Want to jump straight to the answer? The best place to earn interest on DAI is through Origin Dollar OUSD.
Stablecoins like Tether (USDT) and USD Coin (USDC) 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 these 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 MakerDAO, an ethereum-based protocol founded by Rune Christensen.
Dai is a decentralized crypto-collateralized stablecoin created on the Ethereum blockchain. To mint the DAI stablecoin, 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.
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 token 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.
Origin Dollar (OUSD) is a yield-bearing stablecoin protocol that utilizes Compound, Curve, Aave, and Convex to historically earn over 10% APY on its stablecoin reserves. 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.
As explained before, the savings account or savings vault is a smart contract that distributes yield to Dai stakers earning interest from borrowers. MakerDAO has currently set the savings rate to 1%, but has historically ranged between 0.25% to 8%.
Aave and Compound are DeFi lending platforms 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 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.
Convex is another application built on top of Curve that helps stakers optimize earning rewards from their CRV.
Retail and beginner Web3 investors may be attracted by centralized platforms that allow you to stake your crypto for double digit yields. Though Celsius and Voyager have shown these platforms may potentially end up insolvent, certain individuals with high risk tolerance may find them useful. Risk-averse investors should ponder how these platforms generate such yield, when many stocks and equities fail to achieve such performance.
For such investors, OUSD is highly recommended due to its transparency, market-neutral strategies, and competitive interest rates. OUSD’s stablecoin reserves and strategies can be actively monitored 24/7, as the protocol is built on Ethereum. Unlike platforms which may take advantage of their opacity to defraud users, OUSD is built with radical transparency and the users’ wellbeing in mind.
OUSD holders can enjoy passive income while the protocol actively rebalances and creates new strategies to ensure yields stay competitive and safe.
To start earning interest with OUSD, users simply hold it in their Web3 wallets to directly receive daily interest accruals. Simply obtain OUSD via exchanges such as Uniswap, Kucoin, or Gate, or directly via the Origin dapp. No staking or lock ups required.
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 DAI 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.
Tether (USDT) is a fully collateralized stablecoin issued by Tether Ltd. USDT is pegged to the US dollar, reserved by cash, short term deposits, corporate bonds, secured loans, and other cash equivalents. Tether publishes quarterly reports to show all USDT tokens are backed by its equivalent value.
As one of the earliest stablecoins, USDT achieved popularity by acting as a stable store of value for traders escaping crypto market volatility. It’s also used by investors in countries with hyperinflation or tight capital controls of fiat currency.
USDT’s utility, market cap, and trading volume have also led to integrations on crypto exchanges and DeFi, allowing users to earn interest staking USDT.
But how can you start earning interest on USDT? And where is the best place to stake it? We’ll explore how you can earn these rewards with staking and lending protocols in the sections below.
Those wondering how to stake USDT or earn USDT interest need to understand that crypto staking is a term that can mean different things. Originally, it meant putting your crypto at “stake” to help verify network transactions and earn staking rewards. That’s how the process usually works with proof-of-stake crypto assets like Ethereum. But now, many people use the term to mean earning compound interest on your crypto, similar to how interest works with savings accounts or other traditional financial products.
Investors earn interest on Tether (USDT) by doing things like lending, market making, or trading. Some crypto platforms do these activities for you and give you a part of the earnings. However, some platforms took risks with people’s money behind the scenes, leading to problems in 2022.
Because of this, many people now prefer DeFi staking options. These are more transparent and often safer. If you’re a beginner, here’s some information to help you learn how to stake USDT in DeFi.
To use USDT in DeFi, users need to have a crypto wallet. It is generally recommended to use Metamask, coupled with a Ledger hardware wallet for maximum security.
To add USDT to Metamask Wallet, simply start by going to “assets”, scrolling down to click “import tokens”, adding “custom token”, and filling in USDT’s contract address. USDT is now added to your Metamask wallet, and its balance will be shown beside its token symbol if any was received by the address.
“Where do I stake USDT?” is one of the most frequently asked questions by those interested in earning daily interest on USDT. The answer comes down to your unique financial situation and objectives. But here are a few rules of thumb to keep in mind.
There are numerous places to stake USDT and earn interest on your holdings. You can stake Tether on different networks like Ethereum or Binance Smart Chain, using applications like Aave or Compound.
Since anyone can create a blockchain and smart contract application, the options are essentially infinite. However, Ethereum and certain applications built on it are regarded as the safest DeFi platforms to start earning higher rates on USDT, and even explore USDT lending. These platforms include Aave, Convex, and Curve.
If you’re wondering where to earn interest on USDT, here are the best platforms and their staking rates:
Origin Dollar (OUSD) uses strategies built on top of Curve, MakerDAO, and Morpho. As of writing, Origin Dollar has a 30-day trailing APY of 4%. By using market-making strategies and peer-to-peer loans, OUSD earns more than the average DeFi yield.
Aave is a smart contract app that lets users lend and borrow digital assets. Borrowers put up collateral on this platform, which allows them to borrow other assets at changing interest rates or USDT staking rates.
Curve is a decentralized exchange allowing traders to buy and sell assets on the platform. Liquidity providers can stake capital with Curve, allowing it to quote prices for traders. Stakers would then receive yield from trading fees and CRV rewards to start earning yield. Convex is a protocol built on top of Curve, helping users optimize their CRV rewards.
There are many Web3 applications that let you earn interest on your USDT with different rates and risks. Some offer very high interest rates, like double-digit APYs, especially with algorithmic stablecoins. However, these strategies come with significantly more risks.
Everyone has different risk levels and goals, so there's no one-size-fits-all strategy for the best USDT staking. However, OUSD is a great choice for people who want to earn passive income with lower risk. It’s recommended for users who want to grow their assets without taking on too much risk.
To earn interest with OUSD, users simply hold it in their Web3 wallets to receive daily interest accruals directly. In other words, if you’re wondering how to earn interest with OUSD…
Simply swap USDT or other stablecoins to OUSD via exchanges such as Uniswap, Kucoin, or Gate, or directly via this link, no staking or lockup periods required.
What are the best DeFi platforms to stake USDT for earning interest?
The best DeFi platforms for staking USDT include Aave, Morpho, and Origin Protocol, known for their robust security measures and transparent operations. These platforms offer variable interest rates, typically ranging from 2% to 8%.
How does staking USDT on DeFi platforms differ from staking on centralized crypto platforms?
Staking USDT on DeFi platforms generally offers greater transparency and security compared to centralized crypto platforms. DeFi protocols operate with smart contracts that provide clear visibility into all transactions. Since they’re not controlled by any single entity, there’s also less counterparty risk and more trust among users.
Ethereum is a foundational blockchain that ushered in the era of decentralized finance (DeFi). DeFi is revolutionizing how financial services are conceived and delivered. It’s free from central authority and accessible to anyone with an internet connection.
This ecosystem on Ethereum has been particularly instrumental in enabling various financial activities, including lending, borrowing, trading. Yield farming is particularly attractive, as it lets users earn returns on their crypto assets.
As DeFi continues to grow, it’s important to understand the role yield farming plays.
Below, we’ll delve into the mechanics of DeFi yield protocols on Ethereum and explore different DeFi activities. We’ll also highlight some of the biggest platforms contributing to the ecosystem's success.
DeFi yield farming is a powerful concept. It allows cryptocurrency holders to earn returns by leveraging their assets.
Essentially, yield farming involves staking or lending digital assets in exchange for rewards. Rewards are typically in the form of transaction fees or interest from the borrowed funds.
There are two major yield farming mechanisms you should know:
One important part of modern yield farming is using layer 2 solutions like Arbitrum to make transactions faster and cheaper. Origin Ether (OETH) yield farmers, for instance, can leverage ARB incentives on Arbitrum to maximize their returns.
This boosts transaction efficiency and opens up more lucrative farming opportunities due to enhanced scalability and reduced gas fees.
There are also a few different DeFi protocols on Ethereum. Each is designed to fulfill specific financial functions that traditionally required traditional financial institutions.
The protocols have grown in market cap and user activity, partly due to staking and liquidity provision becoming more popular.
As DeFi matures, it attracts more users by offering features that rival TradFi (traditional finance systems). DeFi’s greater transparency and fewer intermediaries continues to attract users which grows the overall market cap of the space.
An easy way to visualize this market cap growth is just by tracking the market cap of ETH:
There are three popular DeFi protocol types:
Let’s take a closer look at each of these in the sections below.
DeFi yield protocols are designed to maximize returns of staked or lent assets.
To do so, they often combine DeFi activities like staking, liquidity provision, and yield farming. Many of them utilize automated strategies to adjust based on market conditions and optimize the returns.
They may also offer other incentives like governance tokens or boosted yield rates for early adopters or long-term stakers.
DeFi lending protocols allow users to lend their digital assets in return for interest payments, similar to a traditional bank but often with higher yields.
To manage risk, borrowers must usually provide collateral exceeding the value of their loan, safeguarding lenders against default.
DEXs allow users to trade crypto directly between each other (peer-to-peer) without the need for a centralized intermediary.
This setup enhances security and privacy while reducing counterparty risks. Users maintain control of their private keys and thus their assets, unlike with centralized exchanges. DEXs also support a wide array of tokens, including those that may not be available on centralized platforms.
Some of the most prominent DeFi protocols on Ethereum for yielding and lending include the following:
Lido Finance offers liquid staking solutions that enable users to earn staking rewards without locking up their assets.
This flexibility allows for greater liquidity compared to traditional staking methods.
EigenLayer significantly boosts new networks’ scalability and utility by introducing reusable verification and computation layers. While a relatively new protocol, it’s already accrued over $15 billion in deposits.
These innovations enhance the efficiency and flexibility of the Ethereum blockchain.
OETH excels in creating automated yield strategies across multiple DeFi platforms, now including faster and cheaper transactions on layer 2 solutions like Arbitrum.
This expansion aims to optimize returns and improve user experience.
Pendle Finance introduces a novel approach to DeFi by allowing the trading of tokenized future yield.
This enables users to manage and speculate on the future yield of their investments in a decentralized manner.
Decentralized Finance (DeFi) offers many advantages over TradFi, such as openness, inclusivity, and lack of central control. But it’s important to know the risks of yield farming and DeFi.
DeFi platforms operate on technology that's still relatively new and rapidly evolving. This means they face risks like smart contract vulnerabilities, market volatility, and liquidity issues. The decentralized nature also means less regulatory oversight, which can increase the chance of fraud and scams.
To mitigate these risks, some DeFi protocols get regular audits by independent firms. They may also use open-source code for transparency, and incorporate governance systems.
Origin Ether (OETH), for instance, prioritizes user security by ensuring all operations are transparent and verifiable on the blockchain.
OETH uses different strategies to reduce risks and increase returns. They also use well-tested DeFi protocols to make investments safer. This approach helps protect investors' funds while providing competitive yields.
While DeFi inherently carries risks, informed decisions and choosing protocols with strong security measures can greatly enhance safety. If you want to try DeFi, start with established protocols like Origin Ether, which explains its proof of yield.
What is yield farming in DeFi?
Yield farming work in DeFi involves staking or lending crypto to earn more crypto as rewards. It's a way to make high returns on your assets. The process involves using various DeFi protocols that offer these incentives for liquidity provision or staking.
What are automated market makers?
Automated market makers (AMMs) enable liquidity provision and trading in real time, unlike traditional market makers. This innovation increases the total value locked within some platforms, but also exposes liquidity providers to impermanent loss. This can occur when the price of tokens in a pool changes compared to when they were deposited. Despite this risk, the efficiency of AMMs continues to attract interest in the DeFi sector.
Where does DeFi Yield come from?
DeFi yields come from transaction fees, interest payments, and token rewards from DeFi protocols (these include AAVE and others). These yields are generated as incentives for liquidity providers and stakers.
Stablecoins are digital currencies pegged to more stable assets like fiat currencies or, gold, or even other cryptocurrencies. As the name implies, they can offer stability in an otherwise volatile market.
Their added stability makes stablecoins attractive to crypto users and investors, especially for payments and financial transactions.
There are a few different types of stablecoins, and each has unique characteristics. We’ll break them down so you can understand the space effectively.
Stablecoins are typically categorized based on the type of collateral that backs them. The two most popular types or categories are fiat collateralized and crypto collateralized stablecoins.
Here’s what you need to know about their key differences.
These are the most straightforward and widely used type of stablecoins. They are backed by reserves of regular currency, such as the US dollar, held by a central issuer or bank.
Each stablecoin is supported by a reserve of a specific currency to maintain its value in line with the fiat currency. This direct backing makes fiat-collateralized stablecoins highly stable and trustworthy.
The most popular fiat collateralized stablecoins are USDT (Tether) and USDC (USD Coin).
Unlike their fiat-backed counterparts, crypto collateralized stablecoins are backed by other cryptocurrencies. They use over-collateralization to keep their value stable, as the reserve cryptocurrency can be unpredictable. In other words, the value of the crypto held in reserve exceeds the value of the stablecoins issued.
This type of stablecoin can be more decentralized and transparent, but also more complex and susceptible to market fluctuations.
A well-known example of this type of stablecoin is DAI, which is managed by MakerDAO.
Stablecoins continue to gain traction thanks to their versatility, utility, and other benefits. But there are also a few more specific benefits that explain why they’re so widely adopted.
Here are a few of the key advantages of stablecoins:
Stablecoins are a reliable option for purchasing and selling items. They maintain a consistent value, eliminating concerns about price fluctuations. This stability makes transactions more predictable and secure. You can confidently use stablecoins without the risk of sudden changes in value.
Many vendors are still hesitant to accept BTC or ETH as payment because of their volatility. Since stablecoins are less volatile, many merchants will accept them for transactions.
They’re also used extensively in decentralized finance (DeFi) as trading pairs.
For crypto traders and investors, stablecoins offer a safe haven during periods of high market volatility.
They can easily change their risky assets into stablecoins to keep their value safe. This gives them time to plan their next steps without worrying about sudden price changes.
This way, investors can keep their money in the “crypto ecosystem” more broadly, but minimize volatility and drawdowns.
Lastly, some stablecoins are made to help holders earn interest by working with DeFi platforms. This allows investors to grow their assets without directly engaging in high-risk trading activities.
We’ll explore some yield-generating stablecoins below.
Fiat-backed stablecoins are supported by traditional currency reserves held by a trusted institution. The reserves ensure that each stablecoin maintains its peg to specific fiat currencies like the US dollar.
Tether (USDT) is one of the oldest and most widely used stablecoins. It’s tied to the U.S. dollar and has many users because it was adopted early and works with big exchanges.
Despite concerns over transparency and regulatory scrutiny, USDT remains a popular option due to liquidity, price stability, and widespread acceptance.
Tether also offers commodity-backed stablecoins, like Tether Gold (XAUT), which are tied to tangible assets like precious metals. While less popular, these are another option for stability outside of traditional central banking systems.
USD Coin (USDC), issued by Circle and Coinbase through the Centre Consortium, is another leading fiat-backed stablecoin.
USDC is always worth one U.S. dollar because its reserves are checked regularly by outside auditors.
Its transparent operation and regulatory compliance have helped it gain significant market share as a trustworthy stablecoin.
Note: One common limitation of these fiat-backed stablecoins is that they typically don’t generate yield on their own. Instead, they’re often integrated into DeFi protocols, where users can stake or lend them to earn passive returns.
Unlike fiat-backed stablecoins, crypto-backed stablecoins use digital assets as collateral, which introduces a higher degree of complexity but also decentralization and transparency.
Let’s look at two types of stablecoins backed by crypto:
MakerDAO's DAI is a popular stablecoin backed by cryptocurrency. It uses smart contracts to keep its value equal to the U.S. dollar. Users put ether or other cryptocurrencies as collateral in a smart contract to get DAI.
To reduce risk, DAI requires users to deposit extra collateral compared to the stablecoin they want to create. This mechanism ensures that the stablecoin remains pegged to the U.S. dollar while minimizing the risks of market fluctuations.
Origin Dollar (OUSD) takes a novel approach by combining the transparency of crypto-backed stablecoins with yield generation. OUSD is fully collateralized by stablecoins like USDT, USDC, and DAI.
Unlike other stablecoins, OUSD continuously earns yield for holders through a rebasing mechanism that automatically distributes yield directly into wallets holding OUSD. The process leverages DeFi protocols to maximize returns, allowing holders to benefit from passive yield generation while maintaining a stable value.
You can learn more about OUSD’s governance here.
Another option worth discussing is algorithmic stablecoins. They’re designed to maintain their value through smart contracts that automatically expand or contract their supply based on market demand.
Unlike fiat or crypto-backed stablecoins, these rely on algorithms rather than collateral to stabilize their value.
However, the absence of collateral makes algorithmic stablecoins inherently riskier than other types. If the algorithm can’t adjust supply enough to meet market demand, the stablecoin could lose its peg, leading to significant volatility.
This risk was evident in high-profile cases like TerraUSD (UST), which de-pegged and collapsed, leaving investors with massive losses. Cases like that underscore the importance of collateralization. Having assets to back stablecoins ensures a more robust mechanism to maintain stability even during market volatility. Collateralized stablecoins offer a safety net that purely algorithmic models lack.
Origin Dollar (OUSD) is designed to provide both stability and passive income for its holders. Using a rebasing mechanism, OUSD automatically distributes yield directly to holders' wallets. The number of tokens increases over time based on the returns from DeFi strategies.
Unlike other stablecoins, OUSD doesn't require holders to reinvest manually, making it an effortless way to earn compounding interest.
The stablecoin is fully collateralized by a mix of leading stablecoins like USDT, USDC, and DAI. This diversified basket ensures strong security and stability while tapping into different yield-generating opportunities.
By leveraging reputable DeFi protocols, OUSD strategically places its pooled assets in lending and yield farming platforms that provide attractive returns while managing risk. Holders can earn automatic yield without the hassle of managing multiple platforms.
It’s an innovative stablecoin option for those seeking a simple, stable, yield-bearing asset.
What are the most common types of stablecoins?
The most common types of stablecoins are fiat-collateralized and crypto-collateralized stablecoins. Fiat-collateralized stablecoins are backed by traditional currency reserves. Crypto-collateralized stablecoins use digital assets as collateral.
How does Origin Dollar (OUSD) differ from other stablecoins?
Origin Dollar (OUSD) stands out because it automatically generates yield for holders through a rebasing mechanism. It's also fully collateralized by a basket of stablecoins like USDT, USDC, and DAI. It provides diversification and stability while maximizing returns through integration with DeFi protocols.
Is it safe to invest in stablecoins?
Popular stablecoins generally offer more stability than other cryptocurrencies due to their peg to fiat or digital assets. However, risks still exist, including smart contract vulnerabilities, regulatory changes, and market volatility. Choosing well-established, fully audited stablecoins like OUSD can help mitigate these risks.
Stablecoins have risen from obscurity to a major sector in the cryptocurrency market. This type of cryptocurrency denotes any token pegged to a cash equivalent.
Stablecoins are a type of cryptocurrency that can represent a wide range of assets, from fiat currency to precious metals like gold. However, the market is largely dominated by stablecoins pegged to currency like the US Dollar. This is due to its positioning as the global reserve currency used by central banks.
The global stablecoin sector now boasts a market capitalization in excess of $130B. This meteoric growth can be attributed to the unique, diverse utility offered by these tokens.
There are a number of designs that stablecoins can use to maintain their dollar peg.
Fully collateralized stablecoins denote projects that are 1-to-1 backed by reserve assets. While these assets can vary, they generally comprise USD dollars or Dollar-equivalents, like bonds.
This means that in theory, holders can mint or redeem their stables in exchange for USD at any point in time.
While this structure is secure, it can be highly centralized and prone to an attack on their single point of failure. Algorithmic stablecoins emerged to create native decentralized alternatives. These are meant to maintain a dollar peg exclusively through coded supply and demand. At present, attempts to create algo stablecoins have largely failed, draining tremendous value from the space.
Stablecoins have enjoyed significant adoption due to their broad use cases.
The crypto space has become infamous for its highly volatile markets. In contrast to other cryptocurrencies, stablecoins should maintain a set value by design. This means that investors can use stablecoins to protect their capital against directional volatility.
Beyond offering investors a place to store their capital, stables have carved out a niche as a popular medium of exchange. While traditional banks take multiple days to execute cross-border transactions, stablecoins offer a mechanism to transfer the same value rapidly. This is particularly important in the context of an increasingly globalized world.
Achieving mass adoption for cryptocurrency is a complex undertaking. Stablecoins play a crucial role by acting as the on and off-ramp for many investors in the space. These rails garner billions of dollars in daily volume as people move their capital.
Stablecoins also function as a vital measure of value. In addition to BTC and ETH, stablecoins are commonly used in trading pairs on centralized exchanges.
Some may argue that the DeFi space would be vastly different without stablecoins. Dollar-pegged stables have formed the lifeblood of on-chain yield generation since 2020’s DeFi summer. Stablecoins are a staple of all aspects of DeFi, from lending to liquidity provision.
Stablecoins need to earn the trust of the market in order to become popular. Following the fall of Terra Luna and other algorithmic stablecoins, participants place an increased emphasis on transparency for popular stablecoins.
Primarily, investors need to see that a stablecoin is fully collateralized – backed 100% by a basket of reserves. The strength of this backing, and additional utility offered by a stablecoin, all contribute to its overall usage and popularity.
Tether (USDT) is the longest standing and most prominent stablecoin at present. The fiat backed stablecoin launched in 2014, and is the result of joint efforts from startup Realcoin and crypto exchange Bitfinex.
Tether uses a combination of cash, investments, secured loans, and US Treasury bonds as reserves. The company issues quarterly reports on its current reserves.
Redeeming USDT for cash is not a straightforward process. Users may only redeem values >100K USDT, and still need to pay additional fees in the process.
USDT has become a popular choice in countries wracked by spiraling inflation, and is commonly used to crowdfund disaster relief efforts.
USDT remains the largest stablecoin by market cap, with a current valuation of over $79B.
USD Coin (USDC) has emerged as Tether’s most significant competitor in recent years. USDC is issued by US-based blockchain firm Circle, and pegged to the US dollar. The protocol uses a mix of US Treasury bonds and cash as reserves.
Circle publishes monthly attestations detailing their reserves in a bid to bolster transparency.
USDC is the top stablecoin in DeFi, enjoying extensive use in peer-to-peer payments and investment strategies.
MakerDAO’s DAI is the most popular decentralized stablecoin to date. Unlike USDC and USDT, DAI maintains its dollar peg with a basket of crypto and traditional asset reserves. Rather than being algorithmic, DAI is over collateralized. The protocol is mainly backed by USDC and ETH, giving it a current collateralization of 179%.
While the protocol was initially backed exclusively by ETH, USDC was incorporated to bolster price stability.
The crypto-backed stablecoin, or crypto collateralized stablecoin, has enjoyed consistent adoption since launching in 2017.
Origin Dollar (OUSD) is a novel stablecoin with unique capabilities. OUSD has been developed to make stablecoin investing more seamless and encourage mass adoption.
OUSD is fully collateralized by reserves of USDT, USDC, and DAI. These reserves are put to work in carefully tailored DeFi strategies to generate yield for holders.
Importantly, OUSD removes the pain points from traditional staking by removing the need to lock up capital. OUSD holders are free to use their tokens as per usual, with yield being directly distributed to holders’ wallets.
In contrast to issuers like Circle and Tether, Origin has made OUSD entirely transparent on-chain. All of OUSD’s smart contracts are open source, allowing anyone to monitor the code and propose upgrades. Users can monitor all of OUSD’s key metrics by visiting the protocol’s analytics reports.
Additionally, OUSD’s governance is decentralized. Holders of the ecosystem’s governance token, OGV, can propose and vote on protocol decisions. OUSD’s strategies are determined via a weekly governance vote.
At present, OUSD offers the best risk-adjusted stablecoin yields in DeFi. The rewards and ease of use offered by OUSD make it a prime candidate for further disruption.
There’s a wealth of options to choose from when it comes to stablecoin investing. Beyond the projects mentioned above, there are many other competitors, including Liquity Dollar (LUSD) and new stablecoins being issued by Aave and Curve.
On a high level, it’s important to investigate the strength of a project’s reserves. At present, it’s a good idea to use fully collateralized stables. Given their track record, algorithmic stablecoins should be treated with the utmost caution.
It’s also good to keep in mind that you can easily switch between stablecoins depending on your needs. USDC and USDT may provide good places to store capital. However, you could also opt to earn interest on these idle funds by placing them in a protocol like OUSD.
This sector is renowned for its flexibility, and there are endless ways to harness its full potential. With stablecoins only set to grow in coming years, understanding what the space offers can give you a valuable edge.
What distinguishes a fully collateralized stablecoin from an algorithmic stablecoin?
Fully collateralized stablecoins, like Binance USD (BUSD), are backed by tangible assets such as cash or bonds, ensuring stability. Algorithmic stablecoins, on the other hand, adjust their supply using code, which introduces more risk.
How do stablecoins like USDT and USDC maintain their peg to the dollar?
Stablecoins such as USDT and USDC maintain their value by holding reserves equivalent to the issued tokens, which are frequently audited to ensure transparency.
What makes Origin Dollar (OUSD) unique among stablecoins for earning yields?
OUSD stands out by using assets like dai DAI, USDT, and USDC to automatically generate and distribute yields to holders' wallets, simplifying the process of earning passive income.
In September 2022, Ethereum successfully transitioned from its Proof of Work consensus mechanism to Proof of Stake. Dubbed ‘The Merge,’ Ethereum’s transition to Proof of Stake laid the foundation for more robust security, better scalability, and a plethora of new Ethereum staking options for investors to take advantage of.
Proof of Work, popularized by Bitcoin, is a consensus mechanism that uses hash power from cryptocurrency miners to secure transactions on the blockchain. This process requires large amounts of energy and specialized computer hardware to mine cryptocurrency.
Conversely, Proof of Stake uses locked capital to incentivize proper behavior to secure blockchains. Instead of consuming energy and computer hardware to earn cryptocurrency, Proof of Stake uses staked funds as collateral to incentivize stakers to work in the best interest of the network.
Ethereum staking works by locking funds on Ethereum’s beacon chain in exchange for staking rewards. Rewards are generated from transaction fees and token emissions, typically ranging from 3% to 5%.
Direct Ethereum staking requires significant capital (32 ETH), as well as technical knowledge and hardware requirements. By staking ETH directly, you aid in Ethereum’s decentralization and potentially earn higher rewards than from liquid staking.
Such a high barrier to entry makes it difficult for most individuals to participate in ETH staking directly. Fortunately, liquid staking services have emerged as a far more accessible alternative for ordinary users.
Liquid staking protocols use novel innovations to drastically reduce the barriers to ETH staking. With this approach, users can stake any amount of ETH to begin earning staking rewards.
The process is far less intimidating than its name suggests:
Issuing LSTs allows users to earn from ETH staking without needing to sacrifice control of their capital. Users can participate without needing to lock up capital for a predetermined amount of time. Further, those who put their LSTs to work via other DeFi protocols are able to compound their returns.
The inclusive nature of liquid staking tokens has seen the sector grow rapidly in DeFi. It’s now the largest sector of DeFi by total value locked, with over $44 billion in assets deposited to liquid staking protocols.
Ethereum staking rewards vary between protocols. However, users can generally expect to earn yields in the region of 3 - 5%.
As of May 2024, Lido’s stETH offers yields of 2.9%. Rocket Pool’s rETH currently delivers 2.8% APY. Meanwhile, Frax Finance’s sfrxETH offers 3.1% APY.
In comparison, running your own validator node generates around 3.7% APY. While this figure is substantially higher, it’s important to remember that running a node requires a 32 ETH investment. If you’re looking to earn higher staking rewards without maintaining your own validator, you may opt for a liquid staking aggregator, such as OETH.
Origin Ether (OETH) is the flagship ETH liquid staking token offered by Origin Protocol. OETH harnesses Beacon Chain staking, enhancing yield through SSV incentives and audited DeFi strategies.
Even in the face of compressing staking yield, the protocol still delivers 4% trailing 30-day APY. This means that stakers enjoy around 30% higher yield than what’s currently offered by Lido’s stETH.
OETH is fully backed by reserves of ETH, which can be tracked on the Origin Ether analytics page. Users can deposit any amount of ETH in order to mint an equivalent value of OETH, which follows the price of ETH.
Traders can use OETH like any other token, ensuring that users retain full control of their capital. OETH’s unique design also offers an impressively seamless user experience. The protocol directly disburses yield to holders’ wallets, with no manual compounding required. As a result, users enjoy time savings and avoid excessive transaction fees.
OETH is able to offer outsized APYs thanks to its meticulous strategies.
One of OETH’s primary strategies utilizes reserves to provide liquidity to pools on Curve, the largest decentralized exchange in DeFi. Supplied liquidity generates yield in the form of trading fees.
As this is executed via Convex Finance, these reserves also earn rewards tokens in the form of CVX.
By staking OGN, users receive voting and economic power in the form of xOGN. This allows holders to propose changes and vote weekly on fund allocations. At the same time, users enjoy double-digit APYs on their staked OGN.
As with any investment, staking Ethereum carries risks. It’s important to do extensive research before deciding to pursue staking.
Direct Ethereum staking is best suited for users with resources and high technical proficiency. Thankfully, liquid staking makes this process far more painless.
With services like OETH, users can retain control of their investment without sacrificing yield. In the case of OETH, this yield outpaces pure staking and other LST protocols.
The amount of ETH staked to the network has steadily grown despite broader uncertainty, evidencing the sector’s strength. In recent months, the share of ETH supply staked to the network has risen from 20% to over 25%. To put this in perspective, most proof-of-stake chains see upwards of 40% of their tokens staked.
As ETH is now deflationary, the race to accumulate has never been more urgent. Dive into the Origin Ether ecosystem and learn how you can stack ETH faster: app.oeth.com
Every month, the Origin team publishes an update to our token holders and the broader community. We hope you enjoy our April 2024 edition.
The OGV-OGN merger, new products, and new staking mechanics – get the scoop on what went down in April.
Origin’s developments in April laid the foundation for the protocol’s new trajectory in multichain yield products. From new products to a tokenomics overhaul, several announcements were made in April that will be built upon in the coming months.
Alongside these announcements, we’ve worked diligently to strengthen Origin Ether’s design, developed new features for PrimeStaked liquid restaking, and found new integrations and incentives for OETH on Arbitrum.
Some of Origin’s achievements from April include:
Let’s dive into everything that’s unfolded in April, highlighting some of the most exciting initiatives we have in store for OGN, OETH, and beyond.
One vision, one token: learn more about Origin Token’s new trajectory in multichain yield.
Origin Token underwent a complete overhaul in April, starting with the proposal to merge OGV into OGN. With the merger, OGN inherits Origin Ether and Origin Dollar and will be the sole value accrual and governance token for all of Origin’s products. Following the upcoming security audit, the OGV migration portal will open for users to convert their OGV and veOGV to OGN at a rate of 0.09137 OGN per OGV.
To set forth new value accrual mechanisms, OGN stakers passed a proposal to upgrade OGN tokenomics. The proposal introduced xOGN, the new token for staked OGN. Upon the OGV-OGN migration portal opening, token holders will be able to convert to OGN, or opt for xOGN to earn protocol revenue, boosted by incentives from Origin’s treasury.
OGN’s new tokenomics add highly requested features to its staking experience, such as being able to add to existing stakes and exit staked positions early. Moreover, the max lock time for xOGN is set to 1 year, enabling stakers to earn maximum rewards without having to lock up funds for extended time horizons.
We’ve seen substantial excitement around our Automated Redemption Manager (ARM), an early stage product that was revealed in April. The ARM aims to alleviate friction for redeeming LSTs and LRTs by offering instant, zero-slippage swaps on redeemable assets. Current redemption methods inhibit users from earning yield across ETH-denominated DeFi products, as redemptions are either too costly or too slow.
You can think of the Automated Redemption Manager as a cross between an AMM and an isolated money market. Instead of pricing assets on a bonding curve, the Automated Redemption Manager uses lending rates for the asset’s collateral to provide instant liquidity and avoid slippage.
Currently, the ARM supports stETH<>ETH swaps. The stETH<>ETH pool is integrated with 1inch and CoWswap, and has generated over $100M in pre-launch volume without any marketing. In the near term, the ARM will get additional support for Origin Ether and open its LP experience to the Origin community.
Coinciding with EigenLayer’s LST restaking initiative, PrimeStaked opened uncapped OETH deposits to primeETH. Users can now deposit Origin Ether and ETH to restake through primeETH, earning an EIGEN allocation, staking yield, and primeETH XP.
On April 29th, the Eigen Foundation announced its initial distribution of its EIGEN token. PrimeStaked users that held primeETH prior to EigenLayer’s snapshot on March 15th are eligible to claim EIGEN starting on May 10th. The snapshot taken on March 15th represents the end of season 1 distribution, with 5% of the EIGEN supply allocated to season 1. Season 2 is now underway, and 10% of EIGEN’s supply is allocated equally between seasons 2 and 3. For more information on the Eigen Foundation’s token generation event, we encourage you to read our EIGEN stakedrop guide.
We’ve actively worked on direct redemptions for primeETH in April, and we’ve prepared code to enable withdrawals on PrimeStaked. The code is under review and will be shipped shortly after the audit is complete.
Here’s how OETH and OUSD are working nonstop to earn you passive yield.
Origin Ether’s 30-day trailing APY achieved 30% higher yield than Lido’s stETH, generating 3.8% APY in April. As OETH completes its transition to a true LST, yields have temporarily decreased. This can be attributed to the protocol’s divestment from sfrxETH and its higher allocation to stETH and rETH. Once all LSTs are divested and Beacon Chain staking support is added, OETH will begin earning staking yield directly, enhanced by our Convex AMO strategy.
Origin Dollar’s 30-day trailing APY was 10.5% at the end of April. Demand for stablecoins has remained high, creating opportunities for OUSD to earn substantial yield through its lending strategies. Origin Dollar’s USDT and USDC collateral is currently allocated to Morpho Aave, while its DAI collateral earns yield from the MakerDAO DSR.
Last month, the Arbitrum DAO granted incentives for Origin Ether’s launch on Arbitrum. As part of Arbitrum’s Long Term Incentives Pilot Program, Origin Ether received 185,000 ARB (~$200,000 USD) to incentivize the use of OETH on Arbitrum for the next three months. ARB incentives will be split between leading AMMs and lending protocols to foster deep liquidity as OETH expands across Arbitrum’s ecosystem.
Also in April, Origin Ether was listed on MEXC. As its 2nd centralized exchange listing, Origin Ether is becoming increasingly accessible. While we advise all our users to own the keys to their crypto, centralized exchanges provide streamlined onramps into the Origin community. MEXC is the 11th largest crypto exchange globally, surpassing $1B in volume per day and being home to over 10 million crypto investors.
Join us in welcoming Pranesh, our new Sr. Solidity Engineer, to Origin!
Last month, the Origin team brought on a Senior Solidity Engineer to accelerate the development of Origin’s new DeFi products. Pranesh Shanmugasundaram (Pranesh AS for short) joins Origin with a long history of smart contract engineering experience, with a focus on security and building dapps on scalable EVM networks.
Also in April, Origin team members spoke at Web3 Dubai to educate attendees on opportunities in liquid staking and restaking. Origin's MENA Community Manager spoke on the DeFi panel, and the team took time to meet several protocols to discuss future integrations.
Origin’s community members received unique benefits for their participation last month. Community members with the explorer role received OGN bonuses for new integrations, as well as access to Curvance’s incentivized testnet. Curvance recently took a snapshot of users’ participation, with future rewards expected for those who claimed the Curvance partner role.
That’s all for now! We’ve been hard at work completing the OGV-OGN merger, with new products being developed in tandem. Expect the OGV-OGN migration portal to open 1-2 weeks after our security audit, tentatively scheduled to be completed on May 17th. Plus, a brand new dapp is coming to coincide with the token merger, integrating OGN, OETH, and OUSD into one unified experience!
Until then, check out some of our favorite pieces of content from April:
In the world of crypto, two popular strategies for growing your digital assets are yield farming and staking. Each strategy has its pros and cons. So which one is right for you? Every investor ultimately needs to decide for themselves.
We’ll take a closer look at both strategies so that you can decide which strategy is best for you.
We’ll cover:
With that in mind, let’s start by looking at how yield farming works.
DeFi yield farming uses multiple strategies to maximize returns from cryptocurrency. It is essentially an umbrella term that can encompass any of the strategies listed below. Here’s how it typically functions:
Staking: At its core, yield farming often starts with staking. This is when investors lock up their crypto assets in a protocol to secure network operations and earn rewards.
Liquidity Mining (LP): Investors can also engage in liquidity mining by providing their tokens to liquidity pools. These are essential for enabling trading on decentralized exchanges (DEXs) without traditional market makers. By contributing to these pools, farmers earn LP tokens, which can then be used or staked to earn additional rewards.
Harvesting Token Rewards: Many DeFi projects issue their own tokens as rewards for contributing liquidity or staking. These tokens can often be harvested, sold, or reinvested into other pools to compound returns.
Extra Incentives: Beyond the basic rewards, many protocols offer additional incentives. These can include boosted yields for early participants or bonus tokens for long-term stakers. These can enhance the profitability of yield farming strategies.
Yield farming and staking are both ways of earning additional return in the crypto space. But they have important differences.
Yield farming is generally more complex, and has potential for higher rewards. This is because it often uses a mix of strategies like liquidity mining and leveraging multiple DeFi protocols. It requires more active management and a deeper understanding of DeFi market dynamics.
Staking on the other hand, is a simpler and more stable way to earn crypto returns. By locking up cryptocurrencies like ETH, investors help secure and operate blockchain networks. The returns from staking are more predictable. This is because they’re generally derived from transaction fees or inflation rewards.
Staking’s simplicity and stability make it appealing, especially for those who prefer a more hands-off approach.
For ETH specifically, staking involves securing the Ethereum network. Staking is especially important now that the network has transitioned from proof of work to proof of stake via the Beacon Chain. Investors can also choose to hold Liquid Staking Tokens (LSTs), which represent staked ETH but offer added liquidity.
In contrast, yield farming with ETH entails using it across various DeFi platforms and liquidity pools to maximize yield.
In short:
To earn higher yields via staking, selecting the right platform is crucial. They each offer unique features tailored to different aspects of DeFi investing.
Here’s a closer look at the three best options:
Lido stands out for its optionality in DeFi. This is because it allows users to stake their ETH without locking it up. Lido’s approach maintains liquidity and enables participation in various other DeFi activities.
The flexibility is great if want to remain active in the DeFi space while still earning staking rewards.
Rocket Pool is best known for promoting ETH decentralization. It does this by lowering the barriers to entry for running an Ethereum validator node.
Individual stakers have to stake 32 ETH to become a validator. But Rocket Pool nodes only need to stake either 8 ETH or 16 ETH per validator. So it’s more accessible for yield farmers with less ETH.
Origin Ether is best known for offering high yields by integrating with platforms like Pendle and EigenLayer. OETH uses these connections to increase profit chances. It's a great option for people wanting to make the most of DeFi earnings.
Origin Ether stands out for its capability to leverage Advanced Market Operations (AMO). It’s a feature that OETH uses these connections to increase profit chances. It's a great option for people wanting to make the most of DeFi earnings.
AMO uses smart math to figure out the best times to start or stop different farming plans, considering risk and rewards. It also eliminates one of the biggest drawbacks of yield farming, which is manually navigating liquidity pools. Plus it spreads risk across various avenues, providing diversification.
OETH is also designed with an inherent focus on transparency and governance. This means token holders can participate in decision-making processes that affect how their assets are managed. OETH is arguably the best choice investors seeking both high returns and a say in their investment strategies.
Origin Protocol's AMO is a special tool that automatically optimizes staking across liquidity pools. Essentially, the AMO strategy deploys assets to capitalize on the best available yield opportunities.
But how does it actually work?
Here’s a quick walkthrough:
Yield farming in DeFi can be incredibly rewarding, but it still has risks. The good news is that OETH was built with many of these risks in mind.
Here are some risks and how OETH helps mitigate them:
Smart Contract Risks: Smart contracts can be vulnerable to bugs and exploits. While no system can be completely secure, using platforms with audited contracts, like Origin Ether, can reduce risk.
Liquidity Risks: Yield farming often requires liquidity providers to lock in their assets. This can be risky in fast-moving markets. Origin Ether provides liquidity solutions that allow for more flexibility and lower risk of impermanent loss.
Counterparty Risks: In many DeFi protocols, you're relying on the actions of other parties. These might not always align with your own interests. Origin Ether’s uses a governance model. This gives token holders a say in the protocol’s development and management, aligning everyone’s interests.
The great thing about OETH is that it balances potential yields against risk exposure. By leveraging robust security practices, automated strategies, and community governance, it aims to provide a safer, more productive yield farming experience. You can start using OETH by clicking here.
What is the best platform to earn ETH APYs?
Origin Ether (OETH) is recognized as a superior choice for earning ETH APYs without centralized exchange risks. With innovative yield-enhancement strategies through the Origin AMO and robust security measures, OETH maintains high and sustainable returns.
Where does ETH yield come from?
ETH yield originates from a variety of activities across the Ethereum network. These can include staking, liquidity mining, and yield farming protocols. This yield is generally produced through transaction fees, interest payments, and incentive tokens. But investors need to be aware of common DeFi risks like rug pulls.
Should you engage in yield farming?
Yield farming can be extremely rewarding. Just be aware of the risks of decentralized applications mentioned above. Origin Ether mitigates these risks with a governance token (OGV). This allows for community-driven governance and enhanced security.
Ethereum's shift from proof of work (PoW) to proof of stake (PoS) didn’t just improve its energy efficiency. It also opened up lucrative annual percentage yield (APY) opportunities for investors interested in digital assets.
So whether you're new to Ethereum staking or looking to optimize returns, understanding the APY landscape is crucial.
Below, we’ll walk you through:
Want to maximize ETH APY? Origin Ether (OETH) is designed for ETH holders seeking to optimize their returns through liquid staking. Users can swap any amount of ETH for OETH to start earning yield. ETH staking rewards via OETH are 3.30% trailing 30-day APY. Click here to learn more.
Read on and discover how to navigate the complexities of the APY landscape. You’ll learn to make the most of your Ethereum investment.
APYs on Ethereum mostly come from two key activities: staking and lending/liquidity provision. Each method employs different mechanisms for earning rewards.
Let’s take a closer look:
When you stake ETH, you’re usually locking up your crypto. This locked up, or staked, ETH helps support the operation and security of the blockchain network. In return, stakers get rewards derived from transaction fees and token emissions.
Staking APY is calculated based on the total amount staked on the network and the rewards distributed among stakers. As of writing, ETH staking rewards via OETH have earned 3.3% trailing 30-day APY.
Unlike staking, where rewards are more predictable, APYs from lending and liquidity provision fluctuate based on market demand. When you lend ETH or provide liquidity, you earn interest or fees from borrowers or traders who use your capital. These returns can be higher during periods of high demand. But they also come with increased risks, like liquidity risk and potential impermanent loss in liquidity pools.
By comparing these methods, you can choose the one that best fits your risk tolerance and investment strategy.
Generally speaking: staking offers a more predictable return and is seen as a safer investment. In contrast, lending and liquidity provision can provide higher yields but with a bit higher risk. We’ll go into more detail on this below.
When it comes to maximizing your Ethereum staking yield, choosing the right platform is crucial. There are three top staking services that stand out in the landscape:
Origin Ether (OETH) is designed for ETH holders seeking to optimize their returns through liquid staking. Users can swap any amount of ETH for OETH to start earning yield.
By staking your ETH with OETH, you can also benefit from deep integrations for OETH across Ethereum’s network. OETH holders can restake OETH on EigenLayer for additional rewards, lend OETH on Morpho and other markets for interest, or provide liquidity to earn trading fees.
As of writing, ETH staking rewards via OETH are 3.30% trailing 30-day APY. Users can further boost their earnings to up to 30% APY through various DeFi opportunities that integrate Origin Ether.
Rocket Pool caters to both small and large investors by allowing stakers to operate their own Ethereum validators. This gives node operators a much lower entry barrier when it comes to participating in staking pools.
With a minimum of only 8 ETH needed to run a node, Rocket Pool is another attractive option. It lets you easily earn staking rewards while contributing to Ethereum's decentralization.
As of writing, ETH staking rewards via Rocket Pool are 2.46% APY.
Lido remains one of the most popular choices for Ethereum staking. Why? It offers a straightforward and flexible staking solution without the need for running personal hardware. Lido’s stETH token represents staked ETH and accrues rebase rewards. This means users can maintain liquidity and engage with other DeFi applications even while their funds are staked.
As of writing, ETH staking rewards via Lido are 2.77% APY.
To boost their Ethereum staking rewards rates, some investors employ Ethereum restaking. This is when an investor uses staked assets to stake again, compounding the returns.
A great platform for this approach is EigenLayer. It allows stakers to contribute to network security and scalability while earning additional rewards on liquid staking tokens.
By restaking OETH on EigenLayer, you can participate in various network activities, like providing security to actively validated services (AVSs). You’ll be contributing to the Ethereum ecosystem while generating bonus rewards on top of your standard staking yields.
For advanced users looking to increase their Ethereum APY, looping ETH can be a high-reward strategy.
Platforms like Morpho and Silo allow you to borrow ETH against stETH or wstETH, then re-deposit the borrowed ETH to earn more staking rewards. This process can be repeated—"looped"—to magnify exposure to rewards earned through staking, while still participating in protocols that help secure the network.
While Ethereum’s consensus mechanism already incentivizes staking as a low-risk, long-term strategy, looping adds a layer of capital efficiency for those comfortable with leverage. That said, it does carry liquidation risks if an LST price drops relative to ETH or if collateral ratios shift.
Still, when done carefully, this technique can offer a way to multiply staking yields over the long term, especially in bull markets or when ETH demand spikes.
The consistency of Ethereum network APYs varies depending on the method used to generate them. Staking, lending, and liquidity provision all offer different levels of stability and predictability in returns.
ETH staking is relatively consistent month-over-month. But the APY can still fluctuate from changes in total ETH staked and network activity.
For example, ETH staking annualized rate of return was as high as 8+% in May 2023, but currently is closer to 2.7-3% at the time of writing.
On the other hand, APYs from lending and liquidity provision depend more on market demand for ETH. That means they’re more sensitive to changes in borrowing and trading activity, especially during market highs and lows. So they typically vary more than staking APYs and can offer higher peaks and greater risks.
Understanding this is important so investors can align their strategy with their risk tolerance. By choosing the right approach, you can manage APY volatility while still optimizing yield.
Ethereum staking APYs are seen as one of the "risk-free" rates in the crypto world due to their foundation on the underlying blockchain security. But the fact remains that no investment is without risk.
So here are some safety aspects and risks involved in earning ETH APYs:
These risks can’t be eliminated, but they can be mitigated through due diligence. Diversifying staking methods, and choosing reputable platforms also go a long way.
