Even in the current downturn, the cryptocurrency market offers investors numerous opportunities to continue generating income. Stablecoins are an asset that can provide substantial returns when used correctly. However, they are not all the same. Some stablecoins offer less risk than others.
Over the past month, stablecoins have found themselves in the spotlight for the wrong reasons. One, in particular, has shown that Stablecoins are also subject to some degree of risk. The stablecoin TerraUSD (USTC) recently lost its $ 1 peg. Unlike other stablecoins which maintain a reserve of cash equivalents equal to the amount of stablecoins distributed, UST has maintained its anchor through a crypto-trading algorithm. It was an experimental strategy that ultimately proved it could fail when markets become volatile. As a result, UST is currently trading at just $ 0,02. This stablecoin has lost almost all of its value and purpose.
However, some stablecoins operate with greater transparency and use traditional methods. Circle's stablecoin, USD Coin (USDC), is rapidly gaining popularity among investors for this reason. The company has spoken out about the need to regulate stablecoins and ensure their reserves are easily verifiable.
This strategy makes USD Coin one of the least risky stablecoins in its class. And investors can use it to their advantage. There are some exchanges that allow USD Coin investors to earn attractive interest on their holdings. While not entirely risk-free, earning interest on USD Coin with a reputable cryptocurrency exchange is one way to continue earning in an unstable market.
The best exchanges to earn interest
Investors need to make sure they are using exchanges that are reputable and have a favorable track record. The following exchanges meet these criteria and offer higher returns than a regular savings account.
BlockFi is one of the largest and most popular exchanges. It was one of the first exchanges to offer customers interest rates on many cryptocurrencies such as Bitcoin, Ethereum, and many others. While it is not possible to open new accounts to earn interest on these cryptocurrencies, investors can still earn interest on USD Coin. BlockFi offers an interest rate of 7% and does not require a minimum account balance.
Another well-known cryptocurrency exchange that investors can use to earn interest on USD Coin is Crypto.com. Unlike BlockFi, the minimum deposit is one month. But account holders with less than $ 30.000 can earn up to 8%. Those with more than $ 30.000 can still get a generous 4% return. Yes, the actual return is lower for larger deposits - Crypto.com's generous interest rates can be complex and counterintuitive at times.
The latest exchange to enter this list is Voyager. Investors can get between 6% and 9% interest on their USD Coin. As with Crypto.com, there are some clauses. The initial deposit must be greater than $ 10 and the minimum monthly balance must be greater than $ 100. As with Crypto.com, rewards also decrease as deposits increase. The minimum requirements and the high interest rate make Voyager one of the best options for earning interest.
These aren't the only exchanges offering interest on USD Coin, but they are among the most respected choices. The FDIC does not insure most cryptocurrency exchanges. This means that if a stock market fails, investors can lose all their money. Making sure the exchange you are using is trustworthy is a great way to minimize risk. Combining this with the transparency of the USD Currency, these interest accounts can be a great way to make extra profits in a volatile market.