Stablecoin Earnings

Passive Income Opportunities with Stablecoins

DeFi Strategy Series: Yield Farming, Saving, and Earning Strategies

On March 26th, Visa announced it would allow settlement of credit card accounts using USDC stablecoin. This means with the right Visa card, you can directly spend crypto. It also means any stablecoin swappable with USDC is equally convertible to spending using crypto Visa cards. Crypto is now equivalent to earning real money, and you don't need to get it into a traditional bank account to use it anymore.

The great news is stablecoins pegged to the US dollar actually earn among the highest yields in Decentralized Finance (DeFi). When money is on the blockchain, it's put to work in the most efficient way possible. DeFi has created many ways for idle assets to grow without volatility. This is a revolutionary source of passive income. It's also working for you every day, without any bank holidays.

This article discusses projects which let you earn money on stablecoins (USDT, USDC, BUSD, DAI, UST). This article does not constitute financial advice and you should continue do your own research before investing.

Yields from Different Projects

Revenue from DeFi comes from various sources: trading fees, compounding interest, and token rewards (non-compounding)

Stablecoins on Binance Smart Chain DeFi generally earn between 10% and 200% APR. The transaction fees on Binance Smart Chain are very low, typically under $1 per trade or investment. Where is the yield coming from in DeFi? Actually, stablecoin yields come from a mix of sources. The mix of strategies is what makes it so powerful and lucrative:

  1. Trading fees. Stablecoins in DeFi are often used as exchange liquidity, helping people change between stablecoin assets during their trading moves. For example, a trader coming from Ethereum may bring DAI but want to trade using BUSD for the lowest overall slippage. He will trade with a DAI-BUSD pool, earning liquidity providers a trading fee. These fees can earn from 0.8% to 10% APY, and usually compound the position's value.
  2. Lending/Saving Rates. Lending and Saving can come from lending your crypto to other borrowers. Interest rates compound the position. This is most lucrative during periods of growth in ETH and BTC as borrowers are plentiful.
  3. Token Rewards. Most often, this is the biggest part of the reward in DeFi. Investors value reward tokens as investments and sources of income in yield farms. The tokenomics of projects and investments matter a lot. Inflationary and non-capped coins generally lose value. Deflationary and limited supply coins typically gain value. Popular project tokens typically gain value. Tokenomics can both increase or decrease your APY- a growing coin value means the investment gets more valuable and you should hold the reward token to sell later. A decreasing coin value means you should send it back to stablecoin or wait for a better time to sell. Some tokens like CAKE let you earn other assets. Other tokens like AUTO get burned by the protocol, increasing the token value overall.

TVL and safety. Generally speaking, the larger the project, the more secure the investments on it are and the more resilient it will be to losses and bugs. Total Value Locked (TVL) is a measurement of the value of all cryptoassets locked into a project's smart contracts. It's the generally accepted measure of a project's size in DeFi.

We will introduce the strategies from greatest TVL (most assets saved in the project) to lowest TVL.

WebsiteTVLRates on StablecoinsPayout CoinInvestment Type
Venus9.6B3%-18% VariableXVS, StablecoinsLending
Pancakeswap7.8B6%-20% VariableCAKE, StablecoinsLiquidity Pool
Ellipsis2.4B80%-100+% VariableEPS, StablecoinsStableswap Liquidity Pool
Autofarm1.7B20%-50% VariableAUTO, StablecoinsYield Farming
Belt1.4B40%-60% VariableBELT, StablecoinsStableswap Lending and Liquidity Pool
Cream830M5%-30% VariableCREAM, Stablecoins Lending
Beefy626M20%-80% VariableStablecoinsYield Farming
Nerve609M100-200% VariableNRV, StablecoinsStableswap Liquidity Pool
ACryptoS334M40%-80% VariableACS, StablecoinsYield Farming
Venus.io

Venus is the largest lender on Binance Smart Chain. It is a decentralized money market with over $7 billion in assets saved. Savers bring their tokens onto Binance Smart Chain and deposit it into Venus. Borrowers then come to borrow the tokens and pay an interest rate. Venus also pays out rewards in the form of the token XVS. You can withdraw your tokens at any time.

Because the yields on Venus are low, it's not the best use of capital. The exception to not depositing directly is if you're looking to borrow against your saved crypto- then Venus would be the correct place to execute a borrowing strategy.

PancakeSwap.finance

Pancakeswap is the largest decentralized exchange on Binance Smart Chain. Around $6 billion in tokens are saved on Pancakeswap Liqudity Pools. These tokens all earn trading fees. To join a Liquidity Pool, you need to collect equal dollar amounts of the two pool coins in your wallet. For example, you would need $1000 of BUSD and $1000 of USDC to create a LP worth $2000. You then go to the Add Liquidity section of the website to deposit the tokens. Pancakeswap stablecoin pairs are: USDT-BUSD, USDC-BUSD, DAI-BUSD, and UST-BUSD. You can withdraw your tokens at any time.

Once you receive the LP token from depositing your two assets, you can stake the LP token in Pancakeswap farms to earn CAKE token rewards. These rewards start at 10% APR and go up to 26% for certain stablecoins. CAKE lets you earn free tokens in syrup pools. You can also deposit the LP token into a yield farm like Autofarm.

Ellipsis Fi

Ellipsis is an authorized fork of Curve.fi on BSC. Ellipsis is a stableswap, so it is more efficient than Pancakeswap for trading stablecoins. It currently has a single pool consisting of BUSD, USDC, and USDT. You may deposit any of the assets. Assets earn some trading fees in the LP, but most fees are reserved for the EPS token holders. On stablecoins alone, the Base APY on the LP investment is 0.72%, and gets 87% APR when you stake the LP token.

Ellipsis also offers the highest APR if you submit to token lockups of their EPS token. This means you need to lock the EPS token to earn higher interest rates (a mix of EPS and BUSD payout). There is a penalty for early withdrawl before 3 months. The locked versions carry APR of over 1400%. They plan to expand to other stableswaps (BTC-BTC) in a manner similar to Curve on Ethereum.

Autofarm.network

Autofarm.network is a yield farm that offers auto-compounding on BZX, MDEX, Bakeryswap, and Pancakeswap investments. This means it grows the principal of those investments using the token rewards. You get to compound your investment, growing it faster than the other sites can offer by themselves. AUTO tokens rewards will also be distributed until October, when they will stop. You can withdraw your tokens at any time.

Autofarm stablecoin vaults average around 40-50%. For PancakeSwap, BakerySwap, and MDEX, Autofarm will place your LP tokens into farms, sell the reward, buy more coins, and re-stake LP tokens for you. Autocompounding vaults are available for:

  • MDEX USDT-DAI
  • MDEX USDT-USDC
  • PancakeSwap BUSD-USDT
  • BUSD-UST
  • BUSD-VAI (Not recommended until the peg is stronger)
  • BUSD-BDO (Not recommended until the peg is stronger)
Belt.fi

Belt Fi is a stablecoin marketplace which is more efficient than Pancakeswap for trading stablecoins. While assets are idle, they're being placed in trading strategies. When a trader comes, they will swap one stablecoin for another and pay the pool a fee.

Belt.fi currently offers three different income sources in their offering. Belt's roadmap has plans to expand to many more strategies to seek out the highest yields. The main APR component currently comes from BELT token rewards and not from compounding in the stablecoins:

  • Trading Fee APR Component: 4%
  • BELT Token APR Component: 40%

One big advantage of Belt is that you can withdraw in ANY stablecoin, so it’s easy to get the right asset to service your loans or seize another yield farming opportunity later on.

Beefy.finance

Beefy is a yield farm on Binance Smart Chain. It offers several farms that work over other platforms, including Belt, Venus, PancakeSwap, and Autofarm. This lets Beefy yield extra high compounding interest. Beefy doesn't offer token rewards, but makes up for it with some of the highest compounding interest rates (118% APY via Belt.fi).

Cream.finance

Cream is a lending protocol like Venus.io and Compound.finance. Interest rates may be higher here than on Venus. Your idle assets can be deposited and lent out to others. Cream's advantage is that it is an established cross-chain lender with a presence on Ethereum, Binance Smart Chain, and Fantom Opera Chain. It's currently offering a special interest rate on deposits in conjunction with Curve.fi.

Nerve Fi

Nerve is a stableswap which offers the highest yield in the long term. 2/3rds of NRV rewards vest over a period of 6 months. It currently has a single pool consisting of BUSD, USDC, and USDT. Trading fee revenues seem to be around 2% APY, and reward token APY is between 100%-200% on the LP pool. You may deposit any of the assets. Nerve also offers ETH-anyETH and BTC-anyBTC pools, although these pools will expose you to asset risk associated with "anyETH" and "anyBTC".

ACryptoS (Advanced Crypto Strategies)

ACryptoS is a yield farm and stableswap. Its highest yielding stablecoin product is a 77% APY stableswap.

Curve Fi on Ethereum

We'll make an honorable mention of Curve.Fi, which is consistently the highest yield on Ethereum. It offers stablecoin-stablecoin, ETH-ETH, and BTC-BTC Liquidity Pools. Curve has optimizing stablecoin trading LPs versus Uniswap. Curve offers lower slippage swapping between stablecoins and incentivized tokenomics. Curve's tokenomics has lockups of 1 week to 4 years. Locked curve is also entitled to collect EPS tokens. Current trading fee earnings are around 3%, and with a 4 year lockup of CRV you can get 14%-45%.

How to get Stablecoins

1) Buy stablecoins using Fiat on a centralized exchange like Binance, Kucoin, or Coinbase. Move them onto Binance Smart Chain using BEP20 chain withdraw, Binance Bridge, or Trust Wallet/Binance Chain Wallet (for US residents).

2) Borrow against your volatile crypto on Cream (TVL 800M on Binance Smart Chain and Ethereum), Venus (TVL 7B on Binance Smart Chain), Compound (TVL 14B, on Ethereum), Aave (TVL 6.7B, on Ethereum), or Maker (TVL 7.9B, on Ethereum). After you've borrowed the stablecoin, move it onto Binance Smart Chain to start earning.

Other DeFi Strategies

Finally, keep in mind there are alternative strategies in DeFi, which are suitable for other investment goals. Please check out our other DeFi Strategy articles where we cover this entire chart in detail:

Optimal Strategy Graph

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