Holding stablecoins such as UST or USDC does not earn the holders passive income. Yield-bearing stablecoins let users hold a dollar-pegged asset while earning passive income.
Ethena’s staked USDe [SUSDE], one of the leading yield-bearing stablecoins by market cap, has a current yield of 5.81%. Historically, it has delivered some of the highest returns, ranging from 10% to 25% APY.
Leading DeFi lending protocols such as Aave [AAVE], MakerDAO [MKR] (now rebranded to Sky), and Compound [COMP] earn by letting users (lenders) deposit their crypto into a “liquidity pools” on the platform.
Other users (borrowers) can take out loans from these pools by using crypto as collateral.
At the time of writing, AAVE staking has a reward rate of 4.63%, beating ETH’s 3%.
The higher return can attract users to DeFi lending platforms over directly staking ETH. Yet, that does not mean Ethereum is losing, as these DeFi products are built on the Ethereum network
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