Currently, Livret A, LDDS and other term accounts yield around 3%/year. Thanks to stablecoin interest rates, particularly on the Euro and Dollar, you can look forward to attractive yields paid daily, which can exceed 10%/year (between 4%/year and 15%/year depending on the day). To take advantage of this, whether you’re a company or an individual, you have two options:
- invest directly, managing your own wallet,
- use a yield account solution, simply by investing euros. A company then manages your assets and pays you the return.
In this article, we’ll explain how to earn a return from stablecoins with these two options.
A reminder: what is a currency-backed stablecoin?
A currency-backed stablecoin is a digital asset whose value is linked to a fiat currency such as the US dollar, euro or another national currency. It is designed to maintain a stable value in relation to this underlying currency.
These stablecoins are backed by reserves of fiat currency in bank accounts or other secure assets. Each unit of the stablecoin is supposed to correspond to an equivalent amount of the reserve currency. For example, a stablecoin backed by the US dollar should always be worth around 1 USD.
This stability is generally maintained by regulatory, control or governance mechanisms put in place by the stablecoin issuer. These can be financial entities, private companies or even decentralized organizations in the case of blockchain-based stablecoins.
The advantages of currency-backed stablecoins are their relative stability compared to volatile cryptocurrencies such as Bitcoin, making them attractive for use cases such as fund transfers and everyday payments.
1st option to take advantage of stablecoin returns: manage your own wallet
Here’s how:
First, you need to create a wallet with your login and access codes. This wallet will then have a unique address, made up of a sequence of numbers and letters.
Next, you’ll need to credit this wallet with a stablecoin, such as EUROC, which is a stablecoin backed by the Euro.
If you don’t yet have any digital assets, you’ll need to use a service that converts Euros into EUROC, called the “On Ramp” service (the reverse is called “Off Ramp” and involves converting stablecoins into fiat currency to your bank account).
Once you have stablecoins in your wallet, you can then invest them to generate a return. You’ll need to visit platforms that allow you to invest these stablecoins:
- or in Liquidity Pools, which are a kind of automated bureaux de change that allow conversions between different currencies,
- or in Performance Protocols,
- or in loan protocols.
If you contribute your stablecoin to a liquidity pool, you will receive an ongoing stream of the “exchange fees” generated by the liquidity pool.
Yield Protocols seek to optimize investments in liquidity pools in particular. However, as they charge a commission, they are not necessarily more attractive than a direct investment.
With regard to Lending/Borrowing Protocols, it should be noted that in decentralized finance, borrowing is generally only possible if the borrower has deposited at least 100% of the sum as collateral, and usually even 120%. The borrower can therefore raise cash without selling assets, but cannot pass on the repayment risk to the lender.
Let’s return to our concrete example, if you want to place EUROC on a Liquidity Poole. For example, you can visit the following websites:
- https:// curve.fi
- https://yearn.fi/
- https:// app.balancer.fi/
Then search for “EUROC” in the proposed Pools to discover the current yield and associated conditions.
NB: to get started, perform a search on the “Ethereum Mainnet”. This simply means that you’ll be using the main, central blockchain. Once you’ve familiarized yourself with it, you can then use other derivative networks such as Arbitrum or Optimism, which cost less but require more management operations.
Once you’ve connected your wallet to the chosen site, the latter will recognize the amount of EUROC available in your wallet, and you can launch the deposit operation, which will require your validations. Once the EUROC have been deposited, you start to receive the return.
What arethe costs if I manage the wallet myself?
There is no subscription fee, but you will have to bear the transaction costs yourself. Currently, on the Ethereum network, a single transaction costs between €30 and €100, regardless of the amount involved.
There is no subscription fee, but you will have to bear the transaction costs yourself. Currently, on the Ethereum network, a single transaction costs between €30 and €100, regardless of the amount involved.
What’s more, once you’ve deposited, if you want to withdraw any money, even just the return you’ve earned, you’ll also have to pay a transaction fee of between €30 and €100. So unless you’re investing sums in excess of €25,000 for a significant return, the fees can quickly negate the appeal of managing your own wallet yourself. Especially if you want to be able to exit it at any time (in which case we invite you to read the 2nd option in this article: using a yield account solution by simply placing euros in it).
Which pools do you recommend investing stablecoins in?
Conditions are constantly changing, and you need to keep an eye on your wallet and the various offers to arbitrate any changes.
To start with, we can remind you of the two sites mentioned above as examples: https: //curve.fi and https://yearn.fi/.
Please note that these are only suggestions, and do not replace the need to conduct your own analysis to keep abreast of conditions and form your own opinion.
Option 2: use a yield account solution, simply investing Euros
If the 1st option seems too complicated or time-consuming to manage, you can opt for a much simpler formula for your company or yourself: use a yield account in which you simply invest euros. This is a type of stable interest-bearing savings account, with higher interest rates than interest-bearing current accounts or regulated passbooks, and a different operating principle.
The principle behind this interest-bearing savings account is simple:
- you invest euros from your bank account,
- you receive a return on these invested euros,
- you get your euros back at any time.
Advantages of this 2nd option :
- no technical knowledge required,
- you don’t have to manage anything: no wallet transactions, no arbitrage decisions based on a particular liquidity pool,
- transaction fees are diluted over large volumes, so you can invest without any upfront costs.
Disadvantage :
The company operating this type of service charges a commission. But in general, this is more attractive than direct management, thanks to the dilution of transaction costs on large unit volumes managed by the company. In addition, you automatically benefit from the company’s intelligence in identifying the best investments.
Here are a few examples of products that use the daily interest account principle:
- eco Account :
- no entry or exit fees, no subscription,
- recovery of funds in 1 to 3 working days,
- the company retains 20% of the gross yield to cover service costs + 5% to purchase carbon credits,
- the return net of fees, i.e. approximately 8.20%/year for the customer, is paid daily,
- available to companies and individuals
- main requirements: residence in France, age of majority (for individuals)
To discover the eco Account, click here https://www.compte-eco.fr/
- My Livret C
- for businesses only, one of the products offered by this company lets you choose from several asset portfolios to invest cash in,
- cash back in 5 days
- To find out more about Mon Livret C, click here https://www.monlivretc.com/
- Nexo – Earn interest solution
- although not a French-language site, offers you the opportunity to invest your cash in the stablecoins of your choice,
- interest paid daily,
- To discover Nexo’s offer, click here https://nexo.com/earn-crypto
We hope you find the answers you’re looking for in this detailed practical point, and wish you a good yield!
