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Yield generating stablecoins offer a unique way for investors to earn passive income while maintaining the stability of their investments. Unlike other digital assets, stablecoins maintain a stable value, often pegged to a fiat currency like the US dollar.
When it comes to yield generation, stablecoins take advantage of different strategies to generate returns for holders. Decentralized finance (DeFi) protocols offer a wealth of opportunities for such investors. For example, DeFi protocols allow stablecoin holders to lend or provide liquidity to various platforms in exchange for interest or rewards. These novel financial services unlock a wealth of opportunity for stablecoin investors.
Yield generating stablecoins are uniquely positioned to offer attractive returns while minimizing the volatility typically associated with cryptocurrencies.
With Origin Dollar (OUSD), users are empowered to earn outsized stablecoin yield with unparalleled flexibility.
OUSD is fully collateralized by crypto’s most widely used stables – USDT, USDC, and DAI. As these stablecoins do not accrue interest on their own, OUSD provides an ideal platform for holders to put their idle funds to work.
Since launching in late 2020, OUSD has delivered the highest risk-adjusted stablecoin yields in the space. The protocol allocates reserves to blue-chip DeFi protocols in order to generate this yield.
OUSD’s unique appeal lies in its seamless usability. Earning yield in DeFi generally requires lock-ups, forcing users to manually stake and un-stake their holdings to earn rewards.
With OUSD, however, users don’t need to surrender their capital or pay gas fees to compound their yield.
Users can mint OUSD by depositing USDT, USDC, or DAI via the native Dapp. Once minted, holders are free to use OUSD as they would any other stablecoin. At the same time, yield generated by underlying reserves is distributed automatically to holders’ wallets.
This means that users can benefit from some of the best stablecoin yields in the space while retaining full control over their capital.
Yield bearing stablecoins earn yield by depositing underlying reserves to DeFi platforms via automated strategies.
Lending protocols are commonly used for yield generation. A stablecoin holder can deposit their funds into a lending platform, where borrowers can borrow these stablecoins by providing collateral. The interest paid by borrowers is then distributed among the stablecoin holders, allowing them to earn a yield on their investment.
Liquidity mining is another popular route for passive returns. In this approach, stablecoin holders can provide liquidity to decentralized exchanges (DEXs) by depositing their stablecoins and another cryptocurrency into a liquidity pool. By doing so, they earn a portion of the trading fees generated by the DEX.
Stablecoin yield farming denotes the use of multiple DeFi mechanisms to generate yield.
OUSD utilizes multiple protocols in order to generate yield for holders. The platform’s strategies and smart contract have been rigorously audited to ensure their security.
Part of the way Origin Dollar earns its yield is by allocating underlying collateral to premier lending protocols Compound (COMP) and Aave (AAVE). These funds are lent out to borrowers in order to earn interest.
Additionally, the protocol earns trading fees via Curve and Convex. OUSD achieves this by supplying liquidity to the Curve OUSD-3CRV pool. This pool pairs OUSD with USDT, USDC, and DAI, allowing users to swap between OUSD and underlying reserves. By providing liquidity in the form of all four tokens, Origin is able to earn rewards in the form of CRV.
Liquidity is supplied to Curve via Convex, a yield optimization protocol. Staking the Curve LP position via Convex allows OUSD to earn CVX token rewards in addition to CRV.
OUSD affirms a strong commitment to full transparency. All protocol allocations, interest rates, and capital flows can be tracked via the platform’s dedicated analytics page.
Farming with stablecoins in DeFi arguably offers one of the safest ways to earn passive returns in crypto for both retail and institutional investors.
With a current APY of ~4%, OUSD offers some of the highest risk-adjusted stablecoin interest on-chain.
While centralized exchanges (CEXs) also offer stablecoin staking with high yield, using such services can be incredibly inefficient. Users need to surrender control of their funds with hard lockups, making it difficult to stay agile in a volatile space. Further, users have no say or line of light into how their funds are being managed while staked on a centralized platform.
In contrast, using a DeFi protocol like Origin Dollar allows users to maximize their yield while retaining control of their funds. Given that users provide stablecoin liquidity in DeFi, anyone can participate in market making activities to earn rewards.
Origin DeFi recently launched Origin Ether to aggregate yield from Ethereum liquid staking as trading volumes in the sector continue to grow rapidly. OETH builds on OUSD’s battle-tested codebase, offering another secure and transparent platform for yield generation.
Like OUSD, OETH delivers outsized yield with no lockups required. OETH maintains a peg to ETH, allowing users to retain full control of their capital. It’s important to note that ETH is a volatile asset and sees regular price fluctuations. However, OETH’s broad utility means that users can liquidate their capital whenever necessary.
Both protocols illustrate the vast opportunities for passive returns in DeFi.
As with any investment, using yield generating stablecoins carries risks. It's crucial for investors to conduct thorough research and due diligence before participating in DeFi activities.
That being said, OUSD’s remarkable design and unparalleled usability offer users a seamless platform to earn returns on idle stablecoins.
Get started with OUSD: app.ousd.com
Stack ETH faster with OETH: app.oeth.com
