​How to Earn Interest on Stablecoins: A Beginner’s Guide. Th | Crypto Miami

​How to Earn Interest on Stablecoins: A Beginner’s Guide.

The emergence of cryptoassets has led to the development of crypto interest markets, composed of DeFi (decentralized finance) and CeFi (centralized finance) borrowing and lending applications that typically provide higher APYs (annual percentage yields) than fixed income securities and money market instruments.

Crypto lending is becoming increasingly popular in the crypto markets as more and more investors are looking to earn yield the digital assets they are hodling. As a result of this growing demand for yield, leading crypto trading platforms are adding features that enable investors to borrow and lend. What’s more, there are a plethora of lending applications both in the CeFi and DeFi markets.

However, the volatile nature of cryptoassets has been a hindrance in the crypto lending markets as market volatility can easily result in losses for lenders despite high-interest rates. To address this issue, stablecoins have emerged as one of the most popular lending assets in the crypto interest markets.

Stablecoins are digital currencies whose values are most often pegged to price-stable assets, such as the US dollar or gold. With stablecoins, investors can earn interest through crypto lending while avoiding the volatility of cryptoassets like bitcoin (BTC), ethereum (ETH), or binance coin (BNB).

Through CeFi and DeFi lending platforms, investors can earn above-average interest rates, higher than the prevailing rates in traditional finance. Most banks offer annual interest rates that do not exceed 1% whereas stablecoins interest rates go as high as 4% to 12% annually. Many lending platforms even offer daily interest payouts, enabling investors to earn on compound interest.

Now, let’s dive in and look at how you can deploy stablecoins to earn interest in two leading crypto lending platforms.