So you’ve made it….

Congrats! You bought an NFT and flipped it or maybe your dog coin 10x’d. Now you’re wondering how you can cash out, but still make a return? One answer could be stablecoins.

There are generally two safe ways to earn yield off of your stable coins: Using a yield aggregator such as Yearn Finance, or liquidity providing for a stablecoin/stablecoin pair.

Yield Aggregator

What is a yield aggregator? Yield aggregators leverage different DeFi (decentralized finance) protocols and strategies to maximize user profits. Think of it as a digitized hedge fund/money manager. Protocols such as Yearn take whatever crypto asset you deposit and earn you interest on it. In this example, you would deposit your stablecoin of choice, and Yearn works hard at finding the best strategies to earn interest off, while taking a small commission.

An example of Yearn stablecoin rates.

Liquidity Provider

Providing liquidity is an important part of DeFi. For every trade there must be a pool of whatever is being bought and sold. If you’re trying to buy USDC using Dai for example, someone is providing a USDC/Dai pool for it, and getting a percentage of all transactions on it. Usually the biggest danger with providing liquidity is impermanent loss. The strategy here would be to cash out into 2 different types of stable coins (Dai/USDC for example) and provide liquidity for them. Your impermanent loss should be almost zero, as if a pool is drained, you still have another stable coin to pull from.

Current interest rates on stablecoins range from 3-10% at the moment, and depending on the market, could fluctuate.

Risks: Both strategies rely on the existence of stablecoins. There is some regulatory risk that stable coins become banned/regulated to a point where they don’t make sense to own anymore.