Stablecoins are one of crypto’s most versatile asset classes. So it’s no wonder they make up well over $100 billion of investment in the sector. Their unique utility offers users many use cases across crypto.
One of these use cases is staking, where users can earn passive income and interest on their stablecoins. We’ll discuss how to stake USDT, DAI, and other stablecoins below. But first, let’s make sure we’re on the same page about what stablecoins are and how they work.
At a high level, stablecoins are digital assets that represent a variety of more stable assets. The space is dominated by stables pegged to fiat currencies like the US dollar.
Circle’s USDC, Tether’s USDT, and MakerDAO’s DAI are considered crypto’s most robust stablecoins. All three of these tokens are fully backed by reserves so the price stays pegged to the dollar. USDC and USDT achieve this by holding reserves of fiat to get their tokens to the US dollar. Meanwhile, DAI is backed by a basket of real world assets and crypto.
Crypto investors use stablecoins in a number of ways. For instance, traders may keep assets in stablecoins to shield their capital against market volatility. Stablecoins also act as a robust medium of exchange.
For the first time, anyone around the world can gain access to USD by accessing stablecoins on Ethereum and beyond. This is especially important for those in countries with high inflation, as stablecoins can be a safe haven for wealth storage.
In addition, stablecoins also provide lucrative opportunities to earn passive income via staking. Stablecoins are widely used in decentralized finance (DeFi) to generate yield for users. A variety of platforms allow users to stake their stablecoin holdings to earn rewards. USDC, USDT, and DAI are generally considered the best stablecoins to stake in crypto.
Stablecoins can generate yield via a number of mechanics. For example, holders can supply stablecoins to liquidity pools to earn a share of trading fees through liquidity mining. Alternatively, stablecoins can be lent out on DeFi platforms like Aave to generate interest.
Staking platforms offer users the opportunity to take advantage of these mechanics seamlessly. These platforms put stablecoin deposits to work via liquidity mining, lending, and other strategies to generate staking rewards for users.
While centralized crypto exchanges offer stablecoin staking, users need to surrender control of their funds to participate. Most centralized platforms lack transparency regarding user funds, presenting risks for users.
Fortunately, users planning to stake their stablecoins can choose from a wide range of DeFi protocols, which offer greater transparency and capital control. It’s important to choose platforms for staking that have solid track records in the crypto market, so let’s explore a few of those.
Users can stake their USDC to a number of protocols to earn yield. As an early DeFi pioneer, Yearn Finance is a popular choice for investors. Yearn’s USDC vault boasts $3.3M in total value locked (TVL), and currently offers 6.6% APY as of writing.
Other blockchain networks and options include LP'ing on Uniswap, lending stablecoins via Aave, and depositing USDC for OUSD via Origin Protocol's dapp.
Users wondering how to stake USDT will be glad to learn that Yearn also supports staking for USDT. Yearn’s USDT vault delivers ~4.8% APYs at present. Yearn also offers vaults on Arbitrum and Optimism, helping you avoid high transaction costs while offering higher APYs.
Investors looking for other options can explore alternatives like Beefy Finance, which allows users to stake their USDT to pools on Ethereum and a variety of other proof-of-stake blockchains.
In contrast to USDC and USDT, MakerDAO’s DAI is a decentralized stablecoin. Maker has become a mainstay in DeFi, offering users a number of avenues to earn yield on their DAI. But many users still wonder how to stake DAI, and where.
In addition to protocols like Yearn and Beefy, DAI can be staked to Maker’s native lending protocol, Spark. Users can lock up their DAI via the DAI Savings Rate (DSR) smart contract to earn staking rewards. While these rewards vary, it’s often higher yield than popular USDT and USDC staking options.
But what if you’re looking to earn higher yield, without compromising on risk? Origin Dollar (OUSD) offers users a native yield-bearing stablecoin, that earns higher yield without needing to directly stake, lock up, or manage your DeFi allocations.
Origin Dollar (OUSD) offers arguably the most seamless avenue to stake stablecoins. Origin Dollar earns competitive yield, offering 30-day trailing APYs greater than 6%. OUSD’s mechanics address the pain points involved in traditional staking to deliver a best-in-class user experience.
Most staking platforms force users to manually lock up their funds and regularly un-stake to compound their holdings. This process is time intensive and results in users having to pay unnecessary transaction fees.
OUSD automates these processes to make staking more rewarding than ever. Users deposit USDT, USDC, or DAI to mint an equivalent amount of OUSD.
Importantly, OUSD can be transacted like any other stablecoin. This means that users retain full control of their funds while the protocol puts deposited reserves to work. Yield is automatically distributed to holders’ wallets, resulting in substantial savings for holders.
OUSD’s cutting-edge strategies utilize blue chip DeFi protocols to generate yield, allowing users to enjoy some of the highest risk-adjusted stablecoin yields in the space. At the time of writing, OUSD holders enjoy 7.10% APYs on their staked holdings.
Users looking to earn APY on Ethereum can also explore Origin DeFi’s liquid staking product, Origin Ether.
Stablecoin staking offers investors a unique opportunity to earn passive returns in crypto. Using stablecoins to earn yield allows investors to secure rewards without dealing with volatile assets.
However, it’s still important to be mindful of the risks involved. Security is crucial in DeFi, given the prevalence of exploits and fraudulent actors. Doing thorough research equips you with tools to fully benefit from stablecoin staking. Thankfully, the internet is ripe with highly informative editorial content.
Discover how the Origin DeFi ecosystem can generate superior returns without compromise.
What stablecoins are the best to stake?
As the most widely used stables in crypto, USDC, USDT, and DAI are the best stablecoins to stake, and also the best for lending and borrowing. OUSD automatically stakes and compounds these stablecoins to offer competitive APYs.
What stablecoins are most popular?
USDC and USDT are the most popular stablecoins in crypto. Cryptocurrency exchanges denominate many trading pairs in USDT and USDC. Some exchanges and lending platforms also allow users to enter the space by purchasing stablecoins using a credit card.
Where should I stake stablecoins?
While there are many options for stablecoin staking, Origin Dollar’s OUSD offers the most seamless way to stake your stablecoins and start earning generous APYs.
