Compound and Coinbase Release Stablecoin Yield Products

The stablecoin yield services will be available to both retail and institutional investors.

By
John Tunney
on
July 2, 2021
Category:
Blockchain News

Safer Yields

In recent news, Coinbase as well as Compound have both released stablecoin yield products, both promising 4% annual percentage yield (APY) on USD Coin (USDC), a coin which strictly follows the value of the dollar with almost zero price volatility. Put in perspective, a 4% yield is roughly 65 times more than the US national average (.06%) APY for an individual's bank savings account.

News broke on June 28th, when Compound announced their new service through a Medium article which introduced their stablecoin yield service called Compound Treasury. The Compound Treasury is a service which is focused toward institutional investors and companies new to DeFi guaranteeing a 4% yield on their USDC stablecoin. Just the day after on June 29th, Coinbase reported via their Medium article that Coinbase will also offer a 4% APY service on USDC. Coinbase’s service is targeted more towards the average investor. 

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Details About Compound Treasury 

  • Offers a 4% yield on stablecoin USDC for large institutional investors
  • The service is built for companies with large USD holdings that have yet to immerse themselves in the crypto space while making the process straightforward and without protocol complexity 
  • Companies and institutions wire money to their Compound Treasury account and instantly start earning a guaranteed rate of 4% a year 
  • For companies and institutions that have deposited money into their Compound Treasury account, they can withdraw their money anytime, with a 24 hour turnaround 
  • Institutional investors and companies can take advantage of no minimums or maximums and no fixed terms or durations with their Compound Treasury account
  • Detailed balance audit of account ready monthly and on demand 

To learn more about Compound Treasury or wish to reach out, they have provided a support email for institutions with inquiries: treasury@compound.finance.

Source


Details About Coinbase’s Stablecoin Yield Service

  • The service offers a 4% yield on USDC 
  • Coinbase will not loan out money to unknown third parties
  • The APY earned via Coinbase’s stablecoin yield service is not FDIC or SIPC insured
  • There are risks involved, and agreeing to Coinbase’s terms when engaged with their new service means investors accept terms and individual risks
  • The 4% APY is subject to change 

To get started earning 4% APY with Coinbase, visit their platform. 

The stablecoin yields which are being offered by Coinbase and Compound are very impressive. Although crypto experts may know that there are yields that exist for these stablecoins floating around 8% APY, the offerings by Coinbase and Compound are very impressive and offer a far more secure, reliable yield. 

To really understand the value (a 4% yield on stablecoins) being brought by these protocols, an example should help illustrate the point. 

  • Trader A puts 100 dollars of USDC into Coinbase’s yield protocol or Compound Treasury. After a year they have $104 dollars because of the 4% APY. 
  • Trade B puts $100 US dollars into a US savings account. After a year, they have $100.06 dollars because of the .06% APY, which is the average across savings accounts.

Although in the example it may not seem like $3.94 is a big difference, when investing hundreds of thousands of dollars or more, that 4% yield becomes far more noticeable.


What is Coinbase?

Coinbase is a crypto exchange that offers investors and users the ability to sell, buy, exchange or store their crypto. The exchange offers the majority of the most popular crypto assets to buy and sell, including but not limited to: Bitcoin, Ethereum, Bitcoin Cash, Cardano, Polkadot, Uniswap and Solana. The exchange is simple to use and geared towards beginners, which has resulted in Coinbase becoming one of the most popular crypto currency exchanges in the world. Coinbase is now available in over 100 countries

What is Compound? 

Compound ($COMP) is a DeFi lending and borrowing crypto currency platform. The protocol offers investors and users the ability to earn interest on their cryptocurrency by lending the money to the protocol, which in turn offers the investor an APY on the deposited money. The protocol also lets users borrow money against their cryptocurrency on the platform, which is a hugely powerful function which Compound offers. Compound makes borrowing and lending crypto assets an incredibly efficient process for investors, which as a result, has helped the protocol grow in popularity and size.

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John Tunney

John Tunney is an accomplished analyst and crypto enthusiast. The UCLA alum has been actively reporting and blogging for 3 years, and has a passion for all things finance.

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