Earning Money Passively With Stablecoins
Before we start off this article on how to generate passive income with stablecoins, let’s first discuss what they are. Here’s a short introduction on what stablecoins are. Stablecoins are cryptocurrencies that represent a tokenized version of any regulated fiat currency, most common among the stablecoins are tokenized versions of the U.S. dollar. These stablecoins provide liquidity and stability to centralized and decentralized cryptocurrency exchanges. Some of these stablecoins are backed by fiat, some are backed by algorithms, and some are backed by assets and/or commodities.
Stablecoins
Here’s a short overview of some of the most prominent stablecoins in the market at the time of writing this article.
USDC: A stablecoin that is pegged to and backed by the USD.
GUSD: The Gemini Dollar which Gemini claims that each GUSD is redeemable for $1, and is built on the Ethereum blockchain.
DAI: Governed by algorithms, it is a stablecoin that is pegged to the USD but backed by Ethereum.
USDT: The first stablecoin that was developed, and currently the most used. This is built on the Ethereum blockchain.
EURL: Developed by Société Générale in collaboration with Nomadic Labs , built on the Tezos blockchain, is a stablecoin pegged to the Euro.
BUSD: Binance USD is a pegged to and backed by USD, issued in collaboration with Paxos, and built on both Ethereum and Binance Smart Chain blockchains. It has received approval from New York State Department of Financial Services (NYDFS.)
UST: TerraUSD is an algorithm-backed stablecoin that is pegged to the USD by Terra Luna’s blockchain.
MIM: Magic Internet Money is a stablecoin that is collateralized by interest bearing tokens and crypto assets. You can swap your MIM tokens for any other stablecoin.
TUSD: TrueUSD can be redeemed 1-for-1 for USD, and is created on the Ethereum blockchain.
USDP: Paxos’ Pax Dollar is fully backed by the USD that has received approval from the New York State Department of Financial Services (NYDFS).
How To Earn With Stablecoins
There are different platforms that allow you to generate passive income from your deposited and/or staked stablecoins. These platforms can then lend out your stablecoins and gain interest payments on them, from which you also receive a percentage. This is similar to how savings-accounts used to work in traditional banking.
On BlockFi you can earn interest on your stablecoins by opening a BlockFi Interest Account (BIA). Your interest accumulates daily and is paid out monthly. It has a 9.5% Annual Percentage Yield (APY), which is the rate or return earned on your “investment”.
On ABRA you can earn interest on your stablecoins by opening an ABRA Intesrest Account (AIA). Your interest accumulates daily and is paid out every Monday. You receive interest payments in the asset that you have in your “Earn” account. That asset will compound, meaning that the paid-out interest will be added to the main balance and the next batch of interested will now be calculated based on the previous main balance plus the previously-paid-out interest. So over time the total amount the interest is calculated upon keeps growing.
On Celsius you can start accumulating interest on your funds as soon as its deposited. Interest is calculated every Friday and is paid out every Monday.
On Celsius you can earn interest “in-kind”, which allows you to earn in BTC, ETH, XRP, etc. based on what you deposited. You can also earn interest in CEL (Celsius’ coin), which allows you to earn a higher rate.
On Binance you have different ways to earn interest or rewards from using your stablecoins. You can open a Savings account which allows you to stable and competitive interest rates. You can open a Locked Staking account which allows you to earn higher yield for locking your stablecoins for a specific amount of time. You can also choose to lock your stablecoins and crypto in a LaunchPool, which allows you to earn “interest” in the form of new coins that are launch on Binance’s LaunchPad. There are more options available, but these are the most “safe”.
On Crypto.com you can stake for different terms (flexible, 1 month or 3 months) and you receive relatively high yields on your stablecoins. They also have a wider variety of non-USD based stablecoins that are pegged to for example, AUD, EUR, GBP, CAD, etc. Interest on your deposits start to accumulate a day after your initial deposit, and your rate varies based on your “locked” term. The interest will be paid in-kind — if you deposited BTC instead of a stablecoin, you will be paid-out in BTC and if you deposited TUSD, your interest will be paid-out in TUSD.
At EXO we use a combination of different platforms for different purposes; we use Binance for its high volume and ease of use, we use Crypto.com for its dependability, we use ABRA as more of a savings account.
So, in any situation, you can continue making money within this industry if you just find the right option for you. It takes time and due diligence to research the different options, but once you do find an option that fits your needs, you can sit back and relax while your money works for you.
EXO VENTURES
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