- Coinbase offers 4% earning via annual percentage yield for USDC holders.
- Only holders willing to lend their assets are eligible for this offering.
- The platform is aiming to target banks with this latest offer.
Coinbase says that USD Coin (USDC) holders on the platform can begin to earn a 4% annual percentage yield (APY). The users can earn so upon lending out their USDC holdings.
The platform made the announcement on a blog post. This way of earning interest proves as a good alternative to earning passive income. It is, in fact, similar to earning interest on a fiat savings bank account.
In detail, Coinbase is looking to target banks with this offer. Seeing as how it is similar to a fiat savings account. The platform is hoping to entice banks to run this possibly better savings offer. Specifically, this could even offer better returns when comparing to the average bank account earnings in the US.
Coinbase also remarks that the USDC available for lending is not under the protection of the Federal Deposit Insurance Corporation. Moreover, it is also not under the protection of the Securities Investor Protection Corporation.
Additionally, the platform also says that the exchange is not looking to offer a crypto interest account where customers receive attractive rates for their assets. However, it highlights that while most banks usually offer less than 1% of returns on the dollar, most crypto platforms offer much better rates.
More so, Coinbase says that it offers higher interests with pretty much no risk. For instance, usually, high-interest rates are attractive but present a certain high level of risk. This is because, in such cases, the assets are temporarily in the hands of third parties. Which in turn, subjects the funds to further credit risks. All in all, it could lead to a complete loss of the original holdings.
Interestingly, back in October 2019, the exchange had only 1.25% as APY earnings. Now, USDC holders can enjoy 4% APY. This is over a 2,500% increase. Finally, the price of COIN has gone up at the time of writing. Presently, it stands at $254.90.