In this article, you will learn what is stablecoin yield farming and what are the best stablecoin interest rates. If you are looking for the best place to earn interest on stable coins like USDC, USDT, DAI and more, this guide has you covered.
What is Stablecoin Yield Farming?
First things first: Stablecoins are not assets that are intrinsically blessed with a risk-free existence. Investors first need to know about the generic and asset-specific risks entailed by each type of stablecoin and refrain from treating these digital assets as if they are ' real' dollars, despite the price peg. If you want to know more about how a stablecoin can crash and protect yourself from something similar, check out our research on the collapse of UST.
Despite the variety of risks they pose, stablecoins remain attractive due to their ability to be used in yield farming strategies.
As yield farming means putting assets into use on DeFi applications for financial returns, stablecoin yield farming intuitively means generating passive income on stable crypto assets via two types of lending activities: lending on money markets and lending to decentralized exchanges.
What are the Best Stablecoin Interest Rates?
-AAVE
AAVE is the best stablecoin farm because they offer the highest yields, lowest borrowing rates and a wide range of tokens like USDC, USDT, DAI and FRAX. You can access AAVE from a variety of networks including Ethereum, Avalanche, Optimism, Polygon and more . Their platform is the most secure and has the most Total Value Locked compared to other protocols.
AAVE currently has over $17B in liquidity locked on their money market earning yield.
USD APY: 3-5%
Chains: ETH, AVAX, MATIC, Arbitrum, Fantom, Harmony
Tokens: DAI, USDC, USDT and FRAX
-Curve Finance
Curve Finance is a great platform for advanced crypto users looking to earn slightly higher rewards with some added complexity. With this platform, investors need to deposit or supply liquidity to a two, or three-sided pool with various stablecoins. A pool example would be USDC/UST/MIM.
This creates a pool of liquidity for traders to be able to swap between the stablecoins for low fees and low slippage. Users who deposit stablecoins to this liquidity pool can earn high rewards from swap fees.
It is important to also note that we would only recommend Curve Finance for advanced users and DeFi natives. It can get quite complicated and requires active management and attention.
USD APY: 5-8%
Chains: ETH, AVAX, Arbitrum, Polygon
Tokens: USDC, UST, DAI, MIM, FRAX, LUSD, BUSD
- Stargate Finance
Stargate Finance is a platform that enables cross-chain swaps for stablecoins like USDC, USDT and DAI. Investors can provide liquidity to the pools that enable these swaps to earn high yields. This stablecoin swap exchange is also backed by some of the largest names in the space like Alameda Research, FTX, Naval and others.
The Stargate Finance token rewards are mainly paid out in STG (their native token). This plarform is growing very quickly so it could be a great way to earn STG tokens to invest for free by providing stablecoin liquidity.
USD APY: 3-4%
Chains: ETH, AVAX, Arbitrum, Polygon, Binance Smart Chain
Tokens: USDC, USDT and BUSD
- Convex Finance
This protocol is compatible with Curve Finance and allows users to take their stake USD stablecoins from Curve, then deposit them on Convex for boosted yield.
The Convex protocol is one of the largest DeFi protocols by Total Value Locked (TVL) with over $4.5 billion in deposits. The best stablecoin farm on Convex is currently the FRAX/USDC pool that yields 3% and has over $800 million in deposits.
USD APY: 3-16% (long-tail risky stablecoins available)
Chains: Ethereum only
Tokens: USDC, USDT, BUSD, FRAX, MIM, LUSD, TUSD, DAI, cUSD and more
Bottom Line
Stablecoin farming has become an increasingly popular way for users to earn passive income with their crypto holdings. This article is about what is stablecoin yield farming.
