is still a very large cryptocurrency exchange that offers its services to hundreds of thousands of crypto enthusiasts.
Besides trading, Poloniex offers several other feature-rich products, including custodian wallets, crypto margin trading, lending service, and earning rewards with staking.
In general, Poloniex has been around since the beginning of crypto and is, therefore, one of the most trusted platforms in staking stablecoins.
Next, a list of some very popular crypto lending platforms. Also, these platforms are the best places to ‘stake’ stablecoins with very competitive yields. Let’s check them out!
Nexo is one of the most recognized and used crypto loans platforms for Bitcoin and stablecoins like USDT or USDC. Particularly the platform is a crypto-backed asset provider where you deposit stablecoins and earn interest or can get a loan.
They are now accepting over 40 fiat currencies and they are operating in more than 200 jurisdictions. That means that they have a large part of the countries of the world covered with their services.
Some benefits of Nexo:
- 12% interest on stablecoins like USDT
- 18 different cryptos can be used as collateral
- 8% interest over BTC deposits
- 30% dividend on Nexo tokens
Another platform to deposit your stablecoins for staking is Celsius. Moreover, Celsius Network is a platform that is providing financial services to crypto users from all over the world. The company claims that they are providing curated services that “have been abandoned by big banks.”
These services include fair interest rates for your loans, zero fees for the services provided, and quick transactions.
The following crypto profits can be earned:
- 10% on stablecoins
- 6.35% on ETH
- 6.2% on Bitcoin
Some would consider BlockFi one of the best platforms for staking stablecoins currently available. It was founded by Zac Prince and Flori Marquez in 2017. Since its inception, the company has managed to raise over $20 from firms, including Coinbase Ventures.
BlockFi is currently the only platform offering a crypto deposit account with compound interest. Meaning that the monthly interest earned goes back to the original pool and continues to compound. Currently, BlockFi has over $50 million of cryptocurrency stored by users that are being paid interest.
Particularly, with a BlockFi Interest Account (BIA), your cryptocurrency or stablecoin can earn up to 7.5% APY. Interest accrues daily and is paid monthly. There are no hidden fees, no minimum balances, and no reason to wait.
CoinLoan has a lot to offer to any investor with significant crypto holdings and eager borrowers. So if you are into staking stablecoins for earning interest you are at the right place.
It challenges traditional financing by combining cryptocurrency and crowdfunding, allowing individuals to borrow funds with a loan-to-value (LTV) of up to 70%. While those looking to gain passive income can get double-digit returns both by funding investments with stable and fiat currencies.
Finally for earning interest over stablecoins you can do this with USDT, DAI, or TUSD for approximately 12.3% APY.
So far, all popular crypto lending platforms. Next is a list of popular decentralized finance protocols that offer to ‘stake’ stablecoins from within your wallet!
Compound is a decentralized, blockchain-based protocol that allows you to lend and borrow crypto — and have a say in its governance with its native COMP token. For staking stablecoins it works a bit different than crypto lending platforms like Nexo or Celsius. Instead of depositing your stablecoin into a wallet, you deposit your coins into a smart contract on the Ethereum blockchain.
Compound supports the borrowing and lending of a specific set of cryptocurrencies. As of this writing, they are: Dai (DAI), Ether (ETH), USD Coin (USDC), Ox (ZRX), Tether (USDT), Wrapped BTC (WBTC), Basic Attention Token (BAT), Augur (REP), and Sai (SAI). Now anyone with crypto can lend and borrow crypto immediately, without having to spend the time, effort, and cost of dealing with a traditional financial intermediary.
Aave is another decentralized finance (DeFi) protocol that lets people lend and borrow cryptocurrency. All this without having to go through a centralized intermediary or lending platform.
When they lend, they earn interest; when they borrow, they pay interest. Aave is built atop the Ethereum network. For staking stablecoins it works the same here; you deposit into the contract, you earn interest over your holdings.
Finally for earning interest over stablecoins you can do this with USDT, DAI, and 7 others for approximately 1.9 – 4.5% APY.
dYdX is a decentralized margin trading platform also based on Ethereum. Furthermore, dYdX allows users to borrow lend, and make bets on the future prices of popular cryptocurrencies. Additionally, dYdX wants to bring trading tools normally found in fiat markets to the world of blockchain.
Particularly, DYDX enables a robust ecosystem around governance, rewards, and staking – each designed to drive future growth and decentralization of dYdX, resulting in a better experience for users.
For staking or lending stablecoins you can deposit USDC or DAI here and let it work for you for approximately 1.9 – 4% APY.
Last in the list of decentralized places to stake stablecoins is Fulcrum. Moreover, Fulcrum is another decentralized lending and margin trading platform built on Ethereum.
Specifically, the system leverages the 0x protocol to offer deeper liquidated spreads through the use of shared lending pools.
Furthermore, bZx is a strong user of the Ethereum Name Service (ENS), giving each asset and trading strategy a unique domain in an attempt to make their service more digestible to average users.
For staking or lending stablecoins you can deposit USDC, USDT, or DAI here and earn interest for approximately 2.49 – 10% APY.
12. Ledger Nano
Last on the list of places to stake stablecoins is Ledger Nano. As mentioned earlier, Ledger is one of the most popular hardware wallets in the market. This is the preferred wallet for investors that hold their coins offline. Thus, stablecoin holders would certainly find Ledger one of the best places to stake offline.
There are different Ledger models. The most purchased Ledger wallets are the Ledger Nano S and the Ledger Nano X. Both of them are very useful and portable but the Ledger Nano X works with Bluetooth, has a better screen and it supports a larger number of apps.
In particular, one of the main benefits of using a Ledger device is that the wallet uses a built-in exchange feature. Additionally, you can purchase new USDT coins and send these to your Ledger wallet instantly. This feature uses a third party(Coinify) so buying comes at a cost: 4.5% credit card fees or 1.7% for bank transfers.
Staking on Ledger with stablecoins is possible in combination with Compound DeFi protocol. If you are able to configure this, then staking DAI, USDC, or USDT will give you an interest of about 3 – 7%.
Conclusion: Is staking stablecoins worth it?
In the case of stablecoins, a positive outcome is almost guaranteed. Earning interest over your stablecoins holdings is no different than staking cryptocurrencies from a wallet.
However, where staking cryptocurrencies can give you higher rewards and higher profits in terms of price, there are always also risks involved. With earnings over stablecoins you know the outcome upfront which is a big benefit.
Ultimately, the choice should depend on your personal attitude to risk. Investors who are willing to take risks in the hope of earning ultra-high returns should try yield farming stablecoins or PoS staking instead of staking stablecoins.
All in all, the crypto markets, in general, give you numerous options and possibilities to be profitable in the end.
The following articles might also be a good read for you:
- 7 Reasons Why Stablecoins Exist in the Cryptosphere
- 7 Reasons Why You Should be Staking Your Crypto
- Stablecoin vs Bitcoin: What Difference do They Make?
- Crypto Lending vs Staking: Which concept generates the most Passive Income?
- 12 Places To Earn Cryptocurrency Rewards
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