Starting Wednesday, customers of the San Francisco-based cryptocurrency exchange can earn interest on their holdings of the dollar-pegged stablecoin USDC. The annual percentage yield is 1.25 percent.
"One of the things we know is a bad customer experience is having to move your money back and forth from Coinbase to a bank account [to] earn a little bit of interest in the bank account. We're trying to bring some of these experiences together but make them crypto-first and on Coinbase."
Users of the exchange with at least one dollar's worth of USDC in their accounts will automatically begin to accrue rewards on their holdings, with no additional cost or fees.
Paid out to users on a monthly basis, all rewards earned on Coinbase can be tracked in real-time and subsequently used instantaneously to buy other cryptocurrencies listed on the exchange.
Speaking to the inspiration behind the USDC Rewards program, Branzburg noted that a 1.25 percent interest rate on holdings of U.S. dollars is "15 times more than the national average or what people might get through a savings account."
While the rates are lower than what a user could benefit from on decentralized financial applications such as Compound or dYdX, Branzburg said the USDC Rewards program makes earning interest on USDC exceptionally easy for consumers since they no longer have to move money into a separate application or account.
"Particularly for developing economies, giving the ability for people to hold USD-equivalent funds and get something like interest a year is really tremendous," said Joao Reginatto, director of product management at crypto finance startup Circle, which launched USDC in partnership with Coinbase.
Outside of Coinbase, Circle is currently the only other approved entity to issue new USDC coins.
Together, Coinbase and Circle make up the CIRCLE consortium meant to drive adoption for the USDC stablecoin and provide a governance framework for its continued development.
Between the two startups, over 1 billion dollars worth of USDC has been issued since Sept. 26, 2018.
Coinbase to Pay Users 1.25% Interest on USDC Stablecoin Holdings
Published on Oct 2, 2019
by Coindesk | Published on Coinage
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