With banks offering low savings account interest rates that hardly beats inflation, it’s time to think out of the box when growing your money. The answer? Earning interest on stablecoins.

Do you have a bank savings account? If the answer is yes, then one important factor you would consider when signing up are savings account interest rates.

The basic savings account interest rates can be pretty measly. That’s why popular savings accounts like DBS Multiplier account, UOB One account, and CIMB FastSaver account offer a higher bonus interest rate when you complete tasks such as crediting your salary and spending on their credit cards. Here’s a quick recap of the interest rates from each bank:

Savings Account Potential Interest Rate Requirements
UOB One Account Up to 2.5% per annum
  • Spend min. S$500 monthly on an eligible UOB credit/debit card
  • Credit min. salary of S$1,600 monthly into your UOB One Account OR
  • Make 3 GIRO debit transactions per month
  • Have SGD $75K in your bank account to reach 2.5%
DBS Multiplier Account Up to 3.0% per annum
  • Total transaction spend equates to SGD $30K or more a month
  • Credit your salary OR dividends OR connect with SGFinDex
  • Transact in 3 categories of either credit card spend, home loan instalment, insurance, or investments with a total of SGD $2K or more
CIMB FastSaver Account Up to 3.0% per annum
  • Only applicable for the first SGD $10K in your account
  • Sign up for Visa Signature and spend a minimum of SGD $300 per month
  • Purchase a CIMB insurance or investment product

Sadly, these rates are barely beating inflation or even falling behind.  According to the Monetary Authority of Singapore, core inflation rates hit 2.2% in February and overall inflation came in at 4.3%. This basically means your money will be worth lesser in value if you rely on savings account interest rates to grow your assets. Seems like a lot of work for interest rates that can’t grow your money if you ask me.

What if we can grow our savings at a higher rate than what banks are offering now? Nope it’s not another new bank account, but rather we can tap into cryptocurrencies to grow our assets at higher interest rates while beating inflation at the same time. Seems incredulous? The idea is not as far-fetched as it seems.

Hold up, isn’t crypto volatile and unstable?

Yes, and no. We often associate cryptocurrencies with volatile assets that often see large dips or rise in their prices regularly, but what we are discussing here are another class of cryptocurrency called stablecoins.

What are stablecoins and how do they work? As the name states, they are meant to be a stable alternative to their volatile cousins. Stablecoins are tokens minted on the blockchain, and each token issued is pegged 1:1 to the US dollar.

How is this stability achieved? It is mainly done so by backing each token with an equal amount of fiat currency. So if 1 billion USD stablecoin tokens are issued, the central issuer must hold 1 Billion worth of USD dollars as fiat collateral for the tokens. That way, users can trade the tokens to cash and back without any fear that their token will drop in value.

Some popular stablecoins on the market are USD Coin (USDC), Tether (USDT), and TerraUSD (UST) which all hold a value of $1 USD. Some cryptocurrency exchanges also offer their own stablecoins such as Binance (BUSD) and Gemini (GUSD). Fun fact – Singapore also has its own stablecoin called XSGD which is issued by payment institution StraitsX.

How do these platforms earn their money?

Platforms that let users earn interest on their stablecoins utilise the same method that banks use. They lend the digital assets to individuals, corporations or institutions that utilises it depending on their business functions, and the borrowers return the assets with interest. The platform then gives a portion of the interest to you as an incentive for holding the assets with them.

Sounds great, but how do I get started?

You can start by earning interest on them in cryptocurrency exchanges. Several exchanges not only facilitate trading, but they also allow you to deposit your assets and earn interest on them. Interest rates vary from token to token, but stablecoins generally see a higher earn rate amongst exchanges.

Another option to tap on are interest-earning platforms that on lending assets to generate interest rate returns. Let’s look at some of them below.

Platform Interest Rate Requirements
Gemini
  • GUSD – 6.90% per annum
  • DAI – 6.43% per annum
  • USDC – 6.36% per annum
Deposit your tokens into Gemini Earn
Crypto.com Between 1.5% - 8% per annum on stablecoins
  • Stake up to USD $4K or more in CRO tokens
  • select a 3-month fixed term period
Coinhako
  • USDC – 8.00% per annum
  • USDT – 8.00% per annum
Deposit your tokens into Coinhako Earn
Hodlnaut
  • DAI – up to 8.32% per annum
  • USDC – up to 9.41% per annum
  • USDT – up to 9.41% per annum
  • Deposit assets into Hodlnaut
  • Hold the required assets within the stated tiers
Nexo Between 8% - 12% per annum on stablecoins
  • To increase your earn rates, hold a percentage of your portfolio in NEXO tokens
  • Choose to earn rewards in NEXO tokens
Celsius Up to 7.10% per annum on stablecoins
  • To increase your earn rates, hold a percentage of your portfolio in CEL tokens
  • Choose to earn rewards in CEL tokens

Cryptocurrency Exchanges

Gemini logo

Gemini

This US-based cryptocurrency exchange allows you to earn interest on your stablecoins with Gemini Earn. Their programme allows you to earn the following rates on these stablecoins:

  • GUSD – 6.90% interest
  • DAI – 6.43% interest
  • USDC – 6.36% interest

In addition to a decent yield that beats savings account interest rates, Gemini is also known for their stringent security measures and third-party borrowers are vetted thoroughly with periodic audits.
Along with daily compounding interest and a quick turnaround when withdrawing funds from the programme, this exchange is a preferred choice for many when earning interest on stablecoins.

crypto com cro metamask blockchain networks

Crypto.com

This popular cryptocurrency exchange allows you to earn an interest of 1.5% – 8% on your stablecoins with its Crypto Earn programme. To reach the higher interest rates, users can combine several different actions to gain a higher interest rate.

The three categories that decides the earn rates are:

1.  The duration that you want to lock up your tokens for

Crypto Earn allows you to deposit your tokens for a period of 1 month, 3 months, or the option to keep it flexible. The interest rates increase by 1.5% – 4% depending on the other factors below.

2. Tiered rewards based on token quota

Tier 1 rewards are capped at USD $30,000 in value regardless of stablecoins or cryptocurrencies, and can earn the full interest rates. Tier 2 rewards apply to amounts that exceed USD $30,000 and can only earn half the interest rate stated.

3. The amount of CRO tokens staked on the exchange

Users who stake USD $400 or less in CRO tokens receive a lower rate of 1.5% – 6% for their stablecoins, while those who stake USD $4000 or more in CRO receive a higher rate of 2% – 8%.

While users can also stake CRO tokens on their Crypto.com credit cards to increase the earn interest rate, the exchange recently announced that they will be phasing out CRO staking rewards for the credit card effective 1 June 2022.

coinhako logo cryptocurrency exchange

Coinhako

This up-and-rising platform has been on a roll with the green light of its Major Payment Institution licence by the Monetary Authority of Singapore (MAS), and it recently launched its Coinhako Earn programme.

Despite being a relatively new programme, Coinhako has added a sizeable number of tokens to their Earn programme in a short amount of time (There are 20 tokens at the time of writing). Their programme allows you to earn the following rates on these stablecoins:

  • USDC – 8.00% interest
  • USDT – 8.00% interest

Their recently launched option for UST offers a rather high interest rate and demand is high as well. With a high interest rate and a fast growing earn programme, Coinhako Earn is shaping up to be another great option to beat savings account interest rates.

Interest-Earning Crypto Platforms

If earning interest on exchanges isn’t your cup of tea, you can also consider interest-earning crypto platforms as well. Such focus on lending cryptocurrencies deposited by their users to corporations or institutions and are able to offer rates that exceed savings account interest rates.

hodlnaut_logo_2

Hodlnaut

This interest-earning company established itself as one of Singapore’s trusted digital payment tokens (DPT) service platform when it received an In-Principle Approval from the MAS in March 2022.

In addition to their credibility, Hodlnaut also offers pretty attractive interest rates when it comes to stablecoins.

On top of that, the platform also offers other perks like one free withdrawal a month, swap between assets without any fees, and choose to earn interest in any cryptocurrency of your choice. Overall it’s a great platform with nifty features to use while beating savings account interest rates at the same time.

nexo_logo_2

Nexo

Another popular way to earn interest on stablecoins is with Nexo. This overseas-based interest platform was one of the first few to offer crypto banking services in 2017 and features a large number of crypto tokens to earn on.

Instead of differing rates for each stablecoin, Nexo offers a fixed base rate for all of them starting from 8.00%. Their list includes:

  • USDC
  • USDT
  • DAI
  • Pax Dollar (USDP)
  • TrueUSD (TUSD)

Similar to Crypto.com, you can perform actions to increase the earn rate on your assets held. This includes increasing your membership level by keeping a portion of your portfolio in their native NEXO tokens, and choosing to earn in NEXO tokens instead of your tokens held.

celsius_logo_2

Celsius

Celsius is another interest-earning platform that is beginner-friendly, and it has a longer list of stablecoins than other platforms which it offers a decent interest rate on. You can find the full list on their site, but here are some common stablecoins which are available to earn up to 7.10% interest:

  • GUSD
  • USDT
  • USDC
  • BUSD
  • TUSD

What makes Celsius great to use is the zero-fee transactions for withdrawals and deposits, making it easy to move your assets when needed. Similar to Nexo’s tiered rewards, users can deposit the platform’s CEL tokens to boost their membership level and increase their earn rates well above that of local savings account interest rates.

There’s so many choices! Are there any risk?

While stablecoins are considered less volatile than standard cryptocurrencies, they do still have some associated risk due to their nature.

Firstly, stablecoins are not recognised as legal tender in Singapore. The digital asset can be converted to Singapore or US fiat dollars when needed, but it is not recognised as money when held as a stablecoin asset.

Secondly, interest rates are determined by market forces and may be adjusted. This phenomenon isn’t limited to cryptocurrencies since banks and other financial institutions adjust their rates according to the market as well.

Lastly, always check the security and credentials of the platform. Even if we consider the platforms listed here to be trustworthy, always do your own checks as well to make sure that these platforms maintain strong security measures, are transparent about their lending, and have stringent checks to those they are lending to.

I’m good to go. What else should I do to get started?

Other than signing up with the platform of your choice, you will also need to convert your Singapore dollars to a stablecoin of your choice as well. Hop on over to our fiat on-ramp guide to get started!

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Disclaimer:
The content of this article is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances. Investment involves risk. The information and publications are not intended to be and do not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by CoinPasar. Any expression of opinion (which may be subject to change without notice) is personal to the author and the author makes no guarantee of any sort regarding accuracy or completeness of any information or analysis supplied. The authors and CoinPasar are not responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained here.

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