Your Stablecoins Earn 4%. Could Your Money Do Better?

Perhaps you’re holding stablecoins while waiting for your next trade, or you want to earn income on money you don’t need right now. Either way, it’s worth knowing what that money could earn.

Let’s say you put $50,000 into a product offering 4% annual income. If the rate stays unchanged, that’s $2,000 over a year. That’s money you’d be glad to earn, but could another product pay you more and still let you withdraw when you need it?

Another product offers 5%. A third offers 7%. Moving could increase your income, but first you need to know what changes along with the rate. Are the fees lower? Are you lending to different borrowers? Can you still withdraw when you need the money?

We’ll help you calculate how much you’re earning across all your stablecoin holdings, then compare other products to see how much more they could pay you. You’ll know whether switching is worth considering or whether you’re already getting a good deal.

If you’re looking to earn passive income on your stablecoins, this article will show you how to compare rates and calculate what different products could pay you.

Our free Onchain Cash Rates tool then lets you enter an amount and compare current rates in seconds. You can see the estimated income side by side, find opportunities worth exploring and check whether your money could earn more. You’ll find the link at the end of this article.

How Much Are You Earning Across All Your Stablecoins?

Some of your stablecoins may be earning interest in a savings or lending product, while the rest sit in your wallet earning nothing. To work out how much you’re earning overall, include both.

For example, let’s say you have $50,000 spread across these four places:

Only $35,000 of your $50,000 is earning 4%. The remaining $15,000 earns nothing. Together, they produce $1,400 a year, which is 2.8% of your total $50,000.

You may want to keep that $15,000 ready for your next trade or an unexpected expense. That’s a valid reason to leave it available. This calculation simply shows how much income you’re earning across the full balance.

Holding a Stablecoin Is Different From Earning Interest

USDC does not pay interest simply because you hold it. Circle’s terms make that clear. If you’re earning income on USDC, it comes from a separate product, activity or reward arrangement.

See Circle’s USDC terms for the distinction between holding USDC and receiving a return.

When you deposit stablecoins into a product that pays income, find out how it uses them. It might lend them to borrowers who pay interest, invest in bonds that earn income, or make them available for other people to trade against and collect trading fees. Some platforms also offer extra rewards to attract deposits.

Ask the provider: Where does my money go, where do my payments come from, and who is responsible for paying me back? Those answers help you understand how the income is earned and what could affect it.

Use Treasury Products as a Starting Comparison

Tokenized Treasury and government money market products can give you a useful reference because their income is connected to short-term government securities. They help you compare your current return with another way of holding dollar investments onchain.

The tokenized product still has its own fees, eligibility requirements, legal structure, custody arrangements and withdrawal terms. It is not identical to holding a Treasury bill directly, and it should not be treated as risk-free.

Suppose suitable Treasury-based alternatives offer around 3.5%, while your current product offers 4%. The difference is half a percentage point, or $250 a year on $50,000. Now you can ask whether that additional income is worthwhile given how each product works.

A Small Rate Difference Can Mean Real Money

On $50,000, one percentage point means $500 over a full year at unchanged rates. On $100,000, it means $1,000. If you hold $250,000, a two percentage point difference means $5,000.

That is a good reason to compare products. You might find a more competitive return without giving up something important to you. You might also decide that easier access or a structure you prefer is worth accepting less income.

Work out what you could earn on the amount you plan to invest, for the time you plan to leave it there. If you’ll need the money in three months, compare what each product could pay over those three months, rather than over a full year.

Find Out Why One Product Pays More

Imagine three products offer 3.7%, 5.2% and 8.1%. The first holds short-term Treasury securities, the second lends stablecoins against crypto collateral, and the third lends to private businesses. Those are three different investments, not three versions of the same savings account.

A higher rate may reflect borrowers who are more likely to miss payments, longer withdrawal periods or additional exposure to a protocol. It may also come from lower fees, a promotion, different portfolio holdings or a different way of reporting the rate. Find the explanation before deciding that one offer is better.

Check incentives separately from the underlying income. A reward paid in another token can fall in value or end when the promotion finishes. Ask what the product would pay without those rewards and whether the displayed figure includes them.

At GnosisFi, we’re excited about the new choices onchain finance gives investors. Being able to compare these opportunities is valuable. Understanding the differences helps you choose where to put your money with a clearer idea of what you’re getting in return.

Compare Rates That Measure the Same Thing

Before comparing rates, check what each percentage means. Is it today’s rate, which could change tomorrow? A rate agreed for a set period? What the product earned in the past? Or what the provider expects it to earn? These figures tell you different things, so don’t assume they all describe what you’ll receive.

APR generally describes an annualized rate without compounding. APY includes compounding under stated assumptions. If you receive payments but do not reinvest them, your outcome may differ from the advertised APY.

A money market fund’s seven-day yield is another measure. It annualizes the income earned during a recent seven-day period. It is not a promise of that return for the coming year. Read the calculation method before comparing it with another product’s APY.

In our examples, $10,000 earning 5% produces $500 over a year. We don’t add that income back into the investment.

With an actual product, we suggest checking what happens to your earnings. Are they paid out to you, or automatically reinvested so they can earn more income? If reinvesting is up to you, the advertised return may assume you do it.

Work Out What You Keep After Costs

A product showing 5% may already deduct management expenses. Another showing 5.3% may quote income before a 0.75% annual fee. In a simplified comparison, the second would leave 4.55% after that fee, less than the first.

Check management and platform fees, entry and exit charges, transaction costs and any spread when you exchange tokens. Avoid subtracting a fee twice if the displayed rate already includes it. Taxes may also affect what you keep, depending on your circumstances.

A higher rate is only worth switching for if the extra income covers the cost of moving your money.

Suppose moving $50,000 costs $100, and the new product pays 4.5% instead of 4%. That earns you an extra $250 a year, or about $21 a month, if both rates stay unchanged. It takes almost five months to earn back the $100 switching cost. Withdraw before then, and you would have been better off staying where you were.

Keep Your Trading Reserve Ready to Use

Suppose you keep $30,000 ready for your next Bitcoin or Ethereum trade. Moving it from a product paying 4% to one paying 6% could earn you an extra $600 a year if both rates stay unchanged. But if withdrawing takes several weeks, you could miss the trade you were saving that money for.

If you have another $30,000 you won’t need for two years, waiting longer to withdraw may be acceptable in exchange for more income. Before comparing products, decide which money needs to stay available and which you’re comfortable leaving invested.

Read the actual withdrawal terms. Can you redeem directly? Are requests processed on business days? Is there a notice period, minimum amount or withdrawal limit? If you plan to sell the token instead, check whether there are enough buyers and what you could receive after trading costs.

The stablecoin itself also belongs in your research. Understand how it maintains its value, what supports it and how redemption works. Holding an investment quoted in dollars is different from having dollars available in a bank account.

Test a Lower Rate Before Moving

Many onchain rates change. Treasury-related income responds to portfolio holdings and interest rates, while lending rates can change with borrowing demand. Incentives can be reduced or removed.

Suppose you move $50,000 to a product offering 5.5% instead of 4.5%. That looks like another $500 over a full year. If the new rate soon falls to 4%, the original comparison no longer describes what you will earn.

Try a lower rate as well as the displayed one. A fall of one percentage point reduces simple annual income by $500 on $50,000, or $250 over six months. Our tool’s rate fall option helps you see that difference using your own amount and timeframe.

Try the Comparison With Your Own Cash

Write down where your onchain cash sits, how much is in each product and what it currently earns. Include balances earning nothing. Then calculate your overall return and decide how quickly you need access to each portion.

Choose a few alternatives with terms you could actually use. Compare the source of income, rates after costs and withdrawal arrangements. Check eligibility, too: appearing on a comparison board does not mean a product accepts investors in your country or at your investment size.

You might find a product that pays more and still lets you withdraw when you need to. Or you might find that, after fees, your current product offers just as good a deal. Either way, you’ll understand what you could earn and what you’d be agreeing to before deciding whether to switch.

See What Your Onchain Cash Could Earn

Find out what your stablecoins could earn in seconds with our free Onchain Cash Rates tool. Enter an amount and how long you plan to invest, then compare estimated income from Treasury products, stablecoin savings and private credit side by side.

See an opportunity you like? Check the provider’s latest rate, fees and withdrawal terms, and whether you’re eligible. The figures estimate income at current rates, which can change.

Build your knowledge with our RWA Masterclass. Learn how tokenized investments work, where returns come from and how to assess an opportunity before investing. Watch the first chapter for free.