DAI Staking Guide: Earn Interest on DAI
Stablecoins like DAI, now Sky USD (USDS), have become mainstays in the Web3 and cryptocurrency market. Stablecoins are used to efficiently make global remittances and payments, supplement crypto trading, and yield farm in DeFi. Due to their stability and backing, these stablecoins have achieved serious adoption in Web3, allowing them to become stable internet money and competitors to fiat currency.
The nature of many stablecoins, however, is centralized and prone to government censorship. The SEC lawsuit against Paxos for the issuance of BUSD has made users realize the importance of having a stable store of value that is not easily censored. One such invention would be DAI, a crypto-native stablecoin built by open-source project Sky Money (prev. MakerDAO), an Ethereum-based protocol founded by Rune Christensen.
If you’re looking for an easy alternative to DAI, consider OUSD. It’s a yield-bearing stablecoin protocol that utilizes Morpho and Curve to offer a 3.5% trailing 30-day APY on its stablecoin reserves at time of writing.
If you’re set on using DAI or want to learn more about it, keep reading.
What is DAI?
Dai is a decentralized crypto-collateralized stablecoin created on the Ethereum blockchain. To mint Dai tokens, users must first deposit collateral such as ETH or WBTC onto the Maker protocol. The smart contract will then calculate the value of the collateral posted and allow the user to mint a percentage of that value in Dai. The contract essentially lends an amount of Dai to the user, charging a variable interest rate set by voters of the protocol.
The DeFi protocol ensures that it stays solvent by liquidating collateral if it goes under a certain loan-to-value threshold. For example, a user would deposit $1500 worth of ETH to mint 1000 DAI when the contract requires a loan-to-value ratio up to 80%. If the collateral value drops to $1250, the protocol would start liquidating the ETH for Dai, giving the user back any leftover ETH and charging a liquidation fee.
The smart contract’s liquidation system and code security have been proven to be robust, weathering crypto’s infamous market volatility and adversarial environment.
Where to Stake DAI
MakerDAO provides a DAI savings vault that allows holders to earn yield from interest paid by borrowers. Introduced as a mechanic to stabilize Dai’s peg to the US Dollar, the protocol is based on supply and demand. It increases interest rates when Dai is under $1 to encourage users to buy Dai, and it decreases interest rates when demand for Dai is too high.
Since DAI is an ERC-20 token, it can be used on numerous different protocols built on Ethereum and Ethereum Virtual Machine blockchains like Avalanche and Polygon. There are limitless strategies and protocols that offer yields on crypto assets, giving DAI stablecoin holders the freedom to customize their portfolio according to their goals and risk profiles.
High yield strategies are generally recommended for more advanced Web3 investors, as they are generally associated with elevated risks. The majority of capital is currently deployed on Ethereum, on DeFi blue-chips that are regarded as the safest platforms to earn interest on digital assets. Some of these blue-chips include Aave, Compound, Convex, and Curve.
DAI Staking Rates
Origin Dollar: 3.5%
Origin Dollar (OUSD) is a yield-bearing stablecoin protocol that utilizes Morpho, Curve, and USDC to offer a 3.5% trailing 30-day APY on its stablecoin reserves at time of writing. OUSD greatly enhances yield for holders by using its proprietary strategies built on top of the DeFi blue-chips listed above, allowing them to earn market-beating yields in TradFi and DeFi. Start using OUSD here.
Aave and Morpho: 2.8% to 3.3%
Aave and Morpho are DeFi lending markets that allow users to lend and borrow digital assets without fixed terms. Similar to Maker, borrowers on these platforms would have to post collateral before borrowing other assets. The interest rate received on stablecoins and other assets is determined algorithmically, mainly based on the ratio of borrowed vs lent capital in the liquidity pool.
Curve and Convex: 0.7% to 5%
Curve is a decentralized crypto exchange that facilitates trading of digital assets. Investors can stake capital on Curve, allowing it to use its market making algorithm to quote prices for traders. Whenever a trade occurs, Curve charges a fee which is split between stakers and the protocol. Stakers also receive CRV rewards from Curve.
APY varies based on the trading volume and which pool liquidity providers deposit DAI to. Pools require multiple assets, typically other stablecoins, and higher yields generally come with higher risk.
Sky USD: 4.5% to 6.25%
Think of USDS as “DAI 2.0.” Just like DAI, it has decentralized governance and is crypto-collateralized, so you never rely on a bank or a single company to hold reserves or earn rewards. USDS currently offers 4.5% via the Sky Savings Rate (SSR) and 6.25% via Sky Token Rewards. For more info, check out our write up on how to earn interest on Sky USD.
Best DAI Staking Rewards: USDS and OUSD
For investors seeking a stable, on-chain way to earn yield, Sky USD (USDS) offers a compelling upgrade path from DAI, and is essentially “Dai 2.0”. Built by Sky Protocol, USDS maintains DAI’s decentralization and crypto-collateralization—but layers in real-time yield through the Sky Savings Rate (SSR) and bonus SKY token rewards.
For those who want maximum convenience, Origin Dollar (OUSD) also puts USDC to work automatically. You just hold OUSD in your wallet to start earning — no staking, no lockups, and yield auto-compounds daily.
Whether you want full control with USDS or a hands-off approach with OUSD, both options let you earn better-than-average stablecoin yields while staying fully on-chain and transparent.
How to Earn Interest with OUSD
OUSD is built for those who want DeFi yield without the hassle. By simply holding OUSD in your Web3 wallet, you start earning interest automatically, without needing to stake, claim, or manage multiple protocols. OUSD integrates with strategies that use USDC from Circle to offer some of the best stablecoin yields available.
If you’re looking for a simple, secure way to grow your stablecoins, OUSD is the streamlined option for earning yield from USDS and beyond.
To start earning interest with OUSD, users simply hold it in their Web3 wallets to directly receive daily interest accruals. It’s the easiest way to tap into stablecoin yields without manually managing positions or tracking multiple reward streams. Simply obtain OUSD via exchanges such as Uniswap, Kucoin, or Gate, or directly via OUSD.com, no staking or lock ups required.
FAQs
What makes DAI different from other stablecoins like USDT or USDC?
DAI is unique as it is a decentralized crypto-collateralized stablecoin, maintaining its price stability through the Ethereum blockchain, not centralized reserves. This method secures its value against the price of DAI without relying on traditional financial systems.
Where can I earn the highest interest on DAI staking?
For the best yields, consider DeFi platforms like Aave, Compound, and Origin Dollar (OUSD). OUSD is especially noteworthy in decentralized finance (DeFi) for leveraging multiple strategies to offer competitive and safe returns on USDC investments.
Is staking DAI safe, and how can I minimize risks?
Staking DAI on reputable platforms such as Aave, Compound, and MakerDAO's DAI Savings Vault is generally safe. To minimize risks, diversify your investments across various protocols and stay updated on the security practices and performance of these DeFi platforms.
