The data is in, and the latest Consumer Price Index (CPI) data has exceeded expectations (and not in a good way), with the figures coming in at 7.5% – the highest it’s been since 1982.
Inflation isn’t just a US problem, it’s a global problem. So, wherever you are in the world, chances are your banks aren’t providing the kind of interest rates that will keep up with local inflation levels. Even gold isn’t a safe bet given the figures coming out of the US!
Having said that, the chart does look ripe for a move!
So, we are left with a few alternatives, and at the top of the list is generating pretty impressive yields on stablecoins that can actually increase your purchasing power (even in the US!).
The case for crypto is only growing stronger by the day.
Cash is trash. And digital cash is king.
Founded by CZ in 2017, Binance is the largest exchange in the world in terms of trading volume of cryptocurrencies.
Currently, it offers 7% fixed returns on BUSD and USDT. But here’s the catch: this 7% return is only available for deposits up to 2,000 USDT, and 500 BUSD!
Founded by Alex Mashinsky, Celsius Network is one of the most popular borrowing and lending DeFi platforms around (with the best catchphrase of all: “Unbank yourself”).
Celsius offers its services across a wide range of crypto assets, and currently (rates are liable to change) offers 8.50% annual percentage yield (APY) on USDC, with rewards paid out on a weekly basis.
Next up, we have Gemini-backed BlockFi, which just inches past Celsius with its offering of 8.75% APY on USDC (and again, these rates may vary).
BlockFi has an app available on iOS and Android, and its solution comes with no hidden fees or minimum balance requirements.
The new kid on the block is Notional Finance, an institutional-grade borrowing and lending service with $431 million in Total Value Locked (TVL) and 681 active users.
It’s currently offering 9.03% fixed APY on USDC, ranking slightly above BlockFi at current rates.
With backing from the likes of Coinbase Ventures, Pantera and many other industry giants, Notional Finance offers fixed interest rates (which can’t and won’t change over time), which comes as a major draw during times of market volatility.
Crypto.com has some of the best stablecoin yields in the business, with 10% per annum on USDC, as long as you’re prepared to lock your tokens up for a minimum of 3 months.
The yield percentage goes down if the duration of the lock-in phase is decreased but one can also increase their returns (up to 14%) on stablecoins if they have 40,000 or more CRO (native token of crypto.com) staked on their app.
Nexo is one of the largest and most established DeFi institutions around, with over 3.5 million users around the world (as per their website).
Currently, they are offering a mighty 12% annual percentage rate (APR) on USDC, with rewards paid out daily. That’s almost double the US inflation rate! With an excellent track record, Nexo offers some of the best (and safest) yields around, thanks to its insurance policy of up to $375 million, backed by BitGo & Ledger.
And now for the reigning champion, the undisputed, heavyweight champion of yield-bearing stablecoin protocols: the beating heart of the Terra ecosystem, Anchor Protocol.
At present, it leaves its competitors in the dust.
Currently, Anchor Protocol offers 19.39% APY on UST, the stablecoin of the Terra ecosystem. An unparalleled return!
Beware however, these returns are not guaranteed forever. Recent weeks saw Anchor’s yield reserve dwindling at an alarming rate amidst market-wide volatility.
If it is left to deplete to zero, the ‘holy grail’ of staking in Anchor, the (almost) 20% APY, could be slashed to 10%.
A proposal had been put forward for the Luna Foundation Guard to capitalize the yield reserve by $450 million. Yesterday, Terra founder, Do Kwon, announced that it has passed. The APY will live to see another day!
With the fear of multiple rate hikes looming over the market, and US inflation reaching 7.5% (the highest level in 40 years), everyone (from investors to everyday people) is feeling the pinch. Everything is getting more expensive: food, rent, energy, travel – you name it. And wages aren’t going up fast enough to narrow the gap.
Keeping money in a savings account is like watching a battery drain over time. Banks can’t offer the kinds of interest we need!
That’s why stablecoins are so important, not just for traders, but for any saver looking to stay ahead of the curve and beat inflation.