How investors are now using Stablecoins to beat the market
According to official statistics, 67% of eToro traders fail to make money on the platform. Likewise, overall, less than 10% of users make a successful living from cryptocurrency trading – contrary to popular opinion. Although this is largely due to the unpredictable volatility of cryptocurrencies – which can lead to dramatic price swings that most traders fail to capitalize on. This has led to the development of a new type of low-risk cryptocurrency that now seeks to leverage stable-priced assets to generate healthy returns. Earning Rewards in Liquidity While decentralized exchanges are not new to the cryptocurrency space, it was only relatively recently that we have had decentralized exchanges that could compete on a more or less equal footing with centralized incumbent operators. With the advent of automated market makers (AMMs) like Uniswap and PancakeSwap, traders have been able to trade the assets of their choice without having to entrust the custody of their assets to a centralized intermediary. But more than that, these MAs also provided users with a means for the first time to transform relatively safe passive income in the form of liquidity provider (LP) rewards. These LP rewards come from trading fees from all exchanges conducted in pools to which these traders provide liquidity. In total, it’s relatively simple to earn 5-15% APY by providing liquidity to pure and stable cash pools, such as Uniswap’s USDT / USDC pool or PancakeSwap’s BUSD / USDT pool. But it doesn’t stop there, as new platforms increasingly look for ways to further incentivize liquidity providers to use farm yield opportunities. BondAppétit is a prime example – as a platform that offers a stable coin backed by real-world assets, known as USDap – in addition to a governance token, known as BAG. BondAppétit allows USDap / USDC Uniswap liquidity providers to wager their LP tokens to earn an impressive extra return in the form of BAG tokens. At the time of writing, this currently sits at 91.7% APY (but is fluctuating). While BondAppétit is far from the only platform with a yield farm, it is rare in that it provides returns to pure and stable liquidity providers, making it attractive to investors worried about losses. impermanent. Participate in a Savings Account Just as depositing fiat into a regular savings account is a popular method of earning interest (although generally an extremely low APY), cryptocurrency savings accounts have become overwhelmingly popular. popular in recent years. However, as with most things in the cryptocurrency industry, the expected return provided by some of these platforms generally dwarfs anything offered by regular banks – with an APY of relatively 5-10%. current. The expected APY can vary widely by platform, but in general these platforms tend to pay a higher APY on stablecoins like Tether (USDT) and USD Coin (USDC) than on volatile assets like Bitcoin (BTC) and Ethereum (ETH). Likewise, there are often ways to further increase the return, such as by holding a specific token, making a payment using a specific method, or committing to a longer-term savings plan. For example, Nexo typically provides a fixed 8% APY on all cryptocurrencies supported by the platform, but allows users to increase that yield up to 12% APY by holding NEXO tokens and paying. in NEXO (rather than the registered underlying asset). BlockFi, on the other hand, uses a tier system, which means that users can earn a different interest rate depending on the size of their deposit for certain assets – for example, it pays a fixed APY of 8, 6% on USDC deposits, but between 0.5% and 5% APY for BTC deposits. Many of these platforms also provide insurance on user deposits, providing an additional safety net for stablecoin users. Using Stable Money with High Yields At present, the stablecoin market is dominated by a handful of USD-indexed stablecoin giants, like the USDT and USDC – who together have a combined market capitalization of nearly $ 70 billion. But while these assets are extremely popular, they do very little for the holder besides allowing them to avoid volatility. However, with the cryptocurrency moving at a breakneck pace, we are now starting to see the emergence of stablecoins that go even further – by offering holders a low risk return, BXTB’s CHIP stablecoin is one of these solutions. Unlike most stablecoins, which are backed by fiat, CHIP is instead backed by other stablecoins (like USDT). Users need to combine their stablecoin with a second token known as BXTB to produce CHIP stablecoins plus a form of yield BXTB called yBXTB. Users can then spend or use their CHIP as a regular stablecoin while earning additional CHIP rewards by keeping the yBXTB they got as part of the process. https://twitter.com/kava_labs/status/1384877080068907011 Likewise, Kava’s USDX offering and Origin Protocol’s OUSD stablecoin also provide return opportunities for holders – albeit using different mechanisms. Still, given that CHIP (+ yBXTB), USDX, and OUSD all provide protocol-level return, they can be considered relatively safe when it comes to investing. Image from Pixabay View more Benzinga Click here for Benzinga options trades $ 25 Million Raised for Infinite Liquidity and Moma Protocol Unauthorized Lending Defi Platform Fi Training Attracts .3M Investment for smart agriculture 2.0 © 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.