High volatility is a common characteristic of many cryptocurrencies, but stablecoins have proven different. These hybrid currencies are decentralized coins that have attached their value to fiat assets. By linking their value to reserve assets, stablecoins manage to avoid extreme price fluctuations, making them safer than other coins.
Because of their stability, stablecoins are attractive to many investors who want to make profits from crypto investments. So, here’s a simple guide on yield farming for stablecoins and the best platforms to farm from.
What Is Yield Farming?
Yield farming is one of the most popular strategies for making profits from crypto currencies. This strategy often involves farmers putting in a certain amount of tokens to a Decentralized Exchange (DEX) or a Decentralized Application (Dapp), then receiving returns on their investments based on the smart contract used to manage the farming activity.
For stablecoins, yield farming can happen in several different forms. Farmers can either participate in staking, lending tokens, borrowing tokens or providing liquidity for certain coins to get profits.
Yield farming is also essential, not just for making returns but for generating liquidity for a given coin as well. Liquidity refers to the ease of swapping a token for another or fiat. The more the liquidity, the higher a coin’s stability is, which is why stablecoins benefit from increased liquidity.
Where Can I Farm Stablecoins?
For farmers to farm yields from stablecoins, they need access to a platform that allows either staking, borrowing, lending, or liquidity provision for a given stablecoin. There are several platforms with this capacity in the crypto space, but you want to make sure you use one that offers you the highest stablecoin yields possible for your investment.
What are the Best Stablecoin Farming Platforms?
If you are looking to get into yield farming, here are some of the best yield farming platforms for stablecoin farming.
PancakeSwap is an alternative yield-farming platform for stable coins. Pancakeswap runs on the Binance Smart Chain (BSC) and has one of the broadest lists of trading pairs among all DEX. This DEX offers liquidity farming for stablecoin pairs including:
Each pair has its own margin for rewards, but investors can take as much as 0.17% of all trades on the respective pair proportional to their share of the pool.
Curve Finance also offers impressive yields to investors providing liquidity on certain pairs. The platform has a market-making algorithm that reduces slippage and costs for trading stablecoins, making it more cost-friendly for investors. Curve Finance supports liquidity provisioning for multiple stablecoins including
Yearn Finance (YFI) provides a unique approach to farming stable coins. The platform, which serves as a tool for yeal farming and aggregation has over thirty Yearn-integrated pools that investors can deposit at least different stablecoins in. These pools support
The tool uses smart contracts to calculate an investor’s compound gains, making it very fast and effective in its transactions.
Among the most prominent platforms where crypto investors can farm stablecoins is Nexo. Nexo offers up to 17% Annual Percentage Rate (APR). This means investors can get returns of up to 17% of their initial deposit every year, paid out daily. This profit margin is among the highest in the market.
Nexo is also a secure platform with cold wallets, insurance cover for investments, and billions worth of assets under its management. This means investors can rest easy knowing they’ve not placed their money on a rug pull or Ponzi scheme.
Yield farming for stablecoins rarely gets as inviting as it does on Celcius. Celsius pays investors up to 17.78 Annual Percentage Yields (APY) weekly for their yield farming efforts.
Besides these lucrative profits,
This network also supports multiple stablecoins, from TUSD to GUSD, USDC, USDT, TGBP, and several others. The platform also offers yield farming for Gold tokens, which are digital assets linked to real-life gold.
The popular crypto exchange Gemini is another excellent site for farming stablecoins. With an APR of about 8.05%, Gemini gives investors a fantastic opportunity to make more money from their existing crypto holdings.
Gemini also comes with a ton of competitive rates and features appealing to many investors. Some of these features include that Gemini doesn’t put a minimum on investments and has no fees for transfers and withdrawals.
Satblecoin investors also turn to BlockFi for the best stablecoins yields. Farming stablecoins on BlockFi can earn investors a maximum of 11% APY paid out every month. BlockFI also comes with its trading platform, BlockFI Trading, which offers competitive prices for a wide range of crypto assets.
Which Are the Best Stablecoins to Invest in?
Although stablecoins are relatively more stable than other cryptocurrencies, some may also be unsafe. Therefore, when shopping for a stablecoin to invest in, it is essential to look for a coin that has safety protocols that prevent hacking or loss of investments by fraudsters.
Also keep in mind that the coin needs to be a thoroughly audited stablecoin to ensure transparency. Below is a list of some of the safest stable coins that investors can take a chance with.
Tether(USDT) is one of the safest stable coins that backs its tokens with an equal amount of the U.S. dollar. This token is the brainchild of the BitFinex crypto exchange and serves as the native token for the Tether network.
Investors can also rely on the USD Coin, a safe, stable coin to invest in. This coin also pegs its value on the value of the U.S. dollar. USD Coin (USDC), was co-founded by the tech-finance company Circle and the acclaimed crypto exchange Coinbase. This coin’s most significant advantage is that it has the full backing of reserve assets regulated by the U.S. Government.
Binance Coin (BNB) is a stablecoin issued by the Binance blockchain in partnership with digital trust company Paxos. So far, it has become one of the most secure stablecoins in the crypto market, approved by the New York State Department of Financial Services (NYDFS). Binance Coin also places its value against the dollar and serves as a hedge against volatility.
Stablecoin investors can also have a look at TerraUSD (UST). UST links its value to the US dollar and is one out of several other coins in the Terra protocol. Other Terra stablecoins include Terra SDR(SDT), which links its value to that of the Special Drawing Rights from IMF.and TerraKRW (KRT), which pegs its value on the South Korean Won.
Dai(DAI) is a stable coin that stemmed from the cryptocurrency concept of Collateralized Debt Position (CDP), presented by the MakerDAO project. This concept suggests a solution to reduce the volatility of cryptocurrencies, and Dai is a part of the solution. The Dai stablecoin, which pegs its value to the is both stable and safe stablecoin grounded to the Ethereum blockchain.
Are Stablecoins Safe?
Stablecoins are often safer because of their reduced volatility. However, some stablecoins can be hacked, turn out to be rug pulls where founders hype the coin and inflate its value, then sell off their shares and crash it. Therefore, you need to vet the stablecoin you are about to invest in to ensure it meets the mark.