How to Use Stablecoins to Earn Higher APY

Many are quick to turn to stablecoins to potentially reduce the risk of crypto positions.

A stablecoin can be linked to any stable asset, such as a digital asset such as Bitcoin (BTC) or a fiat currency such as the US dollar. If a digital asset were pegged to the US dollar, a digital currency value of $ 100 would theoretically mean that the secured asset is holding $ 100 in a reserve, as secure as a bank account. Stablecoins have many functions; Their uses include securely moving tokens between exchanges and logs, lending tokens, or making payments. For this reason, they quickly become an entry point into the crypto world, even for first-time users.

In contrast to Bitcoin, Ethereum (ETH) or other crypto projects, the price of a stablecoin is good, stable and does not always offer significant earning potential. In this case, revenues often depend on new innovative products that come onto the market, such as peer-to-peer loans. With peer-to-peer lending, users can leverage the crypto lending platform to lend their stablecoins. In this case, the interest rates are often significantly higher than with a conventional savings account.

The user chooses a platform that imposes a high interest rate higher than what the end user pays, the difference is called the spread. The spread is how a lending platform pays its lender. Keep in mind that this process can be compared to keeping your assets in a regular bank account. After you’ve deposited your money, traditional banks either invest the capital or lend it to others. They will then distribute a portion of the income they collect to you on a daily, weekly or monthly basis.

A happy mean

Some platforms offer a user interface similar to that of your traditional bank; The only difference is that higher interest rates are usually offered. Although this can be riskier than keeping your money in a traditional bank, stablecoins are also a more attractive investment than traditional cryptocurrencies because the money is less likely to be deposited.

To further illustrate this concept, let’s say you bought a cryptocurrency with the intention of earning 10% interest per year on a particular platform. This is an attractive tariff and more than you can earn with your classic high-interest savings account. However, the underlying asset is also riskier, which suggests to users that if the price goes down (and probably will eventually) they could lose money. Even with a 10% buffer in place, it’s not uncommon for a wild surge in price to drop the prices of these assets much lower than you’d expect if your timing were skewed.

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Stablecoins, on the other hand, almost guarantee that the amount you invested is the same as the amount you get back. For example, 850 USDC tokens that cost 1 USD each will always result in your 850 tokens being worth 1 USD. In theory, prices should always go sideways as the asset that supports them (USD in this case) is always worth $ 1.

Income from sideways exchange rate

While crypto loans offer stablecoin holders the opportunity to earn higher returns, they don’t do much to enable users to accumulate digital assets like bitcoin. To address this problem, Matrixport has released a new user-friendly crypto investment project called “BTC-U Range Sniper”.

The new product from Matrixport offers users an annual return (APY) of 6 to 200%, which can be paid out in USDT, BTC or USDC. The amount is determined by the price of BTC at the checkout. If the price is above a certain range at the time of payment, the user will be paid at least 6% APY in USDC. However, if the payout falls below the specified range, the main investment is shifted back to Bitcoin and the user is paid the same minimum of 6% APY. In an ideal scenario, the price would decrease in predetermined increments so that users can earn up to 200% APY.

When asked about their new offering, John Ge, co-founder and CEO of Matrixport, summarized the initiative as follows: “Stablecoins are an important legal transition and a great entry point for people interested in crypto. However, many stablecoin holders now want to accumulate BTC while getting higher returns. BTC-U Range Sniper is an easy-to-use crypto investment product where we enable users to continue generating attractive stablecoin income or to overcome BTC’s innate volatility in order to accumulate additional BTC. “

As a result, USDC owners looking for the right time to enter the market are likely to benefit from Matrixport’s newest product offering.