A stablecoin interest rate is the amount holders can earn by depositing their money onto a platform. For example, a platform may advertise 3% yearly interest rates for all GBPT deposits. This would mean that if a user were to deposit £10,000, they would have received an additional £300 by the end of year.
A common colloquial saying in the crypto industry is that ‘if you do not know how the yield is generated, then you are the yield’ – so what are the common ways these payments are afforded?
There are a number of centralised and decentralised platforms available for stablecoin holders to generate a yield. To do this, holders deposit their funds onto the platform, which then lends out these coins to other investors for a fee. This cycle is maintained as the interest rate for borrowers is consistently higher than that of the lenders.