How to Earn Interest on HUSD?
HUSD or Huobi Dollar is a stablecoin by Huobi, a well-known cryptocurrency exchange. With a market cap of $700 million, HUSD is ranked 110 among the largest cryptocurrencies by market cap. Unlike Bitcoin, Ethereum, and other cryptocurrencies, HUSD is backed by US dollars that Huobi holds in the Paxos Trust Company's reserves to back every HUSD in circulation.
As HUSD is pegged to USD, its prices are stable. It is definitely a good thing. But you also won't also benefit from the price appreciation of HUSD like you would if you hodl other cryptocurrencies. But you can still use your HUSD holdings to earn more. Start earning interest on HUSD as you can earn interest as high as 12% APY on it, which is more than what any bank will pay you on your USD deposits. Follow the steps below to begin earning interest:
- Signup for an Interest Account
Start by visiting the website of an interest account provider. Go to their signup page and input your name and email ID there. After entering your name and email ID, click on the submit button.
- Verify Your Account
After the signup process, you will receive a verification link in an email from the interest account provider. To verify your email, you must click on the link or copy the link and paste it into the browser and press the go button. It will verify your email address, but your account is still not ready to begin earning interest on HUSD. For that, you need a verified account.
To begin the verification process, you will have to complete a KYC process. Enter your personal details and also upload a government-issued identity card. Also, click a photograph of yourself holding the ID card, as you will have to upload it during the process. After providing all the details, a photo of yourself, and adding a copy of your ID card, click on submit. The KYC process will usually be approved within a few days.
When it comes to DeFi interest account providers, they do not require you to signup for an account and nor would they ask you to go through a KYC process. To earn interest from a DeFi interest account provider, you will have to connect your wallet to their platform. Then, you will have to deposit HUSD. The interest accrual will begin automatically.
- Deposit Your HUSD
After signup and verification processes, you must deposit HUSD to your interest account. Visit the page where the interest account provider lists all the available deposit options. You will see HUSD there. If you click on HUSD, you will see a unique wallet address.
Copy the HUSD wallet address and paste it into the withdrawal section of a wallet where you currently hold HUSD. Enter the amount of HUSD that you wish to deposit to your interest account and click on the withdraw button. You will soon receive HUSD in your interest account.
- Start Earning Interest
Once done with the above three steps, you will start earning interest automatically on your HUSD deposit. So, get the ball rolling and see your crypto wealth grow.
Why Earn Interest on HUSD?
Unlike other cryptocurrencies, HUSD is comparatively stable as it is pegged to the US dollar. It also means that you won't benefit from its price appreciation. But there is a better way to utilize your HUSD funds to earn more rather than keeping it idle in your wallet. You deposit your HUSD funds in an interest account and earn interest up to 12% APY on it.
Another thing is that no banks will offer you 12% interest on your USD deposits in the western world. But with HUSD, which is pegged to USD, You can earn 12% interest APY.
- Easy Process
With HUSD, you can start earning high interest quickly and easily. All you need to do is sign up for an interest account. Then, you must complete the KYC process and once it is approved, deposit HUSD to your interest account.
After you complete all the steps mentioned above, you will start earning interest on HUSD automatically. If you want to earn interest from a DeFi platform, you won't have to go through the signup and KYC process. Connect your wallet to their platform and deposit HUSD. That's it! You will soon begin earning interest.
- Low Risk
When it comes to risk, earning interest on HUSD is a comparatively less risky option than financial instruments offering similar high-interest rates. Platforms offering interest accounts lend cryptocurrencies and fiat currencies to borrowers at high interest, and from this income, they pay interest to their interest account holders. As their main business is lending, there is a risk involved, but most of them require borrowers to over-collateralize to obtain loans for them.
- Passive Income
It is crucial that at one point in time, our passive income must exceed our active income. Otherwise, we will keep on working for many years to come. But with HUSD, you have an option to earn handsome returns as high as 12%. So, deposit HUSD and see your income grow.
Where can I earn Interest on HUSD?
Though HUSD is a stablecoin, the number of platforms offering interest on HUSD is quite limited. Among the ones offering interest on HUSD, YouHolder and Nexo are the best.
One of the leading names in the crypto lending space today, YouHolder offers up to 12% APY on HUSD. As soon as you deposit HUSD to your YouHodler interest account, the interest accruals will begin automatically. The interest payout will get deposited in your interest account with YouHodler every month. There won't be any deductions from your payout.
Nexo is among the most well-known crypto lending platforms. They offer HUSD interest accounts. With Nexo, you will earn up to 12% APY on HUSD. But to earn the highest rates offered by Nexo, you will have to meet some of their conditions.
First, you will have to hold more than 10% of your portfolio in NEXO tokens, the native token of Nexo. You must also agree to receive an interest payout from Nexo in their native tokens. If you meet both of these conditions, you will earn 12% APY on your HUSD deposits.
As for the type of accounts that Nexo offers, you can sign up for either their fixed account or the flexible account. With a fixed account, your funds will be locked for a period of one or three months. So, if you opt for a Nexo fixed account, you won't be able to withdraw your HUSD funds during the lock-in period. But if you opt for a Nexo flexible account, there won't be any lock-in period, and you can withdraw HUSD from your account at any time. Nexo offers daily interest payout to its flexible account holders.
Is it Risky Earning Interest on HUSD?
Yes, earning interest on HUSD has risks. The interest that a platform pays to its users comes from its lending business. A major share of their income is from lending cryptocurrencies and fiat currencies to borrowers at very high rates. Usually, the borrowers have to over-collateralize to obtain loans from them. It helps the platforms manage the risks.
But some platforms offer loans without over-collateralization. They do it to attract more borrowers. But it also creates more risk for the platform and its interest account holders. If you choose a platform that does not require over-collateralization for borrowing from them, your funds will be at a higher risk.
In case of default from borrowers, the platform may find it difficult to pay interest to its interest account holders. If the loan default numbers are large, the platform is likely to become bankrupt. In case of bankruptcy, the platform is unlikely to refund its users. It will result in interest account holders losing their funds and interest payments they were to receive from the platform.
We are noticing one positive trait in the crypto savings space today. A majority of insurance account providers have insured their user funds. It is crucial to point out that having insurance cover for user funds doesn't rule out risks entirely. Usually, the insurance amount is a couple of hundred million dollars. There is no doubt that this sum is not small. But if the losses are more than the insurance amount, the platform won't be able to refund your entire funds.
Research well before choosing a platform to ensure that your funds are safe. You also can check out our reviews to know more about the interest account providers.
What to Look for When Choosing a Platform?
When choosing a platform, do not rely exclusively on interest rates. There's no denying that interest rates are important, but you must also check the platform's credibility. Research how long the platform has been in the industry. A new platform is likely to offer rates that are higher than average. But the risk is higher as well. Look for a platform that offers comparatively better returns and has also been in the industry for a considerable period.
You must choose a platform that has insured its user funds. If the platform loses its funds because of some black swan events like hacking or any other event, the insurance company will pay the insurance amount to the platform. The funds will go to the interest account holders. If the insurance amount is enough to cover the entire loss, interest holders will get their full funds back. But if the insurance amount is not enough to cover the entire loss, interest account holders will receive only a part of their funds.
You must also check the rules each platform has for earning the highest rates of interest they offer. A few platforms will only offer the highest rates if an interest account holder agrees to receive the payout in the native token of the platform. Some require their savings account holders to hold a percentage of their portfolio in the platform's native token. You may also have to meet both of these criteria on some platforms to receive the highest interest rates.
Now, you must look into the minimum amount that an interest account holder has to deposit on the platform. If a platform has any minimum deposit requirements, you won't earn interest on your funds if you deposit less than the minimum amount required.
If you want to access your funds round the clock, check if a platform has a compulsory lock-in period to become eligible to earn interest. If they do, you may want to look for a platform having no such mandatory lock-in period.