How to use stablecoins to earn higher APY

Many people soon flocked Stablecoin Because they can reduce the risk of cryptocurrency positions. Stable coins can be linked to any perceivable stable assets, such as digital assets like Bitcoin (Bitcoin) Or fiat currencies like the U.S. dollar. In theory, if digital assets are linked to the U.S. dollar, a digital currency worth $100 should mean that the backing assets of $100 are kept in safe reserves such as bank accounts. Stablecoins are versatile; their uses include securely moving tokens between exchanges and protocols, lending tokens, or making payments. For this reason, they have quickly become the entry point for first-time users to enter the world of cryptocurrency.

Unlike Bitcoin, Ethereum (Ethereum) Or other cryptocurrency projects, the price of stablecoins is very stable and does not always provide important money-making opportunities. In this case, revenue usually comes down to new innovative products entering the market, such as P2P lending. Through peer-to-peer lending, users can use encrypted lending platforms to lend stablecoins. In this case, the interest rate is usually much higher than that of a traditional savings account.

The user chooses to specify a platform with a high interest rate, which is higher than the interest rate paid by the end user, and the difference is called the spread. Spread is the way the lending platform pays the lender. Consider that this process can be compared to storing your assets in an ordinary bank account. After depositing your funds, traditional banks will invest or lend the funds to others. With the income they collect, they will redistribute part of it to you daily, weekly or monthly.

Happy medium

Some platforms provide a similar user interface to traditional banks; the only difference is that they usually offer higher interest rates. Although this may be more risky than depositing your funds in a traditional bank, as an investment, stablecoins are also more attractive than traditional cryptocurrencies because the possibility of withdrawing funds at an amount lower than the user’s starting amount is lower. .

To further illustrate this concept, suppose you purchase a cryptocurrency and intend to earn a 10% interest rate on a given platform every year. This is an attractive interest rate and higher than what you might get from using the funds in a traditional high-interest savings account. However, the underlying asset also carries a higher risk, which indicates to users that if the price falls, they may eventually lose money (and possibly at some point). Even with a 10% buffer, if your timing is wrong, it is not uncommon for sharp price fluctuations to reduce the prices of these assets far below your expectations.

More insights on Matrixport here

On the other hand, stablecoins can almost guarantee that the amount you invest is the same as the amount you will get back. For example, 850 USDC tokens, each with a price of 1 USD, will always result in your 850 tokens worth 1 USD. In theory, prices should always move sideways, because the assets supporting them (in this case, the U.S. dollar) will always be worth $1.

Profit from horizontal prices

Although crypto lending provides stablecoin holders with opportunities for higher returns, they have done little to allow users to accumulate digital assets such as Bitcoin. To solve this problem, Matrixport released a new user-friendly cryptocurrency investment project called “BTC-U Range Sniper”.

Matrixport’s new product provides users with an annualized rate of return (APY) Anywhere from 6% to 200%, you can use USDT, BTC or USDC to pay. The amount is determined by the price of BTC at the time of settlement. At the time of settlement, if the price is higher than the given range, at least 6% APY will be paid to the user in USDC. However, if the settlement falls below the set range, the principal investment will be transferred back to Bitcoin, and the user will be paid the same minimum 6% APY. Ideally, the price will fall within a predetermined markup range, allowing users to earn up to 200% APY.

When asked about their new product, Matrixport’s co-founder and CEO John Ge summed up this move as: “Stablecoin is an important legal entry channel and has always been a good source of crypto curiosity. Entry point. However, many stablecoin holders now want to accumulate BTC while obtaining higher returns. BTC-U Range Sniper is a user-friendly crypto investment product, we enable users to continue to obtain attractive stablecoins Earnings may use the innate fluctuation of BTC to accumulate more BTC.”

Therefore, USDC holders looking for the right time to enter the market may benefit from Matrixport’s latest products.

Disclaimer. Cointelegraph does not endorse any content or products on this page. Although we aim to provide you with all the important information that we can obtain, readers should do their own research before taking any actions related to the company and take full responsibility for their decisions, and this article cannot be regarded as investment advice.

Source link

You May Also Like

Leave a Reply

Your email address will not be published.