How to earn high interest on USDT?

USDT is the stable-coin that dominates the crypto industry. It is known for its wide variety of applications, and today, we will be discussing one such application - USDT’s yield potential!

Key Takeaways

→ Cryptocurrencies pegged to Real World Assets like fiat currencies are called stablecoins; they are non-volatile crypto assets.

→ Due to their low-risk and less volatile nature, stablecoins make excellent assets for staking. However, their yield is generally low.

→ Multipli is a DeFi yield protocol that generates an average of 10-25% APY on your USDT through Contango and Spot-Perpetual Arbitrage strategies.

→ USDT is a stablecoin issued by Tether; it has a market cap of $116 billion, and is the largest stablecoin and the third largest cryptocurrency by market cap.

(Scrooge McDuck jumping into his high USDT yield reserves.)

Investopedia said, ‘Tether's USDT dominated cryptocurrency exchange trading volumes throughout 2023 and into early 2024.’ It boasts many advantages due to its huge market cap and stability, but a disadvantage of stablecoins is the limited USDT yield farming options in the DeFi industry. Fortunately, multipli can solve that problem!

What are stablecoins?

Stablecoins are cryptocurrencies tied to stable assets like fiat currencies and they act as alternatives to volatile and unpredictable cryptocurrencies.

It brings the best of both worlds by combining the stability of TradFi, and the innovation and decentralisation of crypto.

What is USDT?

USDT, issued by Tether, is the most popular stablecoin by market cap; it is widely used in transactions, institutions and exchanges due to its accessibility, ease of use and stability.

Why should you generate yield on your USDT? Stablecoin yields vs other cryptocurrency yields

Most of USDT’s value stems from being a stablecoin, which is often in high demand within the DeFi landscape.

💡 Because it is pegged to USD→ it is more stable → less volatile → returns are more predictable → risk is lower.

Regulatory concerns are one of Tether’s biggest challenges. The company has come under the radar of many regulators due to a perceived lack of transparency regarding its USD reserve backing. Despite this, USDT remains the largest stablecoin by market cap.

What are the disadvantages of USDT yields?

USDT's stability comes at the cost of certain disadvantages:

→ Limited options on exchanges to earn yield

→ A certain level of regulatory uncertainty

→ Lastly, relatively low yield. This is a big no no!

However, multipli’s average yield output is 10-25% APY on your USDT. Before we tell you how we achieve this, here’s a bit about multipli. If you’re familiar with multipli, skip to the next part.

What is Multipli fi?

Multipli fi is a zero-knowledge powered, multi-chain DeFi protocol that enables users earn yield on their crypto assets. It employs minimal risk and simple yield generating arbitrage strategies to generate yield on your USDT.

When you deposit your USDT into Multipli fi, it’s locked into smart contracts, and with the help of custodians, mirrored on centralised exchanges - this ensures adequate liquidity to carry out our strategies.

How will Multipli fi earn yield on your USDT?

The first strategy in our Yield Generating Arbitrage strategies is:

• Contango Arbitrage: This strategy aims to capture the price difference between an asset’s spot price and futures price by shorting in futures and going long in the spot market simultaneously.

  Also note that the USDT you deposit will be converted to native and non-native assets to generate yield for you; for this example, we’ll be using BTC.

💡 Contango refers to the difference in the price between an asset’s spot price and futures price.

Example:

→ Market Scenario: Let’s say you have put 50,000 USDT into Multipli fi. We will use it in our arbitrage trading strategies such as:

We spot a contango in the Bitcoin market.

• Spot Price of BTC: $50,000

• 3-month Futures Price of USDT: $55,000

→ Strategy Execution:

• Buy Spot: Purchase BTC at $50,000.

• Sell Futures: Sell a futures contract at $55,000 for a 3-month expiry.

→ Outcome at Expiration:

• Profit: Earn $5,000 by delivering BTC bought at the spot to fulfill the futures contract.

The second strategy is:

• Spot-Perpetual Funding Rate Arbitrage: This strategy aims to profit from the funding rate generated by holding positions in perpetual futures while maintaining neutral positions in the spot market.

💡 Funding rate is a payment mechanism between long and short position holders of perpetual futures assets to influence its price to stay in sync with the spot market’s price.

Essentially, if

or

Example:

→ Market Scenario:

• Spot Price of BTC: $50,000

• Perpetual Swap Price of BTC: $50,000

• Positive Funding Rate: 0.1% per day (paid by long positions to short positions)

→ Strategy Execution:

• Buy BTC at Spot: Purchase BTC at $50,000

• Short Perpetual Swap: Open a short position in BTC perpetual swaps to collect the funding rate.

→ Outcome:

• Profit: The funding rate is 0.01% per 8 hours. As a short position owner, you receive the funding rate payment.

  Over a day, you will make:

  Funding rate= 0.01% of $50,000 = $5.

  You receive 3 payments a day= $5 X 3= $15

  Over a month, you will make

  $15 X 30= $450

  If you’ve put in 10,000 USDT = 10,000 X 0.01% X 3 X 30 = $90

  You’ve made $90 by employing this strategy while ensuring that the risks are minimal due to your neutral position.

  To dive deeper into these innovative strategies, go through our Docs.

How much yield does Multipli fi generate on your USDT?

Multipli will generate 10-25% APY on your USDT. Our strategies are backed by extensive research and 5 years of promising back-tested data. This ensures that your funds will generate optimal yields.

Conclusion

In short, if you’re looking to earn yield on USDT through a decentralised protocol, Multipli fi is the place for you.

By the way, have you been Rickrolled today?

Because Multipli fi is never gonna give you up, never gonna let you down! With Multipli, your yield is always on the rise.