Best USDC Interest Rates for Passive Income

Many crypto users are interested in earning a passive income. This is one of the major methods of creating wealth in this industry, with there being a range of different avenues for doing so. For people who own USDC, they are often interested in learning how to find the best interest rates to achieve this. Let’s take a look at this, and find out what types of earnings you can passively make with USDC.

What Is USD Coin (USDC)?

USD Coin (or USDC) is a cryptocurrency that has a price which is pegged to the US dollar. This means that it is a stablecoin, as its price does not fluctuate, and instead stays consistent with the dollar. It is one of the major stablecoins used in the crypto industry worldwide.

Related content: What is USDC?

How Do I Earn Interest On My USDC?

Earning interest on USDC typically involves placing your cryptocurrency into a savings account of some sort. This is sometimes referred to as staking your USDC, although it does not serve the same function or purpose as regular staking (such as with cryptocurrencies like Ethereum or Polygon, which run on full proof-of-stake blockchains). Rather, the term is a misnomer, and is used as a way of making interest and savings accounts feel similar to staking. To learn more about USDC interest rates check out our beginners guide here.

The Best USDC Interest Rates

Let’s take a look at some of the best USDC interest rates in the market by comparing a handful of services.

Ledn

With a reputation for being transparent and secure, Ledn is a great choice for people looking to earn a passive income with USDC. This occurs via its interest-bearing Growth Accounts, which is a crypto savings tool that currently offers up to 8.50% APY on USDC. These Growth Accounts are ring-fenced, meaning that their assets are isolated from the risks of other Ledn products and are only exposed to the counterparties that generate the interest in them. Ledn's USDC Growth accounts’ primary objective is to fund Ledn's overcollateralized retail loan book. As a result, the USDC deposits are currently collateralized with the Bitcoin used to secure these loans, which have never experienced a loan loss, making it the most secure way to earn interest on USDC.

Aave

Aave is a pioneer of the decentralized lending and saving industry, and is often many people’s first port-of-call when they are looking for a completely blockchain-based service. The project offers USDC variable APY of 6.90% and stable APY of 14.65%.

Nexo

Nexo was once one of the top lending platforms in the US, however a settlement with the SEC caused them to pull away from the region.  However, Nexo’s savings accounts are still used in many other countries. Its USDC APYs (annual percentage yield) start at 10.00% and max out at 14.00%.

Crypto.com

Crypto.com is a wide-ranging crypto ecosystem, suitable for a huge selection of blockchain-based activities. It is often known for its trading services, however many people use it for setting up savings accounts. Its USDC interest rates reach up to 5.25% APY.

Compound

Like Aave, Compound is a decentralized network offering lending and saving options. Compound’s interest rates fluctuate regularly, and are subject to a wide array of variables, so it can be hard to offer a definitive percentage, but at the time of writing this, if you were to supply the service with USDC using the Ethereum network, then your net APR would be set to 4.09%.

Related Content: Aave vs. Compound

Goldfinch

Goldfinch is a decentralized lending protocols that allows people to earn interest on their USDC by investing it into certain companies and projects. It takes a strikingly novel approach to lending and borrowing in the crypto space, where people can earn interest by adding their USDC to specific pools that connect to different businesses and endeavors. The pool you choose has a huge impact on how much interest you can earn, with some pools having a variable APY of 7.00%, and others having fixed term APYs reaching a staggering 18.00%. However, bear in mind that this is a very unique platform, and so there is definitely a higher risk of mistakes or shortcomings occurring.

KuCoin

KuCoin is a leading crypto platform, often revered for its exchange. However, it also provides lending and earning tools to its users. When it comes to USDC, it ranges from 0.60% to 6.00%. 

Is USDC a safe stablecoin?

All cryptocurrencies have some inherent risks, and this is true for the stablecoin market as well. This is a relatively new asset class, and so there is a lot of experimentation and learning curves to navigate, even for those who run the coins, tokens, and services. However, with that being said, USDC has a very strong reputation for being safe within this industry. This is because it is a stablecoin that is backed by a 1:1 reserve ratio of US dollars. This means that for every USDC that is in circulation, the company that manages USDC (called Circle) has a US dollar in reserve. This keeps them at an equivalent price-point, and prevents major inconsistencies from regularly happening. You can even check the legitimacy of Circle’s 1:1 reserve claim by freely looking through their monthly attestation report history.

With that being said, there have been complications for the stablecoin. A recent significant matter that occurred was when USDC became depegged from the US dollar, meaning that it lost its equivalent value for a brief period of time. In a nutshell, this was due to people panic selling the asset due to Circle's affiliation with Silicon Valley Bank. However, since then, the panic has subsided as Circle was able to show they had acted fairly and legitimately despite any connections. The asset has stayed stable since this moment.

Is Earning Interest on USDC Worth It?

USDC interest rates can reach remarkably high percentages, provided you pick the right service and lock away a decent amount of USDC. For this reason, it is certainly worth considering this as an option for earning a passive income. For instance, with Ledn’s Growth accounts, you currently can earn up to a staggering 8.50% APY on your USDC, making this a highly competitive rate. With enough crypto, and enough time, this can yield potentially huge returns. It all depends on how long you’re willing to wait, and how much USDC you’re open to placing in a Growth account.

There is another reason why people might turn to earning interest on USDC. For a considerable amount of time, interest rates for the US dollar have been getting higher along with inflation, yet the interest rates offered by banks are still much lower than what you can find with dollar-backed stablecoins such as USDC. This is partially because banks have operating overheads, stringent regulatory requirements, and a traditional business model that often doesn't allow for the same kind of flexibility and competitiveness as newer financial platforms.

How Do You Maximize Your Returns With USDC?

The first thing you want to do when trying to maximize your returns is to choose the right service. This should be somewhere that has a trustworthy reputation, and which is known to offer decent APY percentages. Ledn is definitely a strong contender for this position, as it is known to be open and transparent with its clients, and its rates are highly competitive.

The next thing you should do is figure out how much USDC to lock away and for how long. The point here is to maximize your returns as much as you’re financially comfortable with, and no further. While more digital assets are always better, there are always inherent risks with investments of any sort, and feeling confident and stable in your actions should be of the utmost significance. A professional financial advisor can provide objective guidance, help you avoid costly mistakes, and create a personalized plan that aligns with your goals and values.

Conclusion

Considering how high USDC interest rates can get, and how simple it can be to start making returns, it definitely makes sense to consider this as an option for generating a passive income. Top services, such as Ledn, offer a pain-free and clear method of earning at a high interest level, whilst also offering risk-mitigating solutions and maintaining a strong reputation for trustworthiness and transparency. This makes Ledn a great choice for building a passive income with USDC.

Sponsored by 21 Technologies Inc. and its affiliates (“Ledn”). All reviews and opinions expressed are based on my personal views.