Stablecoins are cryptocurrencies the value of which is pegged, or tied, to that of another currency, commodity or financial instrument. Stablecoins aim to provide an alternative to the high volatility of the most popular cryptocurrencies including Bitcoin (BTC), which has made such investments less suitable for wide use in transactions.
Fiat-collateralized stablecoins maintain a reserve of a fiat currency (or currencies) such as the U.S. dollar, as collateral assuring the stablecoin's value. Other forms of collateral can include precious metals like gold or silver as well as commodities like crude oil, but most fiat-collateralized stablecoins have reserves of U.S. dollars. Such reserves are maintained by independent custodians and are regularly audited. Tether (USDT) and TrueUSD (TUSD) are popular stablecoins backed by U.S. dollar reserves and denominated at parity to the dollar.
Below are the most effective ones to optimize profits with stablecoins:
CEX Lending is a form of lending (Lending) through centralized exchanges (CEX). APY of some major exchanges in the market can be mentioned as:
AscendEx: 8.3% - 18%;
Stablecoin pools on exchanges, such as Binance, often appear in the Earn section. Although APY is not really high but the advantage of CEX Lending is quite simple and safe, especially for some exchanges with a large number of users like Binance, Gate.io, KuCoin,...
If you have ever traded P2P on major exchanges, you can easily realize that:
When the market does not have sudden fluctuations, the USDT/VND exchange rate will also be relatively stable, usually around 23,400 VND per USDT.
On the contrary, when the market adjusts, many people will actively buy USDT to be ready to "catch the bottom". This is an opportunity to sell USDT at a higher price, possibly up to about 24,000 VND, even 24,500 VND. After a few days when the market has stabilized, you can buy back USDT at the usual price, about 23,400 VND. However, this approach will probably be more effective for those with high capital.
When participating in DeFi Lending, which means Lending in the decentralized market (DeFi), you will put stablecoins on the major Lending platforms in the market, for example Aave to make a profit with an APR of about 6%. Although not high, this is a quite safe option, especially on large Lending platforms such as Aave, Compound, Cream, ...
Farming is a form of profit making by lending or providing liquidity on DeFi protocols. Farming is similar to Staking, but a little more complicated, you need to swap for LP tokens to start staking. Stablecoins on AMMs can exist in many different forms, for example in Saber platform on Solana, stablecoin MIM transferred from Allbridge platform will have the symbol “aeMIM”, UST will have the symbol “atUST”. ..
For Cross-chain Bridges, the protocol locks your assets on one blockchain and issues them on another, thus creating an opportunity for Farming instead of simply Farming on AMMs. and Liquidity Pools. This can be a fairly new concept and is also a good way to make a profit for those who are new to the market.