Updated: Apr 26
Get high yield with low risk by holding digital assets
You've probably heard that inflation is off the charts. In fact, it's up over 8%. If you don't understand inflation, the main thing to get is that your money doesn't go as far as it once did. A dollar isn't worth as much as it was a few months ago. That means it won't buy as much as it did in the past.
Here's something just as troubling. If you've got cash in a savings account, the money in that savings account is losing value every day. Think about it. Let's go with that 8% inflation number, and let's say you've got a high yield savings account that pays 0.80% (NOTE: that's less than 1%!). To figure out how much value you're losing, just subtract the interest rate you are getting from the rate of inflation. When you do that with our current scenario, you discover that your money is losing value at a rate of 7.2%. Instead of saving money, you're losing money.
A better way to save (and earn!)
Given the negative value of savings accounts, a growing number of people are moving their hard-earned money into a lower risk cryptocurrency called stablecoin. Stablecoin is a digital asset the value of whcih is backed by (or pegged to) an existing centralized currency, usually the dollar. You probably know that the crypto market can be very, very volatile and you can lose a lot money very quickly. But stablecoins aren't subject to the volatility of the broader crypto market. Their value is stable (as the name indicates). Some of the most popular stablecoins valued by the dollar are True USD (TUSD), Tether, Gemini USD (GUSD), and USDC. And here's the best part. Several crypto exchanges pay very high interest rates to holders of stablecoin.
Earn 6.9% at Gemini
Gemini offers almost 7% on several popular stablecoins including USD Coin (6.36%) and TerraUSD (6.8%). But their best rate right now is on Gemini USD at 6.9% (GUSD). Now those rates are still a little under the current rate of inflation. However, Gemini is a trusted exchange regulated by the New York State Department of Financial Services. Gemini also conducts a monthly audit of its stablecoin and every GUSD issued is backed by one United States dollar held by Gemini.
Earn 9.5% at Abra
Another popular platform that offers high interest returns when you hold stablecoins is Abra. Abra pays 7.5% when you hold True USD (TUSD) and USD Coin (USDC). That interest is paid in-kind on the token you are holding. They also have a bonus program for people who hold CPRX. CPRX is not a stablecoin and is thus subject to volatility, but if you hold 20 these coins, they'll pay bonus interest on your stablecoin holdings. So, if you hold 20 CPRX, you get 1.1% bonus interest. If you hold 200 CPRX, you get 1.25%. 500 CPRX gets you a 1.5% bonus. And 5,000 gets you a 2% bonus. So, if you hold True USD and 5,000 CPRX (about $165 right now), you can earn 9.5% on your money. You'll not only account for inflation, you'll money will actually grow, too.
To put things in perspective, people feel like they're doing well in the stock market if their returns average 8% a year. Stablecoins provide similar returns (and sometimes better!) with far less risk than you'll encounter in the stock market. And given the frequent bouts of volatility in stocks, a "stable" investment can sound really good.
Now it's your turn! Have you invested in stablecoins or other crypto? If so, leave a comment and tell us your favorite coin. Are you investing in coins with potential to appreciate? Or are you taking the safer route and investing in high yield stablecoins? Leave a comment and tell us about your investment strategy.
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