Best Stablecoin Interest Rates

Best Platforms for Stablecoin Yields

We reviewed over 25 centralized and decentralized finance protocols to find the best stablecoin interest rates. Our analysis focused on key factors like available stablecoins, smart contract security, interest rate stability, liquidity, and regulatory compliance. 

Based on these criteria, we’ve narrowed it down to five top platforms offering solid returns, making them smart choices for investors looking to maximize stablecoin yields.

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1. AAVE

AAVE is the top platform for stablecoin yields, managing over $17 billion in assets across Ethereum, Arbitrum, Base, and other EVM-compatible networks. Supporting stablecoins like USDC, DAI, USDT, and PYUSD, AAVE offers competitive interest rates generated solely from on-chain borrowing activity, without any extra incentives. Its over-collateralization model ensures security, delivering stable returns, with an average APY of 6.24% on Ethereum last year.

Trusted by institutions like JP Morgan, BlackRock, Coinbase and the Monetary Authority of Singapore, AAVE combines transparency with decentralized governance. Its non-custodial, multi-network platform is designed for both individual and institutional users, offering a secure and flexible way to earn yields or borrow assets in DeFi.

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2. Stargate Finance

Stargate Finance is a good choice for those looking to earn high stablecoin yields, offering some of the best rates across several networks. Built on LayerZero, Stargate enables efficient cross-chain liquidity transfers, allowing users to earn solid returns by supplying stablecoin liquidity. Currently, APYs reach up to 11.94% on USDC on the Sei network, with other options like Aurora and Base offering over 9%.

Although Stargate holds a lower total value locked (TVL) compared to larger protocols like AAVE, with $424 million in assets, it remains a strong option for maximizing returns on USD stablecoins. Investors can earn by staking USDC, USDT, FRAX, sUSD and more, making Stargate a go-to platform for higher-risk stablecoin yield farming in decentralized finance.

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3. Ondo Finance

Ondo Finance is tailored for institutional investors seeking compliant, on-chain exposure to assets like US Treasuries. Offering 5.35% APY on USDY and 5.27% on OUSG, the platform combines DeFi access with the stability of traditional finance. With $384M in USDY and $226M in OUSG, Ondo offers liquidity backed by highly liquid ETFs from bond managers like BlackRock.

Ondo offers best-in-class security with assets held by qualified custodians, audited smart contracts, and 24/7 mint and redemption capabilities. Designed for qualified purchasers, it offers institutional-grade transparency and regulatory compliance, making it a solid option for institutions transitioning into DeFi while maintaining strict risk and asset management protocols.

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4. Spark

Spark is a protocol designed to optimize yields on DAI, offering 6% APY through its decentralized lending protocol, SparkLend. As part of the Maker ecosystem (now rebranded to Sky), it provides deep liquidity and integration with its DeFi platforms. Users can deposit DAI to earn passive income, driven by the Dai Savings Rate (DSR) and market demand. The sDAI token lets users earn yield while keeping their DAI liquid and available for use.

With $954 million in DAI supplied and $896 million borrowed, Spark has become the leading platform for DAI investors. Fully audited, non-custodial, and open-source, it ensures transparency and security. As a key part of the Sky ecosystem, Spark is the top choice for those looking to optimize DAI yields and gain access to the liquid staking token, sDAI.

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5. Curve Finance

Curve Finance is a top platform for earning high yields on longer-tail stablecoins, providing exposure to riskier strategies for those seeking greater returns. Its efficient stablecoin trading minimizes slippage and supports over 30 stablecoins, including USDC, USDT, MIM, FRAX, sUSDe, LUSD, and more. Liquidity providers can earn both swap fees and CRV rewards, resulting in APYs of up to 13%.

For users looking to take on additional risk, Curve offers strategies like pairing liquid staking stablecoins (e.g., sDAI and sUSDe from Ethena) with potential additional APYs of up to 9%. With $1.7 billion in total value locked, Curve remains a leading choice for investors aiming to maximize returns on alternative stablecoins.

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Where Do Stablecoin Yields Come From?

Stablecoin yields are primarily generated through three mechanisms: lending platforms, decentralized finance (DeFi) protocols, and liquidity pools.

1. Lending Platforms: These platforms operate like onchain banks. Stablecoins are lent to borrowers at a higher rate than depositors receive, with the yield coming from the rate difference.
2. DeFi Protocols: Stablecoins can be used in DeFi yield farming. Users earn returns by providing liquidity, receiving fees from trades, interest from loans, and occasional platform incentives.
3. Liquidity Pools: Stablecoins in decentralized exchange liquidity pools earn yields from a portion of trading fees.

While these strategies can offer attractive returns, they come with risks such as smart contract vulnerabilities and market fluctuations. Investors should carefully assess the balance between potential gains and associated risks.

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Is Stablecoin Yield Farming Safe?

Stablecoin farming comes with risks, despite the stability of the coins themselves. Several factors can affect the safety of yield farming platforms and strategies.

1. Smart Contract Risks: Yield farming depends on smart contracts, which may contain exploitable vulnerabilities. If a flaw is targeted, funds could be lost.
2. Liquidation Risk: Many yield farming strategies require collateral. If the collateral drops in value, it can trigger liquidation, leading to potential losses.
3. Impermanent Loss: Providing liquidity in pools exposes users to impermanent loss, where significant price changes in the assets reduce returns compared to holding them outright.
4. Regulatory Uncertainty: Changes in cryptocurrency regulations may affect how yield farming platforms operate, potentially disrupting stablecoin usage.
5. Platform Stability: The reliability of the platform is crucial. Poor management or technical failures can result in user losses.

To reduce exposure, it's essential to thoroughly research platforms, assess risks, select safer stablecoins, and diversify across different strategies to protect your investment.

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Editor's Choice: Our Preferred Stablecoin Platform 

AAVE is our team's favorite platform for earning stablecoin yields in DeFi. Combining USDC, one of the most trusted stablecoins backed by Circle and Coinbase, with AAVE’s well-established borrowing and lending protocol offers what we consider the best on-chain yield opportunity.

For a secure experience, we suggest adding liquidity to AAVE's Ethereum V3 market, which has $13.5 billion in liquidity, making it the largest on the platform. If you're looking for potentially higher returns, AAVE’s Base and Arbitrum markets are great options due to higher borrowing demand and lower USDC supply.

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Bottom Line

Earning yields on stablecoins offers investors a range of options, from safer, risk-adjusted platforms like AAVE to higher-yield alternatives like Stargate and Curve. Each platform provides unique advantages based on liquidity, user sophistication, asset type, and risk tolerance, making it crucial for investors to align their strategies with their risk appetite and onchain experience. 

By carefully selecting the right platform and staying informed about market risks, stablecoin yield farming can be a valuable part of a diversified investment portfolio.