Stablecoins are coins whose price does not fluctuate very much. They are often backed up by other currencies, allowing for the value to stay consistent. Stablecoins can also be staked to earn interest, allowing others to borrow and lend your funds for a reward.
What Are Stablecoins?
Stablecoins are tokens that are tied to an outside asset, like the U.S. dollar or gold. This allows for the price to be stabilized, as the name suggests. The coins are backed by the outside asset, typically USD, so there is little risk involved. However, some stablecoins are collateralized by other cryptocurrencies, increasing the risk. Stable coins typically do not move very much. In the case of USDC, it does not fluctuate at all. One USDC is always $1 and is backed by several financial institutions. Stablecoins are collateralized coins that offer stability in an otherwise volatile market.
How Cryptocurrency Interest Works
Cryptocurrency interest works similarly to an interest-earning savings account. You give your funds to an exchange, and they use those funds, giving you rewards along the way. This process is known as staking.
However, there are several nuances to crypto interest. Most interest rates are floating, meaning they can change at any moment. For most stablecoins, however, offer interest rates between 4% to 12%, so the fluctuation is not overly dramatic. These interest rates are derived from the supply and demand of the underlying asset. They are paid in crypto, usually in a compounding manner. This means the interest earned is deposited back into the interest pool. Some coins have a lock-up period, meaning you cannot sell your assets for a period of time.
Best Interest Rates on USDC
Now that you understand the basics of crypto interest, you may be considering staking your crypto to earn interest. USD Coin (USDC) is a great way to safely enter into the world of staking.
BlockFi: 8% APR
BlockFi is a great option to begin staking our USDC. It offers a competitive 8% interest rate. It also offers up to $250 in rewards when you sign up. It takes less than 2 minutes to sign up and you can begin earning interest the same day. There is no minimum balance to begin earning interest. Interest is accrued daily and paid monthly. However, it is not insured, so there is a risk of losing funds. BlockFi has a simple interface that allows users to easily navigate the crypto sphere.
Nexo: 12% APR
Nexo is another great option, offering an even higher interest rate of up to 12%. There are no minimums, and payouts are made daily. Nexo also offers the option to be paid in NEXO coin, giving you an extra 2% for choosing to do so. However, to receive higher interest rates, you must stake at least 10% of your account in NEXO coin, and the minimum deposit requirement is $10. Nexo offers up to $375 million in insurance, so your investment is more secure than at other exchanges. Nexo offers some of the highest rates on the market with a smooth and user-friendly interface.
Crypto.com: Up to 14% APR
Crypto.com offers rates of up to 14% on USDC. However, there is a 1-month minimum deposit term. During this time, you will be unable to sell your USDC. Your interest rate also depends on the amount of your deposit. To receive the 14% interest, you must deposit a minimum of $40,000. If you stake less than $40,000, you can earn an interest rate of 10% to 12%. Crypto.com offers high interest rates and is easy to use. However, your funds are not always readily available and higher interest rates require more capital.
Voyager: 9% APR
Voyager is a prominent crypto exchange, offering 9% interest on USDC. It is very easy to make an account, and only $10 is required to begin trading. However, there is a monthly minimum balance of 100 USDC ($100). This is still much lower than the $40,000 required on Crypto.com to receive 14%. Voyager is a great option as it has a low barrier for entry and is beginner friendly.
1 Minute Review
Voyager is a leading name in the sphere of cryptocurrency investing, giving you access to over 50 tokens and coins. Buy, sell and swap assets using Voyager Crypto’s simple mobile platform available as a free download for iOS and Android users.
When you invest through Voyager, you’ll pay nothing in commissions, which is a major benefit when compared to other cryptocurrency brokers. Voyager is also one of the only brokers we’ve seen that allows users to earn interest on their crypto investments.
Though the broker could do more to improve its customer service, it’s an excellent option for beginner investors and seasoned professionals alike.
Best For
- Cryptocurrency investors looking for a wide selection of supported projects.
- Investors who prefer mobile trading.
- Anyone interested in earning interest on their crypto investments.
Pros
- Simple, straightforward and intuitive mobile platform
- Wealth of investment opportunities
- Allows users to earn interest on select crypto investments
Cons
- Only available for mobile users — no desktop platform
- Limited routes to contact customer service team
1 Minute Review
Crypto.com strives to make cryptocurrency a part of everyday life by offering a full suite of services for crypto users. The company offers a Crypto.com App, Exchange, Visa Card, DeFi swap, DeFi Wallet, DeFi Earn, Crypto.com Price, staking, crypto lending, and many other services. What really sets them apart, however, is the combination of super low fees and incredibly generous rewards programs for their users.
Best For
- Traders who want access to a secure, low-cost cryptocurrency exchange
- Passive investors who want to earn interest on their balance without frequent trading
- Mobile investors who prefer to handle all their crypto needs via their phone or tablet
Pros
- Low fees
- High security
- One-stop shop for all your crypto needs (wallet, trading, spending, and more)
- Lots of ways to earn interest, rewards, and rebates
Cons
- Low privacy
- Customer service response time could be improved
1 Minute Review
Maybe you think cryptocurrency is the future, or perhaps you were swept up in the initial waves of Bitcoin. BlockFi may be your next step if you’re ready to evolve as a crypto investor.
Whether you’re a native crypto user or curious enough to start investing, BlockFi seeks to bring institutional-grade financial products to crypto markets that often face restricted access. It strives to bring clients low-cost, simple applications designed to maximize the potential of crypto assets. Learn more in our BlockFi review.
Best For
- Crypto native clients. You own Bitcoin now. You’re the friend who fills in the blanks when conversation turns to cryptocurrency, and you devour crypto literacy content like it’s your job (and maybe it is). BlockFi’s platform can help take your crypto assets to the next level.
- Crypto fringe clients. If you’ve dabbled in buying alternative assets like crypto or know enough to be interested, BlockFi can help you take the next step.
- Crypto curious clients. If you’re both intrigued by bitcoin and the type of person who obsessively learns everything you can about things you’re new to, BlockFi’s crypto asset platform might be the entry point you’re looking for.
Pros
- Mostly fee-free platform
- Market-best interest rates
- Earn interest, trade and borrow from a centralized hub using the BlockFi app
Cons
- Mostly restricted to those with a base knowledge of cryptocurrency
- No dedicated relationship with an investment advisor, so best for those who have a solid handle on crypto trading
Best For
long-term cryptocurrency investors
1 Minute Review
Nexo is a unique lending platform that allows you to earn interest on your cryptocurrency investments. Interest rates vary by distribution method and coin, but you can expect to earn between 6% and 12% APR. Nexo is based in Switzerland, which makes it less vulnerable to increasing U.S. regulation of crypto lending platforms.
Nexo also allows you to take out loans based on the amount of cryptocurrency in your account without selling your coins and buying them back. Interest rates for loans begin at 5.90% APR. Though you cannot currently buy or sell cryptocurrencies through the Nexo platform, the crypto savings account provider offers a high-yield method for investors to earn money on idle coins and fiat.
Best For
- Long-term cryptocurrency investors
- Those who already hold a stablecoin or alt-coin
- Beginners who are new to cryptocurrency savings accounts
Pros
- High-yield savings accounts earn up to 12% interest on coins and fiat currencies
- Comprehensive mobile app makes management simple
- Advanced security features and insurance
Cons
- Fewer educational resources than some competitors
Risks of Stablecoin Interest Rates
While stablecoin interest rates remain within a range, they can always fluctuate. This can change the amount of interest you earn. Crypto interest rates also have much less regulation than typical banks. The exchanges are not required to offer insurance. Also, since you earn interest on a centralized exchange, there is a risk of being hacked.
With no insurance requirements, a hack could permanently destroy your investment, leaving you with nothing. While there are currently very little regulations, governments could step in at any point and attempt to regulate the industry. This means you may no longer be able to earn interest on assets. While stablecoins offer high interest rates thousands of times higher than typical interest rates, it is not entry risk-free.
Cryptocurrency Interest vs. Stablecoins
Cryptocurrency interest differs from that of stablecoin interest. Because cryptocurrencies are much more volatile, exchanges are less willing to loan them out. A cryptocurrency could lose 50% of its value in 1 day, but stable coins hardly move. Because of the increased volatility on cryptocurrencies, exchanges offer stakers lower interest rates on cryptocurrency. This being said, the same applies to the upside; if the cryptocurrency you hold increases, your portfolio will increase, as well as the interest you’ve earned.
Stable coins do not fluctuate much, and are a much safer way to store value in crypto. Exchanges are willing to offer users much higher interest rates on stablecoins. For instance, most interest rates on a cryptocurrency, like Ethereum, hover around 5% to 8%. However, stablecoins, such as USDC, can easily offer interest rates surpassing 12%. Stablecoins are a safer option, so exchanges are able to offer higher interest rates.
Is Earning Interest on USDC Worth It?
Earning interest on USDC can be a great option to begin earning interest on crypto assets. Interest rates are much higher than those of typical saving accounts, giving investors much higher returns. However, risks of hacking and insurance pose a threat to your investment, so it is not entirely secure. If you can tolerate the risks and are looking to begin earning interest on crypto assets, stablecoins like USDC are a great option.
Methodology
Benzinga crafted a specific methodology to rank cryptocurrency exchanges and tools. We prioritized platforms based on offerings, pricing and promotions, customer service, mobile app, user experience and benefits, and security. To see a comprehensive breakdown of our methodology, please visit see our Cryptocurrency Methodology page.
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