How to Earn Interest on Gemini Dollar?
Gemini Dollar is a stablecoin from Gemini, the company operating the popular Gemini exchange, one of the leading cryptocurrency exchanges globally. Similar to other dollar-pegged cryptocurrencies, the Gemini dollar does not suffer from extreme volatility.
You can hold onto Gemini Dollar without worrying about it losing its value as it is pegged to the US dollar. But it also won't rise in value, unlike other cryptocurrencies like Bitcoin and Ethereum. If you are holding Gemini Dollar, then you can put it to better use by earning interest on it.
Earning interest on Gemini Dollar is far better than keeping it idle in your wallet or any crypto exchange. Follow the steps below to start earning interest up to 13.3% APY on Gemini Dollar:
- Signup for an Interest Account
To begin earning interest on Gemini Dollar, you will need an interest account. Go to the website of an interest account provider and visit their signup page. Here, you will have to provide your legal name and email ID to complete the signup process.
- Verify Your Account
After you complete the signup process, you will receive an email from the interest account provider, which will contain a verification link. Click on the link to verify your email address. But your account isn’t ready yet for earning interest.
To activate your account, you will have to go through a KYC process. Here, you will have to provide your personal details and a government-issued identity card. You will also need a photograph of yourself holding the identity card.
The process is different when it comes to DeFi interest account providers. There won't be any signup and KYC processes if you opt for a DeFi interest account.
- Deposit Your Gemini Dollar
Once your KYC is approved by the interest account provider, it's time for you to deposit Gemini Dollar to your interest account. To deposit Gemini Dollar, go to the page that lists all the deposit options available. Click on the Gemini Dollar option to receive a unique wallet address.
Copy the unique wallet address and paste it to the wallet from where you plan to withdraw Gemini Dollar into your interest account. Enter the amount that you wish to deposit and click on the withdraw button. You will soon receive Gemini Dollars in your interest account.
- Start Earning Interest
Once you receive Gemini Dollars in your interest account, the interest accruals will begin within or after 24 hours, depending upon the rules of the interest account provider.
Why Earn Interest on Gemini Dollar?
You won't benefit from the price appreciation if you are holding onto Gemini Dollars like you would if you hold onto Bitcoin, Ethereum, and other cryptocurrencies. But if you keep Gemini Dollars in your interest account, you can earn up to 13.3% interest on it. The kind of returns that interest account providers offer on Gemini Dollar is unrivaled as traditional financial institutions do not offer such high interest rates on US dollars.
- Easy Process
It is easy to earn interest on Gemini Dollar. In most cases, it is a three-step process: signup for an account, complete the KYC process and deposit Gemini Dollars into your interest account.
When it comes to DeFi interest providers, the process is even easier than earning interest on Gemini Dollar in the CeFi space. You do not have to sign up for an account to earn interest on Gemini Dollar, and neither do you have to complete a KYC process. All you need is a wallet and enough funds to earn interest on it.
- Low Risk
Earning interest on Gemini Dollar is an attractive financial proposition. Yet, it is not entirely risk-free. But compared to other similarly high interest-paying financial instruments, earning interest on the Gemini Dollar is a comparatively safer option.
The interest you earn on Gemini Dollar comes from the lending business of interest account providers. They lend cryptocurrencies and fiat currencies to their borrowers and charge them high interest for funds. A part of their income is distributed among their interest account holders in the form of interest.
As a majority of their income is derived from their lending business, there is a risk. But most of them manage the risk by requiring borrowers to over-collateralize to obtain loans from them.
- Passive Income
If you love passive income, you will find that earning interest on Gemini Dollar is the best way to increase your crypto wealth. All you need to do is deposit Gemini Dollar into your interest account, and you will see your income grow.
Where can I earn Interest on Gemini Dollar?
Though Gemini Dollar is a stablecoin, there are limited options to earn interest on it now. If you are interested in earning interest on Gemini Dollar, check out BlockFi, Celsius Network, and Aave.
With BlockFi, you can earn interest up to 8.6% APY on your Gemini Dollars. The process of earning is straightforward on BlockFi. All you need to do is signup for an account, complete KYC, deposit Gemini Dollar, and interest accruals will begin almost immediately. BlockFi is one of the leading interest account providers today and hence, is a safer option to opt for.
Celsius Network offers the highest interest rates on Gemini Dollar. You will earn up to 13.3% APY on your Gemini Dollar funds on Celsius. But to earn the highest interest rate, you must meet their criteria.
First, you must agree to receive your interest payout in CEL, the platform's native token, and be from a country other than the United States. If you are from the United States, you are ineligible to receive an interest payout in CEL, which automatically disqualifies you from earning 13.3% interest on Gemini Dollar. Thus, the United States residents can only earn 10.51% interest on Gemini Dollar.
If you do not agree to receive the payout in Celsius Network's native token, you can only earn 10.51% interest. In this case, you will receive your interest payout in Gemini Dollar.
Aave is a DeFi protocol, and hence, you can start earning interest pretty quickly. First, you will have to connect your wallet with the Aave platform. Then, you must deposit Gemini Dollars to your Aave interest account. That's it! The interest accruals will begin automatically. As of now, Aave offers interest up to 3.02% APY on Gemini Dollars.
Is it Risky Earning Interest on Gemini Dollar?
The kind of returns that you can earn on Gemini Dollar is impressive. But there is an element of risk involved. You must understand these risks first before you start earning interest.
The crypto lending platforms offer loans in cryptocurrencies and fiat currencies to borrowers at very high interest. They share a part of their income with their interest account holders, which is known as interest. As a majority of their income comes from lending, there is a risk as they also use their user funds for lending.
Most of them manage the risk by making over-collateralization mandatory to borrow from them. Yet, some platforms offer loans without any over-collateralization requirements. They do it to stand apart in the crypto lending space. If you opt for an interest account with such platforms, there will be a comparatively higher risk.
If borrowers default, it will directly impact the platform’s ability to pay interest. If the number of loan defaults grows beyond their ability to cope, the platform will go bankrupt. In case of bankruptcy, their users will lose the funds that they kept in interest accounts along with any interest income that the platform was liable to pay them.
There is no doubt that many crypto lending platforms have insured their user funds. But the question is would the insurance amount be enough to cover the total losses? In most cases, the insurance amount is the range of a couple of hundred million dollars. If the losses are worth more than the insured amount, the platform is unlikely to refund 100% of user funds. It means that the insurance funds will cover only a partial amount. Hence, even if they have insured user funds, there is a high chance that it won't be enough to refund the entire sum.
To earn interest on Gemini Dollar safely, research the available interest account providers to choose the most credible option from them. You can also read in-depth reviews on every major interest account provider on our site.
What to Look for When Choosing a Platform?
It is crucial to check for a few factors while choosing a platform. The two most important factors that you should check in the beginning are the interest rates offered and the platform's industry standing.
There is something that you must keep in mind though. Do not opt for a platform solely based on interest rates offered. Many new platforms offer the highest interest rates in their initial days to lure new users. But the risk is comparatively higher in such platforms.
Another crucial factor is insurance. Check if the platform has insured user funds or not. Insurance is a crucial factor as in case of any black-swan events like hacking or bankruptcy, the insurance company will pay the amount insured to the platform. The platform will use the funds to refund its interest account holders. Depending upon the amount of losses and insurance amount, you will receive the full amount or a part of it.
You must also check for criteria that each platform has to become eligible for earning the highest interest rates they offer. Many platforms make it mandatory to receive interest payout in the platform's native token for earning the highest interest rates they offer. Some require their interest account holders to hold a specific percentage of their investment portfolio in the platform's native token. Some demand their interest account holders meet both of these criteria.
You may also require to deposit a minimum amount of Gemini Dollar to become eligible for earning interest. Check if the platform has such requirements or not. Another thing to note is if there is any lock-in period or not, as you cannot withdraw your funds during this period. Check for a platform that offers a flexible account if you think you will need your funds back soon.