Staking stable coins

This article was originally posted on: Topjer.net

My brother brought my attention to the site youhodler which allows you to stake certain cryptos to earn interest. Which is nothing new. You can do that in many places.

Staking is a good way to let your crypto work for you if you have no plans with it anyways and is also necessary for the health of a proof of stake coin.

Of course it would be a bad idea to convert your fiat currency into crypto only to stake it since crypto prices are so volatile. This means you cannot benefit from the interest rates on the crypto market with your fiat currency.

That would be the case if it were not for stable coins which are a crypto currency that has a fixed exchange rate to a fiat currency. Tether for example can always be exchanged 1:1 to USD.

These stable coins can only have small interest rates. Right?

Wrong!

They come along with an impressive 12% APR.

So in theory you could convert USD to a stable coin, earn interest on that coin, convert it back and you essentially have earned interest on you USD.

There is a small caveat here - at least for me. There is only one stable coin for Euro and it is not as big as the USD variants. Into the latter I would not want to invest because of potential currency risk.

So far I have not invested in a stable coin to stake it because it somehow sounds too good to be true. So i am still looking for the catch. Will keep you updated.