As an investor, it is difficult to find generous returns from traditional banking products such as savings accounts. Fortunately, the cryptocurrency industry has matured and is now offering low-risk investment products. Many of these products include stablecoinswhich are blockchain-based tokens with their price pegged to fiat currencies (usually the US dollar).
The largest stablecoin by market capitalization is Tether (USDT); Here’s how you can get the most out of it.
| USDT | USDC | DAI | BUSD | ETH | |
| avi | 1.40% | 0.42% | 0.93% | 0.21% | 2.10% |
| complex | 1.44% | 0.73% | 0.71% | – | 0.06% |
| BlockFi | – | 6.00% or above | 3.50% or higher | 6.00% or higher | 2.00% or higher |
| nexo | 8% or higher | 8% or higher | 8% or higher | – | 4% or more |
| Binance | 10.00% | – | 2.20% | 10.00% | 1.80% or higher |
| Crypto.com | 0.40% or higher | 0.40% or higher | 0.40% or higher | – | 0.20% or higher |
USDT Lending Platforms
If you want to achieve high returns while reducing the risk of volatility, centralized lending platforms are the perfect choice. They work similarly to traditional online banking or lending services. They will require you to go through a KYC (know your customer) verification procedure before your account is approved.
We chose three of the most trusted lending platforms that support USDT and provide high returns:
BlockFi
BlockFi, which has been in operation since 2017, is one of the most popular lending platforms. One of its main products is BlockFi Interest Calculation (BIA), which enables investors to earn interest from their cryptocurrencies. Interest is accrued daily and paid every month. BlockFi is preferred by many beginners because it does not require a minimum balance.
USDT deposit accumulated APY number can reach more than 7%. In fact, the fixed interest (updated regularly) depends on BlokFi’s interest levels as follows:
- Level 1 – USDT deposits less than 20,000 come with an APY of 7.25%.
- Level 2 – USDT deposits between 20,000 and 5 million USD have an APY of 6%.
- Level 3 – USDT deposits over 5 million provide an APY of 4.5%.
BlockFi offers a separate, personal return A product for High Net Worth Individuals (HNWIs), who can earn customized rates by negotiating them with BlockFi. Typically, the loan term ranges from one to six months.
BlockFi allows one USDT withdrawal per month for free, after which users must pay a withdrawal fee.
Click to see the current interest rates for BlockFi.
nexo
Another popular cryptocurrency lending platform is nexo, founded in 2017. The APY platform offers up to 10% on USDT deposits. If you choose NEXO Premium Rewards, the original token of the platform, you will earn a higher APY. These are by far some of the highest interest rates on the market today. We also like Nexo’s intuitive interface, which can make a difference for beginners.
Individual and institutional investors choose NEXO because of its compound daily payments and flexible dividends. Also, deposits are backed by $375 million in insurance coverage through BitGo and Ledger.
Using the NEXO token not only provides better interest rates, but also offers more free cryptocurrency withdrawals and other perks.
Click here to see the current interest rates for Nexo.
Pros and Cons of Lending Platforms
| Positives | Negatives |
| high returns Cryptocurrency lending platforms provide the highest return on USDT deposits. | central – Since these are centralized platforms, you will have to transfer the custody of your USDT funds (Private Keys). |
| low fees Most cryptocurrency lending platforms charge little fees. For example, Celsius claims that it does not charge any fees at all. |
Lending USDT on exchanges
You can also earn interest on USDT lending through centralized cryptocurrency trading platforms and platforms. They usually use the funds to lend to traders who participate in margin trading. As a general rule, you will have to lock in your USDT for a predetermined period. Here are a few of the well-established cryptocurrency exchanges that support USDT lending:
Binance
Binance It is by far the largest crypto exchange in terms of trading volume. Since it started in 2017 as a spot exchange, it has transformed into a diversified ecosystem that also offers futures and options trading, a launch platform, liquidity farming, betting and pay options, and more.
One of the main products Binance earn, which is a comprehensive interest earning solution, including interest on USDT. The APY on the USDT Flexible Deposit is a generous 10.00%, although the rate drops significantly as deposits go up. Thus, if you deposit more than $2000 USD, you should expect an APY of only 3.00%.
Click to see the current interest rates on Binance.
Crypto.com
Founded in 2016, Crypto.com It has become one of the biggest brands of cryptocurrency thanks to several high-profile partnerships, especially in the field of sports. The platform provides exchange, non-fungible tokens (NFT), payment and lending services to more than 50 million users around the world. Provides insurance coverage of $750 million on all assets. In 2021, the company partnership with Visa to settle transactions on its own payment network.
The Encoder gain The product supports USDT and offers APYs from 0.4% to over 5%, depending on your balance, as well as whether you’re willing to hold CRO tokens and/or crypto locks for three months. You can choose between flexible and fixed-term deposits, but the former gives lower returns. Interest bonuses are paid weekly.
Click to see current interest rates on Crypto.com.
Pros and Cons of Lending on the Stock Exchange
| Positives | Negatives |
| Diverse ecosystem – Large cryptocurrency exchanges include all forms of cryptocurrency which can be accessed with just a few clicks. | central Cryptocurrency exchanges store your funds in their custody, which means that you do not have complete control over your funds. |
| lower returns Most cryptocurrency exchanges offer lower returns compared to cryptocurrency lending platforms. |
USDT DeFi Lending
If you want to have complete control over your money and not share your personal information with anyone, you can choose Decentralized Financial Lending (DeFi) protocols. DeFi is one of the hottest trends in the crypto industry, as it enables users to access financial services that are managed by algorithms and powered by the blockchain instead of being managed by central entities.
avi
avi It is the second largest DeFi protocol, with a total locked value (TVL) approaching $8 billion. Stablecoins play a leading role in Aave, accounting for more than 30% of all deposited assets.
The interest rate for contributing to USDT liquidity is more than 1%. Although this is much lower than the interest rates shown above, there are no closing periods and no minimum balance. (You’ll usually pay transaction fees to move money in and out.)
Click to see current Aave rates.
pooled financing
Aave’s direct competitor is complexTVL, which has $4 billion as of this writing. The lending protocol sparked a DeFi frenzy in the summer of 2020, when it launched its governance token.
USDT plays a leading role here as well, with APY on USDT deposits reaching over 1%.
Click to see current compound interest rates.
Pros and Cons of DeFi Lending
| Positives | Negatives |
| decentralization DeFi protocols are powered by algorithms, which completely reduces potential human errors. Also, they do not require KYC/AML verification from users who have complete control over their funds. | lower returns DeFi lending protocols offer much lower rates compared to their centralized counterparts. |
| high fees – some DeFi protocols, such as those built on Ethereum, come with high gas fees. However, the list of low-cost alternatives built on Avalanche, Polygon, and other blockchains is growing. |
What is USDT?
USDT is a stable cryptocurrency issued by Tether Limited, a company that launched in 2014. USDT has a price pegged to the US dollar based on a 1:1 ratio. It is hosted on the Ethereum blockchain as an ERC-20 token.
Tether claims that USDT is fully backed by reserves consisting of US dollars, cash equivalents, other short-term deposits, and commercial paper. The latest certification report has been released by MHA Cayman, confirming that USDT tokens are fully backed.
At the time of writing, USDT has a market capitalization of over $72 billion, making it among the top 3 cryptocurrencies after Bitcoin and Ethereum. Stable currencies have played a major role in the cryptocurrency industry, bridging the gap between blockchain and traditional finance.
Why are USDT returns so high?
The return offered by traditional savings accounts is less than 1%, so how are USDT rates higher? This is a good question given that USDT has pegged its price to the US Dollar, which reduces the volatility risk to almost zero.
Nexo, BlockFi, and others offer better rates thanks to a business model in which users lend cryptocurrency to borrowers willing to pay higher rates. The latter are ready to use their cryptocurrency as collateral, which is not possible with traditional banks. Thus, the increasing demand for loans against crypto collateral is driving interest rates.
USDT Staking vs Lending
Stacking and lending are two ways for investors to profit from their crypto holdings without selling them. Traditional savings accounts cannot generate much return in today’s low interest rate environment. Fortunately, investors can use stablecoins like USDT to bet and lend instead.
The main difference between staking and lending is that the former requires users to rent their USDT to a blockchain or crypto platform in exchange for rewards, while lending USDT requires them to lease funds to borrowers to earn interest.
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