Which Crypto Earns The Most Interest?

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Earning interest on your idle crypto seems like a no-brainer.

After all, why leave your stash languishing on an exchange when it could be earning a bank-busting APY?

There are now numerous platforms available to investors in the UK and around the world which offer potentially double-digit rates of return.

These platforms generally offer a choice of cryptos you can hold for yield, although the amount they pay varies significantly depending on which coin you deposit.

Currently, the way to earn the most interest through a mainstream platform is by depositing stablecoins, such as Tether (USDT).

There are ways of earning more through strategies such as liquidity mining, but they tend to require a greater level of knowledge to set up and can be a riskier option.

Here, I look at the cryptos that pay the most interest and the best platforms to hold them on.

The cryptocurrencies that earn the most interest

As I’ve already mentioned, stablecoins are consistently the best earning cryptocurrencies to hold, but don’t ignore the others if you keep a diversified portfolio.

USDT and USDC are two examples of stablecoins that offer a good rate of return. You should be able to earn in the region of 10-12% APY at the time of writing.

Other tokens which offer tempting rewards – if supported by your platform of choice – are Matic, Dot, Avax and Atom, with rates in the 7-9% range.

Popular cryptos such as Bitcoin (BTC) and Ethereum (ETH) don’t pay quite as much – around 5-6% – but are more likely to be in the average investor’s portfolio.

Some platforms will even pay interest on meme coins, such as DOGE, although the rates of return will small, ie around 1% or so.

Nevertheless, if you have a few coins sitting idle, it’s better to earn something on them than nothing.

The two main options for earning interest are lending platforms and exchanges.

Lending platforms are dedicated companies which don’t offer anything else other than loans and interest accounts. Exchanges offer interest accounts in addition to a wide range of other trading and investment functions.

Bear in mind that no platform is risk-free. In 2022, Celsius, one of the big-name firms in the lending and interest space, filed for bankruptcy and suspended withdrawals during the ‘crypto winter’.

The safest place to keep you coins is still an offline storage solution, such as a hardware wallet, but the trade-off for this peace of mind is that they won’t accrue any interest.

Why do platforms pay interest?

Crypto interest platforms make their profits by lending money.

They need capital to facilitate these loans and that’s what you’re giving them by depositing your crypto.

The interest you earn is your reward for doing so. It’s a way of increasing you stash – or stacking some sats in the case of Bitcoin.

The bulk of the loans made by these platforms are made to other financial firms and it’s their interest payments that generate your yield.

Crypto lending/interest platforms

There are dozens of dedicated platforms that offer interest on your crypto deposits and selecting the right one might seem daunting.

Remember, many crypto exchanges also offer significant returns for holding and staking your crypto, despite the fact they’re not dedicated lending platforms.

But don’t be put off. If you’re new to this area of crypto the best way forward is to stick to the mainstream platforms that support the cryptos you hold.

Compare interest tables (although the rates can change frequently with the volatile crypto markets) and do your due diligence when you’re researching a company you’re interested in.

All the platforms publish APY tables so check that you’re happy with the rates before shifting your crypto across.

In most cases you won’t earn as much as you could on a dedicated platform, but it’s a good way to get a feel for how it works and if you’re comfortable with the process.

at the time triggered significant scrutiny by regulators into the nature of these platforms so be mindful of the unpredictability of the cryptosphere.

Are crypto interest platforms safe or risky?

Many exchanges offer a number of ways to earn interest on your crypto.

These include:

• Flexible interest (low risk)
• Staking (medium risk)
• DeFi Staking (higher risk)
• Dual Investment (higher risk)

As with most investments, the more risk you take the higher the returns, but you need to assess how comfortable you are with losing money before you plough your savings into some of the more sophisticated interest earning products.

Just because they’re available, doesn’t mean you should bet your house on them!

Also, if you’re prepared to commit your crypto for longer you can add a few percentage points to your yield.

Some platforms also reward you for having your interest paid in their native token.

Nexo, for example, allows you to add at least 2% to your return if you agree to your earnings being paid in its NEXO token.

Also, Nexo features loyalty tiers – the more NEXO tokens you hold the greater your rate of return.

You’re taking more risk by a) holding NEXO tokens and b) agreeing for your interest to be paid in them because the token as the potential to tumble in value, potentially more so than other coins.

However, the additional percentage points can add a significant boost to your holding.

Crypto in general is seen as a higher risk investment product so you could be effectively layering risk on risk by entrusting your stash to a lending platform.

Consider spreading your coins across multiple platforms to limit your exposure if there’s another Celsius moment.

If you’re already in crypto you’re probably familiar with the ups and downs of the market but you need to carefully consider if you want to add further risk to your position.

If you’re considering buying crypto purely to place on a lending platform you need to ask yourself how much you’re prepared to lose on the underlying asset and whether placing it in a more precarious position is the sort of investment you’re happy with.

There are many useful resources online which can help you decide which crypto lending platform is right for you if you’re looking to earn crypto interest.