Stablecoin Farming 101: How I Generate 15%+ Returns

Stablecoin Farming 101: How I Earn 15%+ Returns

Stablecoins on various blockchains are offering very attractive yields right now, particularly on Solana and various Ethereum Layer 2s.

In this post, I’ll share insights into my $133,000 stablecoin farming portfolio, which I started building in late November. Let’s explore the best yields, why they’re so high, and which platforms I use, and trust, the most.

Farming The Best Stablecoin Yields

Yields on stablecoins are dynamic, and constantly shifting (by the hour!) based on pure market supply and demand factors. Lending and borrowing platforms update their rates in real-time, sometimes spiking several percentage points throughout the day.

As a lender, I rest easy knowing my money consistently works for me.

To get a real-time snapshot of the best yields, I recommend checking the stablecoin comparison page on DeFiLlama. Sorting by APY (Annual Percentage Yield), you’ll see rates climbing as high as 25%.

Why Are Stablecoin Yields So High?

The crypto market is currently red hot. Investors are leveraging their positions by borrowing stablecoins like USDC against their collateral. This demand drives up borrowing rates, allowing lenders to profit.

However, these high yields are cyclical. During the 2022-2023 crypto winter, stablecoin farming was less exciting.

Typical stablecoin lending yields ranged between 4% and 8%. But generally they have always been better and higher than fiat lending rates.

Which Stablecoin Is Best?

I primarily use three stablecoins: USDC, USDT, and PYUSD. Here’s a quick breakdown:

• USDC: Issued by Circle, a U.S.-based company planning a 2025 Nasdaq IPO.
• USDT: The largest stablecoin, issued by an offshore company. While retail users widely trust it, institutional investors may hesitate.
• PYUSD: Issued by PayPal and fully backed by USD in their treasury. The new player in the stablecoin arena.

My Favorite Stablecoin Lending Platforms

I’ve tested many lending platforms, but here are my current top picks:

1. Lulo on Solana

Lulo.fi, backed by Circle, is currently my go-to lending platform. It offers:

• A clean, intuitive interface
• Easy-to-use features
• Significant time savings

It makes it super easy to check out your daily earnings and see how your money works for you!

I deposited $29,000 and earn about $10 daily on Lulo and plan to grow this over time.

What I love most about Lulo is how it automatically deploys my capital on Solana, offering the highest stablecoin yield at any moment. Here’s a look at everything Lulo did autonomously:

After I made another deposit of $10,500 on Dec 8th, Lulo instantly got to work and kept shifting my capital to whatever project offered the highest interest rate.

This is basically a stablecoin farming autopilot – well done, Lulo team!

2. Morpho on Base

At the moment, I earn a 20% APY on USDC on Base, the L2 Coinbase launched in Feb 2023.

I deposited $20,000 so far.

Once a week I claim extra rewards that Morpho helped me to collect – giving me the feeling I “harvest” and “get something” extra – which is cool.

3. Nostra Finance on Starknet

I have been a fan of Nostra Finance since its launch. It’s currently only available on Starknet,  an L2 on Ethereum.

Once a week I harvest the DeFi Srping STRK rewards (8.75%).

Let’s say you have $2,500 USD and like to start earning a good yield on Nostra.

Here is how to get started:

1/ Buy $2,500 worth of STRK tokens on Coinbase or Kraken
2/ Create a free Braavos wallet on Chrome
3/ Send some ETH (for fees) and STRK tokens to your Braavos wallet
4/ Convert the STRK into USDC with Nostra
5/ Deposit the USDC into the Nostra Lending
— Done —

4/ Aave on Optimism

I am a longtime Aave user and have been using it to lend and borrow assets for years.

At the moment, I deposited $29,000, and in the past few days, I earned +15%, which just dipped back down to 6% as we speak.  But this changes on an hourly basis and I am sure it will go up again shortly.

In particular, I appreciate Aave’s transaction summary, see below. It simply lists what you deposited and withdrew on what date. Very useful!

Conclusion

Stablecoin farming gives me joy and the yields are good. If my USD would simply sit on my ledger, I’d feel FOMO with all the cryptocurrency prices going up.

But by earning good yields of 15%+, I feel good knowing that I already cashed out profits from my crypto portfolio, which in return are put to work.

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