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Tether (USDT) is a fully collateralized stablecoin issued by Tether Ltd. USDT is pegged to the US dollar, reserved by cash, short term deposits, corporate bonds, secured loans, and other investments. Tether publishes quarterly reports to show all USDT tokens are backed by its equivalent value.
As one of the earliest stablecoins, USDT achieved popularity by acting as a stable store of value for traders escaping crypto market volatility. It’s also used by investors in countries with hyperinflation or tight capital controls.
USDT’s utility has also led to integrations on crypto exchanges and DeFi, allowing users to earn rewards or interest staking USDT. We’ll explore how you can earn these rewards with staking in the sections below.
Crypto staking is a term that can mean different things. Originally, it meant putting your crypto at “stake” to help verify network transactions and earn rewards. That’s how the process usually works with proof-of-stake crypto assets like Ethereum. But now, many people use the term to mean earning interest on your crypto.
Investors earn interest on Tether (USDT) by doing things like lending, market making, or trading. Some crypto platforms do these activities for you and give you a part of the earnings. However, some platforms took risks with people’s money behind the scenes, leading to problems in 2022.
Because of this, many people now prefer DeFi staking options. These are more transparent and often safer. If you are a beginner, here is some information to help you learn how to stake USDT in DeFi.
To use USDT in DeFi, users need to have a Web3 wallet. It is generally recommended to use Metamask, coupled with a Ledger hardware wallet for maximum security.
Adding USDT to Metamask can be done by going to “assets”, scrolling down to click “import tokens”, adding “custom token”, and filling in USDT’s contract address. USDT is now added to your Metamask wallet, and its balance will be shown beside its token symbol if any was received on the address.
“Where do I stake USDT?” is one of the most frequently asked questions. The answer comes down to your unique financial situation and objectives. But here are a few rules of thumb to keep in mind.
There are numerous places to stake USDT and earn interest on your holdings. You can stake Tether on different networks like Ethereum or Binance Smart Chain, using applications like Aave or Compound.
Since anyone can create a blockchain and smart contract application, the options are essentially infinite. However, Ethereum and certain applications built on it are regarded as the safest DeFi platforms to start earning higher rates on USDT, and even explore USDT lending. These platforms include Aave, Compound, Convex, and Curve.
Aave and Compound are smart contract apps that let users lend and borrow digital assets. Borrowers put up collateral on these platforms, which allows them to borrow other assets at changing interest rates.
Curve is a decentralized exchange allowing traders to buy and sell assets on the platform. Liquidity providers can stake capital with Curve, allowing it to quote prices for traders. Stakers would then receive yield from trading fees and CRV rewards to start earning yield. Convex is a protocol built on top of Curve, helping users optimize their CRV rewards.
Origin Dollar (OUSD) uses strategies built on top of Curve, Convex, Aave, and Compound. As of writing, Origin Dollar has a 30-day trailing APY of 7.1%. By using market-making strategies and peer-to-peer loans, OUSD earns more than the average DeFi yield.
There are many Web3 applications that let you earn interest on your USDT with different rates and risks. Some offer very high interest rates, like double-digit APYs, especially with algorithmic stablecoins.
Everyone has different risk levels and goals, so there's no one-size-fits-all strategy. However, OUSD is a great choice for people who want to earn passive income with lower risk. It’s recommended for users who want to grow their assets without taking on too much risk.
To earn interest with OUSD, users simply hold it in their Web3 wallets to receive daily interest accruals directly. Simply swap USDT, or other stablecoins, to OUSD via exchanges such as Uniswap, Kucoin, or Gate, or directly via OUSD.com, no staking or lockup periods required.
What are the best DeFi platforms to stake USDT for earning interest?
The best DeFi platforms for staking USDT include Aave, Compound, Curve, and Convex, known for their robust security measures and transparent operations. These platforms offer variable interest rates, typically ranging from 1% to 2.06%.
How does staking USDT on DeFi platforms differ from staking on centralized crypto platforms?
Staking USDT on DeFi platforms generally offers greater transparency and security compared to centralized crypto platforms. DeFi protocols operate with smart contracts that provide clear visibility into all transactions. Since they’re not controlled by any single entity, there’s also less counterparty risk and more trust among users.
