Hot Features
Premium
Level up your trading with our powerful tools and real-time insights all in one place.
The cryptocurrency industry is developing, making it simpler for investors to do speedy transactions with low fees. However, cryptocurrency’s volatility might make it challenging to use as a means of payment, which causes investors to be wary.
This is where stablecoins come in, as they help to protect against the volatile nature of crypto assets. Stablecoins are intended to retain a stable value, or “peg,” and are linked to an underlying asset. Stablecoins are therefore always linked to the value of an asset that is not volatile, in contrast to other crypto assets whose prices vary.
The best lending platform depends on the stablecoin you choose. For instance, Nexo is appropriate if you want to invest in BUSD because it provides BUSD at competitive prices. To estimate possible earnings, take into account the platform’s yield from the chart as well.
In today’s issue, find out more about the best stablecoin lending platforms and their potential returns. In comparison to stock dividends, yield represents the returns on stablecoin investments. In general, higher yields indicate higher income and lower risk. By the end of the article, investors would have been provided with basic information for those new to stablecoins.
Stablecoins have helped lower volatility in trade by supporting their stability through fiat money and other less volatile assets. This attracts conservative investors to the cryptocurrency market.
Below are some of the leading stablecoins.
USDT (Tether)
Tether was launched as RealCoin in 2014, and it is the pioneer of the Stablecoin markets. Because of this, USDT enjoys the distinction of being the market’s most liquid stablecoin. It holds the largest market cap among stablecoins as of May 2022, ranking third overall after Bitcoin and Ethereum.
Tether aims to maintain a 1:1 peg to the US Dollar, enabling investors to buy and redeem one USDT for $1. It is widely used on stablecoin exchanges for convenient and low-fee trading. Tether claims full backing of USDT through reserves, including traditional currency and cash equivalents.
Tether provides three strategies as well. The first of the three stablecoins it introduced to the market was the USDT. Additionally, it has a third stablecoin tied to the Chinese yuan (CNYT) and a fourth stablecoin tied to the euro (EURT).
USDC (USD Coin)
Coinbase, Circle, and the Center Consortium worked together to build USDC. This project aimed to make investing in cryptocurrencies easier by reducing market swings for investors.
USDC and Tether both have USD ties. The cryptocurrency exchange Coinbase asserts that it has attained regulatory compliance and that all of its supply is backed by US dollar reserves.
The majority of significant exchanges accept USDC. It was previously an Ethereum-based token, but it has subsequently crossed over to several other blockchains, which makes it appropriate for various DeFi applications.
BUSD (Binance USD)
Binance, like Coinbase, has also developed its stablecoin. It is a rival to Coinbase’s USDC. BUSD is an ERC20 token issued on the Ethereum blockchain. It was introduced in 2019 by Binance and Paxos, and its supply is tied to audited dollar reserves. As Binance is a founding member, users enjoy fee-free fiat/crypto conversions when using BUSD on the Binance exchange. It is the go-to stablecoin for Binance users engaging in crypto-asset transactions.
Some Top Stablecoin Lending Platforms:
Nexo
Nexo supports various tokens and offers attractive APYs, including up to 17% for stablecoins like USDT, with earnings in Nexo tokens.
Lending options at Nexo include both locked and flexible-term holdings. Locked-in holdings yield higher interest rates, while flexible holdings permit free withdrawals.
Additionally, Nexo provides $375 million in insurance coverage for custodial assets, attracting conservative investors.
Please note that Nexo no longer accepts customers from the United States.
Aave
Aave is a versatile DeFi protocol for crypto loans, including stablecoin options. It offers fixed-interest rate loans, uncollateralized flash loans, and regular crypto loans.
Users can earn interest on their crypto deposits and borrow funds by staking assets on Aave. The platform provides transparent interest rate information, simplifying comparisons between borrowing and deposit rates.
Compound
Compound is a DeFi protocol with diverse lending and borrowing options for various cryptocurrencies and stablecoins. It prioritizes security and provides a live price feed for tracking liquidity-based platform prices efficiently.
Conclusion
Lending, including stablecoin lending, carries inherent risks. Centralized institutions often provide safeguards and regulations to protect lenders in the event of borrower defaults.
For instance, banks require collateral (e.g., a car or home) for loans, and government insurance backs them. However, stablecoins may have limited or no regulations, potentially lacking guarantees in the event of default. Regulators are working on supervising stablecoin lending, but uncertainties remain. Furthermore, there is a slight risk of custodian hacks.
However, if you are seeking to invest in crypto but want to avoid the downside of its volatility, stablecoins are great options for such investors.
Learn from market wizards: Books to take your trading to the next level
