• We can earn interest on stablecoins by putting them into savings accounts or providing liquidity for exchanges
• The amount of interest we can earn while providing liquidity will depend on the size of the pool we are joining
• While providing liquidity, interest is usually paid out in different cryptocurrencies than those provided
• Putting our stablecoins in saving accounts is similar to putting our money in a traditional bank's savings account

This year has not been a great year for crypto investors as most of the tokens have seen huge dips that far exceed those that have been seen in previous years. Despite that, there was one type of token that did not feel the effects of this market crash and these were stablecoins. Stablecoins are cryptocurrencies that have a 1:1 peg with traditional currencies, usually the USD. What this means is that if a stablecoin is pegged with the USD, one of those tokens will always be worth $1 with minimal changes of +/- $0.002. 

Stablecoins are not a new concept, and they have been around for quite some time. For example, the world's largest stablecoin USDT was created in 2014. These stablecoins are not all the same just with different names. We can put these stablecoins into two categories. The first category is where coins like USDT and USDC fall. This is where tokens are backed by real-world cash, and they have minimal dependence on the crypto market.

The second type of stablecoins is algorithmic decentralized tokens that are not tied to cash money. These algorithmic tokens might seem better because of their decentralized nature, but they are also more fragile. One example of it is TerraUSD, which lost its value in a matter of days following an exploit performed by one of its developers.

You might also be wondering why are there so many stablecoins as they don’t usually do anything unique and are all alike. There are always personal preferences as to which project you like the best and which team you believe in, but the main distinction is the network these tokens operate on. Almost every single stablecoin is built on a unique blockchain, and they operate on different networks. For example, USDT, the world's largest stablecoin, uses the Tron network to complete transactions and runs on the Ethereum blockchain, while the second-largest stablecoin USDC also runs on Ethereum, but can complete transactions on the Solana and Polygon networks. 

"I think the government should be extremely happy that stablecoins exist because they just pump their fiat currency bags everyone that's in crypto is that's in a stablecoin is literally just buying the dollars of some country" – Richard Heart

When it comes to earning interest on stablecoins, there are a few ways we can do it. For this, we can take two different routes. We can either operate with centralized financial institutions or visit decentralized exchanges which might offer even higher interest, but in general, these interest rates are paid out in the form of traditional cryptocurrencies. When it comes to the actual investment of your stablecoins for interest, you can just create a savings account, provide liquidity, or lend it out. Whichever route you choose will decide how much interest you will earn and how long of an investment you will have to make.

Create a savings account

One of the most common ways to earn interest on your stablecoins is to create a savings account. What makes this method really interesting and attractive is how closely it resembles traditional savings accounts you would open in a bank. This method of investing is great for those who are looking for long-term investing. 

Since stablecoins retain their $1 value, you can be assured that your savings won’t lose their value suddenly like with other cryptos, and you can keep your funds in your account for years without any problem. There are multiple platforms where you can open your savings account, and you have to make a choice depending on which coin you are investing in, how long you want to invest, and also where you reside.

AQRU - The best overall place to create a savings account

Aqru.io is one of the best places where you can earn interest on stablecoins. Here you can earn interest on stablecoins such as USDC and USDT. The average APY on Aqru is between 7-12%. In general, you are expected to earn an interest rate close to 12%, but following the huge market crash of 2022, Aqcru temporarily lowered interest rates to 7% to better assess the situation and make sure that everything will run smoothly. 

To start your savings account on Aqru you will need to deposit at least $100. There is no lock-up period which means that you can withdraw your funds whenever you want. This investment process is run automatically and does not require anything from you other than depositing coins in your account. Each day your account will be funded with the interest you earned from your investment. One downside of Aqru is that it is not available for US customers.

Crypto.com - The best place to earn interest for US residents

While the Crypto.com exchange platform is not available for the majority of US customers, their Crypto Earn program is. What this means is that you can purchase tokens on other exchanges and transfer them to your savings account on Crypto.com. You might be asking why you should go through all these processes of using different exchanges and making transactions when you can just use the platform which also allows US customers to use their exchange. The answer to this question is high-interest rates. Crypto.com has interest rates of up to 10% for stablecoins such as USDT, USDC, DAI, and TUSD. Here is the catch, there is a lock-up period of three months and during that period you won’t be able to access your tokens. But since you are investing in stablecoins it is extremely unlikely that they will lose much value, so you should not worry about that during the three-month period.

There is one more thing to consider. Alongside stablecoins, you need to stake CRO tokens to earn interest.

Binance - The best place to earn interest on BUSD

Launched in 2019 BUSD is the native stablecoin of Binance and operates on the Binance Smart Chain. BUSD has its main usage and utility while using Binance. For those who are interested in this stablecoin, where would be a better place to earn interest on them other than Binance itself? 

When it comes to earning interest on BUSD, Binance offers us two different options. We can either lock tokens for a flexible timeframe, which means that just like Aqru, you can withdraw your funds any time you want. But, doing so will earn you a low-interest rate of just 3.21%. Things get interesting when we lock our BUSD for 120 days. When locking BUSD for 120 days, Binance offers an interest rate of 13.33% which is one of the highest interest rates on any stablecoin. Another attractive feature that it has is that there is no minimum deposit, and you can even deposit 0.001 BUSD if you want to.

Provide liquidity

Another option for earning interest on our stablecoins is to provide liquidity for exchanges and receive rewards for doing so. Whenever we go to a platform where we can directly swap one crypto for another, these cryptos come from liquidity pools that users have provided.

Whenever someone swaps tokens for the pair you provided liquidity for you receive rewards for your services. But these rewards come in the form of different crypto assets. So if you want to invest in stablecoins and don’t have a problem receiving interest in different cryptocurrencies, then using this investment strategy is worth considering.

Binance - Best centralized exchange for earning interest from liquidity pools

Binance makes a second appearance on our list. Binance allows users to provide liquidity for many different crypto pairs, including 4 stablecoin pairs. When providing liquidity for Binance, the interest that you earn will depend on which pair you provided liquidity for, and these return rates are not fixed. The return rates of each pair will depend on how big of a liquidity pool it already has. The more funds in the pool the less you make, since rewards are being distributed to more investors.

Also, when providing liquidity for stablecoin trading pairs you can either provide both tokens or only one token, but there are some disadvantages when doing this. Whenever we are providing liquidity for two coins we have to indicate how much we want to provide for one token and Binance will tell us how many coins we need to add for the second currency. When doing so, you don’t have to pay any fees and worry about slippage which are disadvantages associated with providing just one token. Whenever we provide one token, a portion of it gets converted into its pair coin and for this, we have to pay fees. 

Binance pays interest on stablecoin pairs in the form of their native token BNB, which at the time of writing this article is worth $227.

Uniswap - Best decentralized exchange for earning interest from liquidity pools

If we don’t want to deal with centralized exchanges and the countless regulations associated with them, there are always options to utilize decentralized exchanges. One of the best-decentralized exchanges for liquidity is Uniswap which is a DAO project controlled by community members and is not subjected to a single governing body.

One of the best things about Uniswap is that you can provide liquidity for any trading pairs and are not limited to a select few. Also since this is a decentralized platform there is no need to register your account and all you need is to connect your wallet. The amount in returns you might earn, just like with Binance, will depend on how big of a pool you are joining. 

Whenever someone swaps coins they pay small fees and then these fees get distributed among those who have provided liquidity, the more liquidity you provide the bigger the reward you receive. Unlike Binance, you have to provide both coins of the pair and can't just provide one.

Uniswap gives out rewards in the form of their native token UNI, which at the time of writing this article is worth $5.66 and is the 19th largest crypto on the market. 

• Aqru is the best overall platform for earning interest on stablecoins
• Investing in stablecoins will save you from the volatility associated with traditional crypto
• For those who want decentralization, using Uniswap is the best option for earning interest on stablecoins

“So what's extraordinarily powerful about digital currencies like USDC and stablecoins.. is that they exist on the public internet and you know the underlying infrastructure that they're built on top of these blockchains are basically operating systems that exist on the public internet and they're operating systems that are not centrally  managed and controlled " - Jeremy Allaire