How to use stablecoins to earn a higher APY – Cointelegraph

How to use stablecoins to earn a higher APY – Cointelegraph

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Many are quick to flock to stablecoins for their ability to de-risk cryptocurrency positions. A stablecoin can be pegged to any perceivably stable asset, for instance, a digital asset like Bitcoin (BTC) or a fiat currency like the US dollar. In theory, if a digital asset was pegged to the US dollar, $100 worth of the digital currency should mean $100 in the backed asset is held in a secure reserve like a bank account. Stablecoins are broad in utility; their uses include moving tokens between exchanges and protocols securely, lending out tokens or making payments. For this reason, they have also quickly become an entry point into the cryptocurrency world for first-time users.

Unlike Bitcoin, Ethereum (ETH) or other cryptocurrency projects, the price of a stablecoin is, well, stable and won’t always provide a significant opportunity to earn. In this case, earning will typically come down to new innovative products entering the market, such as peer-to-peer lending. With peer-to-peer lending, users can leverage a crypto loan platform to lend their stablecoins out. Interest rates, in this case, will often be significantly more than what is earned in a traditional savings account.

Users choose a platform that specifies a high-interest rate, higher than the rate the end-user is paying, the difference being known as the spread. The spread is how a loan platform will pay its lenders. Consider that the process can be likened
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