So, you’ve been thinking about getting into yield farming? Who can blame you, right? It lets you earn higher rewards on your crypto than just putting it into a wallet and waiting for its value to increase. But here’s the thing. You need to find the right yield farm. It’s simple, if you use a reputable yield farm, you’ll avoid scams and reduce your risks of getting hacked. If not, well, you can guess the consequences.
However, the problem is that there are so many yield farms out there that it could be difficult to find the right one for you. Fortunately, we’re here to help and, in this post, we’ll look at the best USDC yield farms out there today.
Wait, before we look at the best USDC yield farming, let’s first recap some concepts so that everyone knows what we’re talking about.
What is Yield Farming?
So, what exactly is yield farming? Simply put, yield farming is when you use decentralized finance (DeFi) protocols to generate higher returns on your crypto investments. Remember, DeFi is the umbrella term for a variety of blockchain-based financial applications that facilitate peer-to-peer lending and payments.
Anyway, instead of just storing your crypto in a wallet and waiting for its value to increase, with yield farming you’ll typically stake or lend it out to generate returns. These returns can take the form of a percentage of transaction fees, interest, or in some cases governance tokens.
How Does Yield Farming Work?
We’ve now recapped what yield farming is. Good. Let’s now look at how it works. There are several types of yield farming that let you generate a return on your crypto. No matter which you use, yield farming is made possible by smart contracts that automate the financial transactions between everyone on the network. The different types of yield farming include providing liquidity, lending, borrowing, and staking.
What is APY in Yield Farming?
Finally, you should understand how you calculate your returns when yield farming. Generally, when it comes to investments, you’ll find two measurements – annual percentage rate (APR) and annual percentage yield (APY). Although each refers to the percentage returns earned in a year, the difference between the two is that APY takes into account compound interest while APR does not.
And this is an important distinction, as compound interest is where the magic happens. This is simply because compound interest allows you to grow your investments exponentially. It’s no wonder Einstein said that compound interest is the eighth wonder of the world. Yield farmers, platforms, and protocols use both APY and APR as a yardstick when measuring returns. But considering its unique features, yield farming might need a unique metric soon.
Now, why should you use USDC when yield farming? For one, as a stablecoin, USDC is pegged at 1:1 to the US dollar. In addition, it’s fully backed by US dollars and dollar-denominated assets. So, you’ll avoid the volatility of many other cryptocurrencies. In turn, this can also help you to stabilize your portfolio.
An added advantage is that USDC makes it easy to transfer money into and out of a token in dollar value without needing to convert crypto into it. In other words, you’ll always know what your tokens are worth.
We’ve finally come to the part you’re here to read. What are some of the best USDC yield farms available out there? Luckily, we’ve done the research, so you don’t have to. Here, we’ll give you a list of the best yield farms you can consider when you want to earn some returns.
Keep in mind, though, that while we believe these yield farms to be the best, the choice of the right one is ultimately up to you. And this choice depends on your goals, the features you want, and what type of farming you would like to do. Simply put, there’s no one-size-fits-all approach when it comes to yield farms.
With that in mind, let’s look at the top 6 USDC yield farms.
Undoubtedly, Aave is the safest yield farm out there. It’s also one of the most popular. The protocol can be best described as a system of lending or liquidity pools where you can deposit your USDC.
Your USDC then becomes part of these liquidity pools that AAVE can lend out to other users. In turn, you’ll receive interest on your deposit. Likewise, you can borrow using the Aave protocol, in which case you’ll pay interest.
There’s over $16 billion in value locked in Aave across 7 networks and over 13 markets. You can expect to earn an APY of anything up to 7.45% when you use Aave for yield farming.
Quickswap is an automated market maker running on the Polygon Network. When you use it for yield farming, you’ll add your USDC to a liquidity pool in the form of a token pair. In return, you’ll receive liquidity pool tokens that represent your share in the liquidity pool.
You’ll then be able to provide these liquidity tokens to third parties for use in yield farming. Here, you’ll then earn rewards of 0.3% which is shared by liquidity providers based on their share in the pool, and you’ll be able to earn an APY ranging from about 2% to 60%, depending on the token pair you use.
Keep in mind, that these are just a guide and your APY might vary. For instance, APYs of about 600% have been reported on Quickswap.
Like Quickswap, Sushiswap is also a decentralized exchanged and automated market maker. You can earn returns on your USDC by being a liquidity provider. To do this, you’ll connect your wallet to Sushiswap and lock a token pair into a smart contract.
Buyers can then swap tokens within the liquidity pool in terms of the pool’s rules. As a contributor to the liquidity pool, you’ll earn protocol fees and a portion of the newly minted SUSHI every day. Once you’re happy with your return, you can reclaim your funds together with the return you’ve earned. Apart from this, users can also stake their SUSHI to earn even more rewards. You can expect to earn an APR of about 8.7%.
Hop is a scalable, general token bridge that allows users to send tokens from one sidechain to another almost instantly. Here, you’ll be able to earn returns on USDC by contributing to the liquidity pool and, in turn, earning rewards. To do this, your USDC will be swapped for hTokens (in this case, the hUSDC) and made part of the pool.
This not only allows users of the protocol to seamlessly transfer tokens from one network to the next, but also lets you earn a part of the fees paid by users to use the protocol. You can expect to earn an APR of about 0.95% when you yield farm using Hop.
Uniswap is an open-source protocol for providing liquidity. As such, it serves as an automated market maker which uses a series of smart contracts that determine how liquidity pools are created, how users provide liquidity, and how swaps are made. It’s one of the largest decentralized exchange protocols, with a trading volume of more than $1 trillion and over 300 integrations.
To provide liquidity, you’ll connect your USDC wallet to the Uniswap interface and provide a token pair to the pool. You’ll also set the price ranges in which you’ll provide liquidity and the amount you want to contribute. You’ll then earn rewards for your contribution. You can expect to earn an APY of about 19% on Uniswap.
Polycat is an automated market maker and yield aggregator that focuses on providing value to its users. Launched in 2021, it was one of the first yield farms on Polygon, and despite being relatively young, the platform offers several features. As such, it offers various ways in which you can generate returns with your USDC.
For one, you can vault your USDC where you’ll be able to earn an APY of up to 36%, depending on what token pair you use. You can also stake your USDC and, here, you can earn an APR of up to 87%, once again depending on the token pair you stake.
Now that you’ve seen some of the best yield farms, you’re probably wondering if yield farming is safe. And this is a valid concern when you consider that markets have been on a downtrend as of late. To answer the question, it’s important to consider the general risks relating to yield farming.
Here, like any investment, you can’t guarantee your returns and, in a turbulent market, as we have now, you could face an increased risk of loss. Also, as is always the case, the smart contracts that make yield farming possible could be hacked, and you could be scammed by less reputable platforms.
That being said, you could argue that, as the markets decline, users will lend more, which, in turn, creates an opportunity. Also, as investors move away from unstable fiat currencies, demand for crypto could increase and create further opportunities.
Ultimately, if you have the stomach to face the risks mentioned earlier, yield farming can still be extremely profitable.
Yield farming can be extremely lucrative, and you can earn far higher returns when yield farming compared to just saving your crypto. There you go, now you know what the best yield farms are if you want to use USDC. Hopefully, this post showed you what the best USDC yield farms are.
Another bonus of many of the yield farms on our list is that they’re compatible with Spritz Finance. This means that, by using our app, you’ll be able to pay your bills directly from these protocols, which not only makes money management more convenient, but also ensures that you don’t lose out on any of the returns and rewards you earn.
So, why not head over to our website and join the waitlist to join our private beta now.