How to Earn Interest on USDC?
USDC is one of the most well-known stablecoins in the crypto world. Many crypto enthusiasts use USDC to trade cryptocurrencies. They also hold USDC, as unlike the majority of cryptocurrencies, it is not prone to extreme volatility as it is pegged to the US dollar.
But holding isn't enough when there's a better way to multiply your USDC holdings. You can earn interest as high as 12% on your USDC holdings. The only thing that you need to start earning interest on your USDC is an interest account. Follow these steps to start earning interest on USDC:
- Sign up for an Interest Account
To create an interest account, you will have to provide your legal name and email address on the registration page of the USDC interest account provider.
- Verify Your Account
Once you are done with the account registration process, you will receive a verification email from the interest account provider. Click on the verification link given in the email. After you click on the link given in the email, your interest account will be created.
To activate your interest account, you will have to go through a standard KYC process. You will be asked to provide your personal details and a government-issued identity card. The other thing that you will need is your photograph holding the identity card.
It is to be noted that there won't be any signup or KYC process if you opt for a DeFi insurance provider. The above-mentioned steps are a part of the process to create an interest account with the CeFi insurance provider only.
- Deposit Your USDC
After your KYC is approved, it's time to deposit USDC to your interest account. To deposit USDC, login to your interest account and go to the page where all available deposit options are available. Go to the USDC option and click on it to receive a unique wallet address.
Depending upon the supported types of USDC, you will see ERC20, BEP2, and BEP20 (BSC) options. Click on the type of USDC you are going to deposit. If you want to deposit USDC ERC20, click on the ERC20 option to receive a unique USDC ERC20 wallet address. Click on BEP2, or BEP20 (BSC) options, if you want to deposit USDC BEP2 or USDC BEP20 (BSC) to your interest account.
Copy the unique wallet address and paste it into the withdrawal section of the wallet from where you are withdrawing USDC. Click on the withdraw button, and soon, you will receive USDC in your interest account.
- Start Earning Interest
Once you have received USDC in your interest account, interest accruals will begin automatically. Depending upon the interest account provider you choose, you will earn up to 18.98% interest on your USDC deposits.
Why Earn Interest on USDC?
Earning interest on USDC is far better than keeping it idle in a wallet. The interest that you will earn on your USDC holdings is far more than what any banks offer on fiat currencies like the US dollar.
- Easy and Straightforward Process
To begin earning interest on USDC, you will have to sign up for an interest account. Then, you will have to go through a KYC process and then deposit USDC to your interest account. You will start earning interest on your USDC deposits automatically once you receive USDC in your interest account.
The process of earning interest on USDC is even simpler if you opt for a DeFi interest account provider. There are no signup or KYC processes for earning interest on USDC in the DeFi space.
- Low Risk
Compared to the kind of returns that USDC interest account providers offer, the risk is minimal. Definitely, there is a risk involved. But the magnitude of it is low compared to other high-risk options out there.
Interest account providers offer a part of their income in the form of interest to their interest account holders. Their main business is to lend cryptocurrencies and fiat currencies to borrowers at a high-interest rate. Most of the crypto lending platforms manage the risk by making over-collateralization mandatory to borrow from them.
- Passive Income
Passive income is the best form of income. With USDC, you can also start earning interest on your USDC holdings even while you are asleep. Deposit USDC to your interest account and you will see your income grow.
Where can I earn Interest on the USDC?
You have lots of options to choose from when it comes to earning interest on USDC. But as far as the best USDC interest account providers go, Swissborg, YouHolder, and Nexo lead the tally.
Every interest account provider has different criteria to select who will earn the highest rate of interest and who will not. You can use our USDC interest calculator to calculate the interest amount that you will earn on USDC.
You can earn up to 12% interest on your USDC holdings on YouHodler. The payout period is weekly on YouHodler, and there's no deduction from the interest, which you will earn on your USDC deposits.
Nexo offers up to 12% interest on USDC. But to earn the highest interest rate, you must hold 10% of your investment portfolio in Nexo tokens. You must also agree to receive interest income in Nexo tokens. The interest accrual will begin 24 hours after you have deposited USDC to your Nexo interest account. It is important to note here that any amount of USDC that you use as collateral won't be eligible for earning interest.
Swissborg offers interest rates as high as 8.5% on USDC deposits if you are a normal interest account holder. If you are a premium interest account holder, you will earn twice the returns on your USDC deposits. To become eligible for a Swissborg premium interest account, you will have to stake 50000 CHSB tokens, the native token of Swissborg.
The interest amount will be deposited into your account daily. But to withdraw it, you will have to wait for some time as withdrawals are processed only once in 24 hours.
Is it Risky Earning Interest on USDC?
Earning interest on USDC is one of the best ways to earn passive income in the crypto space. The level of risk is also comparatively lower, but there is an element of risk involved here. There's no denying it.
A majority of crypto lending platforms require over-collateralization to borrow from them, and this way, they manage the risks. But some crypto lending platforms do not require over-collateralization to borrow from them. If you opt for an interest account with such platforms, you will lose your funds if their borrowers default on their loans.
If defaulting becomes a norm rather than an exception, the platform will go bankrupt. In the case of bankruptcy, you stand to lose your deposits along with any interest income that you earned on your deposits.
Many crypto lending platforms insure their user funds nowadays. But the insurance amount is almost in terms of millions of dollars. It means, if a platform faces losses worth billions of dollars, the insurance coverage won't be enough to refund the entire amount to interest account holders.
If you want to keep your USDC holdings safe while earning interest, select an interest account provider that has built a good reputation in the industry. Do not fall for the high interest alone, as that can turn out to be risky if the interest account provider is new.
To know more about the interest account provider, you can also check our honest reviews on almost every major interest account provider.
What to Look for When Choosing a Platform?
The two most important things that you should look for while choosing a platform are the interest rate offered and the duration since when the interest account provider has been active in the industry.
Do not fall for the highest interest rates right away, as the industry standing of interest account providers is crucial as well. Opt for a platform that offers better interest rates and has been active for at least a few years.
You must also check if the platform has insured their user funds or not. It is important because insurance providers will repay at least a part of user funds if the platform loses user funds or becomes bankrupt.
Before you choose a platform, you should know about the eligibility criteria that the platform has for earning the highest interest rates offered by them. Some platforms mandate holding a specific percentage of their investment portfolio in the platform's native tokens.
A few platforms will only offer you their highest interest rates if you agree to receive interest payout in their native tokens. Then, there are some platforms like Nexo that require their interest account holders to meet both these criteria to earn the highest interest offered by them.
Some platforms require interest account holders to lock in their funds for a fixed duration to become eligible to earn interest. If you will need your funds back before the stipulated lock-in period, look for the interest account that has no lock-in period or also offers a flexible accounts alongside the fixed accounts.