Best Long-Term Stablecoin Interest Rates

New coins and tokens constantly emerge in the cryptocurrency world, leading investors to seek out long-term stablecoins. There is no single solution yet for this problem, but we can take a look at some interesting solutions that are already being tested on the market today to see what might work best with their own specific use cases.

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The “highest stablecoin interest rates” is a question that is asked often. The best long-term stablecoin interest rates are in the top 10 coins by market cap.

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Stablecoins are popular with today’s savers. This is why.

Banks now pay nearly little interest. Inflation is rapidly increasing. This implies that your dollar, which we all believe is permanent and immovable, is rapidly losing value.

If inflation is 8%, your dollar loses 8% of its value every year: $100 today is worth $92 next year.

Your buying power is being eroded by inflation.

Stablecoins, on the other hand, may gain money over time, even during times of heavy inflation. Because cryptocurrencies are in more demand than cash, they may pay higher interest rates. (Please read our Stablecoins Guide before investing.)

As an example, suppose you have $1,000 in USDC. If the long-term interest rate is 7.5 percent, you will receive $75 each year in interest. You would have made $750 in interest after ten years, a considerable return on your investment.

(The gains are considerably greater with compounding interest: if the 7.5 percent interest rate persists for 10 years, your money will have doubled.)

Long-term interest rates are significant. We’ve been watching the long-term interest rates of the leading stablecoins at Bitcoin Market Journal, and here’s how they’re averaging:

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The Quick Guide to Stablecoins

Stablecoins, if you’re new to us, are a form of cryptocurrency that’s growing more popular. Stablecoins vary from bitcoin and other cryptocurrencies in that they are less volatile and are tied to a stable asset, generally the US dollar.

Stablecoins provide substantially greater interest rates than standard savings accounts, making them an appealing choice for depositors. Stablecoins, on the other hand, come with certain hazards, such as the prospect of devaluation if the asset they are tied to loses value.

Stablecoins are a potential new choice for savers and investors searching for high interest rates and stability. However, since advertised interest rates change every day, wise investors will concentrate on long-term interest rates. Here are our top recommendations.

usdc coinUS Dollar Coin (7.5 percent )

Risk and reward are inextricably linked.

USDC is the safest stablecoin in our opinion, since it is backed 1:1 by US dollars and is regularly audited. In comparison to our other two stablecoin benchmarks, there is significantly less profit since there is less risk.

Keep in mind that a 7.5 percent interest rate is still 125 times the average bank interest rate of 0.06 percent. (However, it is still lower than the total inflation rate of 8.5 percent.) Nonetheless, we believe USDC is as secure as stablecoins come.

TetherTethering (8.5 percent )

Due to recent debate that it was not truly backed 1:1 by fiat money, Tether has a modest risk premium — and so a little higher interest rate. (In October 2021, it settled with the CFTC for a fine of $41 million.)

The backing is important for stablecoins. If everyone withdraws their money at the same moment during a market panic, you want to know that there is “money in the vault.”

To be clear, this did not occur, and Tether’s commitment to openness has since been increased. Still, because of the lingering dispute, USDT has a higher risk and higher reward.

Best-Long-Term-Stablecoin-Interest-RatesDai’s (9.7 percent )

The Dai stablecoin is backed by other cryptocurrencies rather than cash. This increases the danger of Dai, since a collapse of the whole crypto market might result in a “bank run” on Dai, leaving those at the rear of the queue with nothing.

Dai has done a decent job of keeping its peg to the US dollar in practice, especially during periods of market upheaval. The price momentarily climbed to $1.10 during the early days of the pandemic in 2020, before returning to its previous level.

Dai pays a percentage point more in interest than USDT and two percentage points more than USDC because to its higher risk premium.

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Stablecoins and Their Stability

What’s surprising is how comparable the long-term interest rates of the top stablecoins are. (The stablecoin market is genuinely stable in the long run!)

However, in the near run, the interest rate on any given week might be absurdly high: 25% or more. Don’t be fooled: even though they’re named “Yearly Percentage Yield,” they aren’t annual interest rates (APY).

The APY is the rate today assuming it remained constant for a year. (It will not.)

Investors are misled by the phrase “APY,” although banks do it all the time. It would be more appropriate to label it “Today’s Yield” and then display a 12-month moving average for APY, similar to our chart above.

Beyond these three, there are many more stablecoins. We do not, however, include algorithmic stablecoins like UST since we believe they are a hazardous investment (see our UST Investor’s Guide). Others are progressively receiving assistance.

It pays to be steady in a world that is always changing.

The “stablecoin interest rates blockfi” is a cryptocurrency that has been designed to be stable. It uses the dollar as its base currency and is backed by U.S. dollars in reserves. The “blockfi” offers an interest rate of 5% on deposits made with USD, BTC, or ETH.

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