Stablecoins play an important part in the crypto space. They peg to another asset, in most cases to the USD, and USDC is currently one of the leading stablecoins in the market.
So, many people in the ecosystem are trying to look for alternatives to stake USDC and get USDC as staking yields. In this article, we are going to have a closer look at staking USDC by answering 5 popular questions about USDC.
1) Who Owns USDC?
A consortium by the name of Centre manages USDC. However, it’s Circle that founded this consortium. Members of Circle include Coinbase and Bitmain, a bitcoin mining company. Just to clarify, it is a private company that issued USDC. This means that it is not a CBDC.
Furthermore, Circle claims that they back each USDC with cash and short-dated U.S. treasuries. As a result, you can always redeem USDC 1:1 for US dollars. Circle claims to hold these reserves ‘in the custody and management of leading U.S. financial institutions‘. For example, BlackRock and BNY Mellon.
Each month, Grant Thornton LLP, a third-party company, assures the size of the USDC reserve. They are one of America’s largest audit, tax, and advisory firms, as the Circle website states. In the same manner, they are also regulated as licensed money transmitters under U.S. state law. This puts them level with PayPal, Stripe, and Apple Pay.
2) Is USDC Staking Safe?
Staking USDC has relatively low risk. However, there are some risks. Here are four to consider:
- The U.S. government is not involved with issuing the USDC: As a result, USDC doesn’t have any FDIC or SIPC insurance. A US dollar savings account will have this insurance. In other words, the USDC is not legal tender, so the US government doesn’t insure it. On the other hand, Centre, are fully regulated. They are a licensed financial institution. In other words, they report their reserves each month. This is how they prove that the USDC is fully backed by the US dollar.
- USDC uses the Ethereum blockchain: So, there can be cyber threats. For instance, a 51% attack. However, considering the size of the Ethereum network, it’s not likely this will happen.
- Any interest percentage can change without warning: The crypto projects offering these percentages all have a small print in place. This is precisely what it tells you.
- Intermediaries: Make sure that the project, you receive interest from, doesn’t invest your USDC with a third party.
Here is an example:
1/ Market driving you crazy? Need a strategy for peace of mind? 🤪
We're offering the highest APY on INSURED $USDC #staking on @0xPolygon thanks to @Orion_Money X @InsurAce_io
Get a safe and stable 13% APY in $USDC plus $GOGO rewards ▶️ https://t.co/McjXcJBUIO 😌
— GOGOcoin (@GOGO_coin) January 10, 2022
3) Is Staking USDC Worth It?
Yes, staking USDC can be worth it. However, many platforms that offered a high-interest percentage in early 2022, are now closed down. Platforms like Celsius, Voyager, or Vauld. They all got caught up in liquidity issues. As a result, they suspended withdrawals.
However, there are still good interest percentages available for USDC.
- dYdX—Currently they offer 15% on staking USDC in their liquidity pool. It’s important to note that dYdX doesn’t act as a custodian. However, they pay out yield in DYDX tokens.
- Midas.Investments—They offer 11.6% on USDC. Their boosted rates are 14.7%. They are a custodial crypto-investment platform. They mix CeFi with DeFi.
- unFederalReserve—They offer 6.41%. They bridge the gap between DeFi and TradFi.
- MyCointainer—They currently offer a 10% APR on USDC. However, they get mixed reviews.
Don’t miss out the opportunity to stake $USDC with 14.5% APY and receive rewards every day.💰
Make your money work for you👉https://t.co/114TCbeTcK#MidasInvestments #CeDeFi #Staking #DeFi #YieldFarming pic.twitter.com/KTjAlqNTe1
— Midas.Investments (@Midas_platform) June 9, 2022
4) How Does USDC Staking Work?
Staking USDC works straightforwardly. The different platforms will all have a different way of how you can stake your USDC. However, the bottom line is that you will need to:
- Deposit USDC onto the platform.
- Once your USDC is on the platform, you follow the staking guidelines as described by each platform.
The easiest options are exchanges. You can also opt for specialized staking platforms. In general, they lend your USDC to borrowers. In return, you receive a reward that can be the platform’s native token or even USDC too. Here is an example:
The @yieldyak_ Liquid Staking Yield Farm is live!
Double Rewards for your $yyAVAX:
Stake: $yyAVAX – $USDC
Earn: $yyAVAX + $JOE 🔥
Note: $JOE rewards start tomorrow (17th)
— Trader Joe🔺 | New AMM Soon 🌊📘 (@traderjoe_xyz) August 16, 2022
You may want to use caution with CeFi platforms. They tend to lend your assets to a third-party platform. We have seen the problems this can cause. For example, with Celsius.
5) Best Staking for USDC
We already mentioned four platforms that offer good interest for USDC. Here are a few more options:
- MyConstant—They offer 12.5% on USDC. This is a P2P crypto-lending platform.
- Crypto.com—They offer up to 14% on USDT if you stake $40,000. However, you need to commit for at least one month. Staking rates drop when you stake less than $40,000.
We answered five questions related to staking USDC. As a result, you know if staking USDC is safe. We also discussed the best staking options and how staking USDC works. You also know now if staking USDC is worth it. Happy staking!
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