The USD Coin, otherwise known as USDC, is one in the pool of Stablecoins available today. It has a value equivalent to the US dollar and is sufficiently hedged from volatility. In this article, we look at a better way to generate passive income with your USD Coin.
Table of Contents
- USDC Passive Income – Option or Not?
- What is USDC?
- Staking USDC – Is it Profitable?
- Better Alternative Already Exists
- How to Earn Interest on Your USDC at CoinRabbit
- Final Thought
USDC Passive Income – Option or Not?
Simply put, staking is locking up your crypto assets for a period of time in order to get chosen as a validator and earn rewards.
Staking enables you to earn on idle tokens rather than merely keeping them in your wallet. Proof-of-stake is the consensus mechanism used by protocols that allow staking.
You can stake your stablecoins and to do this, the following are some popular platforms that have this feature:
Coinbase supports USDC and USDT ERC-20, while Binance supports USDC, USDT TRC-20 and USDT ERC-20.
What is USDC?
Based on Ethereum’s ERC-20 standard, USD Coin was unveiled in 2018 by a consortium called Centre. Its value is pegged 1:1 to the dollar, putting it at the exact price of the fiat currency. At the time of writing in December 2021, more than 40 billion USD Coins are available in circulation. The token is also a leader in the stablecoin sector, with companies, exchanges, defi protocols and a variety of others adopting it for their services. USDC provides a cheaper, faster, and transparent option for making transactions. Data is also published on a monthly basis by the accountancy firm, Grant Thornton LLP.
A stablecoin refers to cryptocurrency which is backed by another asset. This asset could be a commodity such as gold or a fiat currency. The value of the coin is tied to that of the real-world asset, protecting investors from the usual volatility of the crypto market. As stated earlier, USDC is linked to the dollar, making it a fiat-backed stablecoin.
USDC differs from stablecoins like Tether in the sense that issuers are to provide details of their holdings to Grant Thornton.
These details are in turn published as monthly reports which can be accessed online. To secure confidence from investors, USDC issuers are guided by financial regulations. They are also audited on a periodic basis, positioning the token as a much safer option than USDT.
In addition, while Tether appeals for trading and making payments, USDC is better suited for transacting with businesses.
Staking USDC – Is it Profitable?
While some consider staking to be the most risk-free method of generating passive income, it still has some drawbacks that you should know of before making a decision.
3 Risks of Crypto Staking
While profitable, staking involves a number of risks. Three are highlighted below:
- First among the risks is your inability to access your holdings during the lockup period. This means that during negative price movements, you cannot trade your holdings to save profits.
- Additionally, there is the potential that your assets will have severely dipped in value during the staking period, earning you a loss even with your percentage yield.
- Also, staking in a protocol that does not allow daily payouts can make you lose profits at the end of the staking year. To hedge yourself from this, invest in assets that have flexible payment schedules and protect you from risk.
A Better Alternative Already Exists
Rather than seal your assets within a protocol for long periods of time, you can earn interest by lending out your stablecoin. Interest rates on lending are as high as 4 – 12%, beating anything a bank offers you. To lend your stablecoin, deposit the amount you wish to lend into your chosen platform and follow the processes there.
The following are some benefits of lending to earn interest on USDC:
- Unlike other assets where your profits may drop after lending, USDC is more stable and guarantees returns as it is pegged to a fiat currency.
- You earn far more on lending USDC than you would if you had saved the underlying asset in a bank. In other words, lending the stablecoin offers higher returns than routine transactions in a regular bank.
- With an investment in the USD Coin, you can have a fair certainty of what your returns will be.
To lend your USD Coin, you need a reliable platform like CoinRabbit to help you. The following are advantages of using CoinRabbit:
- No KYC process
- No deposit or withdrawal fees.
- Fixed percentage yield of 10%.
How to Earn Interest on Your USDC at CoinRabbit
- To begin, navigate to CoinRabbit
- Select “Savings” on the calculator. Enter the amount you wish to invest and select the asset. A calculator is available on the page to determine your rewards.
- Click the ‘start earning’ icon once your yield appears
- On the next page, verify your phone number and confirm you have read the terms
- Now, deposit your stablecoin and start earning.
For more insight into how to create an account with CoinRabbit, click here.
Staking may earn you some profit but to earn substantial passive income, lending offers a reliable way out. It is equally important to check the fees on your preferred platform to avoid hidden charges. With CoinRabbit, you can withdraw and deposit without costs.