What Might You Want to Know About USDC Savings Account?

For a long time now, crypto owners have enjoyed earning seemingly ridiculously huge returns by selling their crypto when its value goes up by enough to satisfy them. Today, crypto enthusiasts can benefit from these great returns and also earn a decent yield on their investment by opening crypto savings accounts. You can earn interest on your crypto simply by depositing it in a savings account meaning there is no need to sell it to make gains.

We all know digital currencies are very volatile assets. This means that you are exposed to a high level of risk when you deposit these currencies waiting to earn interest — especially if your crypto savings account is a fixed-term one. To mitigate this risk, many crypto enthusiasts prefer opening crypto savings accounts and depositing stablecoins like USDC which do not experience the same price volatility.

When you open a USDC savings account, you can earn interest on USDC coins without any fear of losing your assets as the price of the coins is pegged to the value of the US dollar. USDC savings accounts are gaining a lot of traction but how do they work? What is the interest and what are the risks if any? This post answers all your questions.

What is a USDC savings account?

A USDC savings account is similar to a traditional bank deposit account with the difference being that you deposit USDC instead of cash. The cash you use to deposit USDC to your account is lent to others who use crypto as collateral for loans they take out. They then repay the money with interest. You then earn interest on USDC by being paid part of the interest on the loan repayments when you open a USDC savings account.

Depending on the platform you choose, you can earn a USDC APR of ranging from 7% to 12% plus compound interest. For instance, YouHodler, one of the best platforms where you can open a crypto savings account, pays an APR of 12% with compound interest. You immediately start earning interest (which can be paid weekly) as soon as you make a deposit.

How does a USDC savings account work?

USDC savings accounts borrow the premise of traditional bank accounts although they pay higher interest rates. In the recent past, the world has been facing an economic crisis which has led to a slump in bank interest rates. On the other hand, you can earn a USDC coin APY of up to 12% with guaranteed returns paid out weekly.

The interest rates paid differ from one platform to another mainly because of the kind of people or corporations they make their crypto-backed loans to. The USDC earn interest program is less risky allowing you to freely open both the fixed savings account and the flexible one depending on your preference. You can use a USDC interest calculator from YouHodler to determine how much interest you will earn.

Is a USDC savings account risky?

There are risks that investors who open crypto savings account will face. Price volatility, borrowers defaulting on their loans, and the possibility of hacks and data breached. The level of these risks depends on the platform you choose. Since the USDC coin is a stablecoin the risk of price volatility is eliminated. If you choose a platform that is less secure, hackers can attack it and you may end up losing your assets. You need to choose reputable platforms such as YouHodler which employ sophisticated encryption techniques and security.

To mitigate the risk of borrower defaults, it is also important to choose a reputable platform, which offers transparency on their lending criteria and procedures as well as having strict measures for repayments. This lowers the risk of not earning any interest from your deposits.