What interest rates do exchanges offer for deposits in USDC?
Last week, Coinbase, the largest cryptocurrency exchange in the US, announced a new deposit service for the USDC stablecoin at a rate of 4%.
Notably, other crypto lending platforms offer depositors rates of around 8%. For example, Celsius offers an annualized percentage yield (APY) of 8.88% on USDC deposits.
Coinbase can bet that it will pay a lower interest rate on deposits, as it is a large and well-known player in the cryptocurrency industry.
Coinbase’s shares are traded on the open market. This means that the firm is required to publicly disclose financial statements and risk information.
Asset strategist Fundstrat believes that many users will rightfully view Coinbase as a very creditworthy borrower.
Circle provides cryptocurrency financial services. It supports USDC stablecoin and offers APY of around 4% on its USDC Circle Yield product.
Compound Treasury Compound Labs offers about 4% per annum on US dollar deposits, which are later converted to USDC and invested in the Compound’s decentralized lending protocol.
The Compound Treasury website states that the accounts are offered by Compound Prime LLC. Accounts are also offered in part by digital asset firm Fireblocks Inc. and Fireblocks LLC, a monetary services company.
Coinbase may have been right with the timing of the launch of lowering the APY as BlockFi, Ledn, and Matrixport have also lowered the APY for their USDC deposit. And rates on major decentralized finance (DeFi) protocols, according to Defi Rate, dYdX, Aave and yearn.finance, have already reached 0.47%.
In July, BlockFi set an APY for USDC deposits ranging from 5% to 7.5%, depending on the size of the deposits. Ledn and Matrixport interest rates range from 6.5% to 9.5%.
Crypto lenders Nexo and Voyager Digital offer interest rates on their USDC deposits of 12% and 9%, respectively. These firms believe that the higher rates set are justified by their way of managing depositor funds.
However, if the assets of the lenders are in any way impaired, users may lose a significant portion of their funds, since these types of institutions are not regulated in the same way as banks are.