Tether (USDT) is a well-liked stablecoin known for its price stability. But can you earn interest on your holdings? The answer is yes, but not exactly in a traditional way.
While Tether staking might be a popular term, it's not entirely accurate. But don’t worry, we’re here to explain what you can actually do with USDT to earn rewards!
Can I Stake USDT?
USDT, or Tether, is a stablecoin, and unlike many cryptocurrencies known for big price swings, USDT is stable in value. It's pegged to the US dollar, and 1 USDT is always worth $1.
USDT staking is a perfect way for crypto holders to earn income from their holdings without the necessity to sell them. But staking Tether works differently. Let’s get into the details.
So, can you stake USDT? You can’t stake USDT in a traditional way because it doesn't operate on a Proof-of-Stake mechanism. But you can still earn interest by lending it. In lending, you loan your USDT to borrowers on crypto exchanges and DeFi platforms. Then your tokens will be used for various purposes and you’ll get bonuses in return. The key difference is that lending doesn’t secure the network the way staking does.
If Tether is a new concept for you, we have a handy article that explains what it is.
Ways To Stake USDT (Tether)
Now, we’ve established that you can earn interest on Tether tokens, it’s time to dive deeper. The two main ways to stake USDT include Centralized exchanges and DeFi platforms.
There are many CEXs that offer USDT lending. These platforms match you with borrowers, handling all the technical aspects, and usually have simple interfaces. DeFi platforms provide peer-to-peer lending where you connect with borrowers directly. And while they have a potential for higher rates, such platforms require more technical knowledge and have some more risks involved.
Naturally, we wouldn't leave you without a guide on how to get started. Here’re several steps on how to stake USDT:
- Decide If You Prefer CEX or DeFi Platform
- Transfer USDT
- Pick Lending Option
- Select Interest Rate and Lock-in Period
- Start Earning
It’s important to do your research before choosing where to stake USDT. Look into APY rates, fees, and other terms before committing your tokens. USDT staking reward (APY) typically brings around 2-3%, but it can vary depending on the platform, lending terms, and market conditions.
Speaking of the best place to stake USDT, there are several reputable crypto services that offer Tether staking options. The platforms where you can stake USDT include Cryptomus, Binance, and Aave. Cryptomus provides users with a competitive 3% expected yearly return on USDT, so you can receive your first reward in just 6 hours.
Don't miss our guide for buying USDT at the best price.
Benefits and Risks Of USDT Lending
Staking USDT can be worth it if you want to earn interest on your holding while minimizing volatility risk. The benefits of Tether staking include:
- Passive Income: You don’t need to get actively involved in the process to get returns.
- Minimum Volatility: As Tether is a stablecoin, there are almost no price swings associated with other tokens.
- Interest Rate: Since Tether is tied to the US dollar, holding USDT is like having a savings account, but with potentially higher interest rates.
- Protection From Inflation: USDT interest can help offset inflation, safeguarding the value of your funds.
Yet, any investment comes with its drawbacks that have to be taken into account. The key risks of staking USDT include:
- Lock-Up Periods: Staking restricts access to your USDT for a set period, limiting your liquidity.
- Platform Risk: CEXs and DeFi platforms can be a bright target for hacks or exploits. Choose reputable platforms with strong security measures.
- Smart Contract Risk: DeFi platforms rely on smart contracts that can have bugs or vulnerabilities.
In short, you can grow your USDT by earning interest on it. However, it's not the standard staking and comes with its own risks. We've equipped you with the key concepts, but do your research before making a move.
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