8-14% APY on Stablecoin. Better than High Yield Saving Account?

If you’re a regular reader of this blog then you must have noticed by now that this site now has crypto contents. The content thus far has been catered towards my usual readers, credit card and miles enthusiasts, but at the same time I think the content in those articles is at a higher level than many dedicated crypto sites. First, I wrote about 8% cashback on crypto debit card. You all know what 8% earning debit card means and how to maximize the result. Then I wrote about a Fold App, likes of which many of you use, except Fold pays in crypto. Now I want to explore another aspect of money that you use – high yield accounts. Well, except this time the payout will be in cryptocurrency.

First let me begin by saying that in this article I will primarily focus on stablecoin because they are supposed to be pegged to 1:1 to dollar. In other words, stablecoin is a cryptocurrency whose value is exactly $1 and will remain $1. You can certainly get even higher APY with other coins but those coins can fluctuate in value a lot. For example, HYDRA paid hilariously large APY of 180% but of course the coin itself could lose 99% of its value tomorrow.

Then let me also say ask you to not invest in the most popular stablecoin known as Tether (USDT). Yes it is currently the #3 coin (behind BTC and ETH) but long story short many people have raised several red flag against it and perhaps more importantly Tether’s FAQ page clearly states that

Unfortunately, Tether has decided to stop serving U.S. individual and corporate customers altogether. As of January 1, 2018, no issuance or redeeming services will be available to these users.

Most crypto enthusiast think USD Coin (USDC) is safe as groups like Circle and Coinbase (now a public company) are involved in it. This is also my stable coin of choice.

CDC – Up to 14% p.a

Revelant links: CDC Earn | CRO Token Price History | r/Crypto_com

Crypto.com (CDC) offers up to 14% p.a on stablecoin. If you have staked $400 or less worth of CRO (CDC’s crypto which will fluctuate), then the rates on stable coins are as follows:

1. 6% p.a. for flexible deposit term (you can withdraw at any time)
2. 8% p.a. for 1 month deposit term (locked for 1 month)
3. 10% p.a. for 3 month deposit term (locked for 3 months)

For example, if you lock $1000 for 3 months, you will be paid $1.92 USDC per week. If you choose to do this for the entire year then you will make $100 in USDC.

You can also stake at least $4k worth of CRO and earn up to 12% p.a. while staking at least $400k gives you up to 14% p.a. in stable coin. I do not recommend the latter during this ultra volatile market. You can learn more about staking on CDC in CDC’s “Crypto Earn” page.

Here are a couple of things worth pointing out:

1. Initially staking at least $400 worth of CRO will give you a 2% cashback earning debit card which will provide 100% rebate on up to 12.99 monthly Spotify subscription. Additionally, your staked CRO itself will earn interest on its own (paid in CRO). Oh and if you use my above mentioned referral you get $25 worth of CRO.
2. CDC itself is also an exchange so you can buy/sell other crypto too. Furthermore, for the first 30 days credit and debit card fee of 2.99% is waived. Your credit card most likely will code as a cash advance but you could potentially find a gem in the form of your local credit union.

Celsius (8.88% APY)

Relevant links: Celsius Earn | Celsius Token Price History | r/CelsiusNetwork

Unlikely CDC Celcius is not an exchange, instead you can think of it as a platform where people hoard cryptos. Currently you get 8.88% in stablecoins. You can buy stablecoin within the app throw following methods but there is a fee

• 1. credit card: $10 minimum fee; EU and UK 2.99% fee while global fee is 3.5%
• 2. Bank Transfer with ACH: 0.1% fee
• 3. Bank Transfer with SEPA: 0.5% fee

Alternatively you can buy coins in an exchange, eg CDC, and pay gas fee to transfer money into Celcius.

You can download the by following the appstore link in their official webpage. The terms and conditions of this promo are as follows:

• funds must be transferred within 20 day of activating your promo code
• you must maintain a wallet balance equal to or greater than your balance after completing your transfer of $400 or more
• withdrawing from your wallet within 30 days of completing your transfer may disqualify you from receiving your reward
• rewards are distributed after 30 days of maintaining a qualifying wallet balance

Voyager (9% APR)

Relevant links: Voyager Earn | r/Invest_Voyager

Voyager is an exchange that gives 9% APR on USDC. The app also gives you $25 BTC when you deposit and trade $100 after using a referral code. The optimal way to do this is to connect your bank account, deposit cash, buy USDC, and wait for $25 in BTC to post. Afterward, you can sell all and withdraw to your connected bank account or continue to keep USDC and BTC on Voyager and earn 9% and 5.75% APR respectively.

Note that you have to manually opt in to get the interest. Voyager does have a fee (it earns money if it saves you money by executing order at a better price). It may take up to 12 weeks to get your application approved with Voyager and from what I have seen their exchange can suffers in performance during sudden crash or bull run.

Closing Thoughts – is it Insured?

Although stablecoins are supposed to be pegged 1:1 with USD (see price history of USDC here) none of them are backed by the U.S. government nor do we get the benefit of FDIC insurance like we do with banks. So if the company goes under, runs away with the money, you’re probably going to be out of money. Remember many of the crypto companies operate from outside of US, including CDC (headquartered in Switzerland with offices in Hong Kong and Singapore) and Celsius (England). Furthermore, if the company gets hacked or you get hacked then you’re likely out of money as well. If the exchange is hacked, you’re at the goodwill of the company and there have been cases where the company has paid the money. Anyway, you can read about past crypto exchange hacks and their aftermath in this detailed article.

It is also worth noting that you can easily get 3% through various fintech like Porte ($50 signup bonus) , HMB, or One Finance ($50 signup bonus) or even 5% if you hardcore shop for better rates and go on about fulfilling whatever requirement is needed to maintain 5% interest rate. So, the question should never be “is X% APY worth the risk?”, instead it should be “is the extra Y% worth the risk?” If you choose to go down this route, I strongly urge you to enable 2FA as opposed to say SMS verification which is not very secure.

Disclaimer: not a financial advice