How to Earn Yield on Stablecoins: A Beginner's Guide to USDB

Early adopters of USDB on Spark have a great reason to celebrate! Now, holding and trading the stablecoin comes with rewards, paid out in bitcoin to your Spark wallet in 24-hour increments. 

In this guide, we’ll cover how it works, what you need to do, and how to get started using Xverse.

TL;DR

• USDB is a stablecoin on Bitcoin, issued on the Spark protocol and fully backed by the US dollar.
• While stablecoins typically don’t pay interest in the traditional sense, Flashnet now offers rewards for holding and trading USDB.
• You can earn between 3.5% and 6% APY, depending on your 24-hour trading volume, paid out in BTC.

What Are Stablecoins? 

Stablecoins are tokens designed to keep a stable value, usually pegged to a fiat currency such as the US dollar, the Euro, the British pound, etc., or to a commodity like gold. 

In practice, this means the stability of the fiat currency of choice, commonly the US dollar, combined with the utility and flexibility of a blockchain-based asset.

As with any other ecosystem, stablecoins on Bitcoin are an important part of the DeFi ecosystem due to the high degree of price stability.

Do Stablecoins Pay Interest? 

No, unlike the fiat currency in your bank account, stablecoins don’t natively pay interest.

However, various efforts have been made to incentivize users in other ways, such as offering yield through staking, lending, or rewards programs that support stablecoins. This way, it’s possible to earn yield from stablecoins in spite of no traditional interest being paid out.

As the regulatory framework around digital asset is changing, we may see interest-bearing stablecoins soon. Unlike then, however, DeFi innovation like the USDB reward system act as the replacement. 

What is USDB? 

USDB is a Bitcoin-native stablecoin that’s regulated, reserve-backed by US dollars, and based on the Spark protocol. The stablecoin was launched by Brale, a US-regulated entity focused on stablecoin issuance and blockchain tokenization.

The token is fully backed by US Treasury bills, cash, and cash equivalents, which are held in regulated reserves to maintain the peg. 

This makes USDB the first of its kind: fully backed, regulated, and Bitcoin-native.

How Does USDB Work?

USDB is issued by Brale, which also holds the reserves backing the stablecoin, in accordance with US stablecoin regulations.

On the technical side, USDB is issued on Spark, a high-performance Bitcoin Layer 2 that comes with zero fees, near-instant settlement times for Spark-based tokens, and its own token standard called BTKN.

This combination is what makes USDB unique among similar assets: it gets the speed and low cost of Spark, inherits the security that comes with Bitcoin, all while being compliant with US regulations.

How to Earn Stablecoin Yield Using USDB Rewards, Step-by-Step

Flashnet, a decentralized trading and liquidity protocol on Spark, is launching a program that lets USDB holders earn rewards based on their 24-hour trading volume.

The steps are simple:

• Get USDB: Either bridge USDC or swap BTC for USDB in a compatible wallet, like Xverse.
• Hold: Your USDB will generate rewards by default, but only at the lowest reward tier. You don’t have to do anything else.
• Trade: This is optional, but trading using USDB can help you reach higher rewards based on your trading volume.
• Watch your rewards arrive: Your BTC rewards will be deposited to your wallet on a daily basis at 00:00 UTC.

Trading may be optional, but the rewards will make you consider joining if you were only going to hold. There are six tiers based on daily volume (DV):

1. Less than $500 DV: 3.5% APY
2. $500 - $2,499 DV: 4% APY
3. $2,500 - $4,999 DV: 4.5% APY
4. $5,000 - $9,999 DV: 5% APY
5. $10,000 - $24,999 DV: 5.5% APY
6. More than $25,000 DV: 6% APY.

This volume is measured in 24-hour rolling windows, and the average is taken, which means you can’t deposit just before midnight to cheat the system. 

To get started, you need to hold a minimum of 10 USDB. Keep in mind that rewards are capped at 500,000 USDB, which means that trading more won’t net you more in rewards.

The rewards are paid out in BTC directly to your Spark wallet. 

Access USDB Using Your Xverse Wallet 

If you’re ready to get started earning yield on stablecoins such as USDB, download and install the Xverse wallet. Here, you’ll find an integrated Spark wallet, bridging to and from Spark, and swapping features for Spark-based tokens. 

Download the Xverse wallet today to start earning stablecoin yield.

FAQs

Can you earn yield on stablecoins?

You can earn yield on stablecoins by taking advantage of the rewards offered by different protocols. One example is the rewards for holding and trading USDB offered by Flashnet, the DeFi protocol on Spark. The protocol offers between 3.5% and 6% APY depending on your trading activity over a 24-hour period.

Can stablecoins pay interest? 

In the traditional sense, stablecoins can’t pay interest. However, Flashnet rewards for holding and trading USDB are very similar in the sense that you can get incentivized for participating in this ecosystem, receiving anywhere between 3.5% and 6% of your USDB in the form of BTC rewards.