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Learn about Tether Staking

How to lend USDT?

There are several ways to earn a return on your USDT, including lending them out to custodial providers or via a Defi lending protocol. We suggest using a Ledger Hardware Wallet to maintain complete control over your funds. Before delegating your tokens, ensure they are stored on your Ledger wallet and follow the instructions provided.

Step 1: Access to the Aave lending app page that features USDT.

Step 2: Click “Connect wallet” in the upper right corner. Select the Ledger option.

Step 3: Click “Supply” under “Your info”. This allows you to deposit your tokens into a smart contract in exchange for aUSDT tokens.

Please see the official lending tutorial here.

How do I choose a lending platform?

Distinguish between Custodial and Non-Custodial Lending:

  • Custodial lending refers to lending your crypto through a centralised entity such as Binance, Kraken, Coinbase
  • Non-custodial lending means that you have sole control of your private keys, and therefore control and custody of your own assets

Do not fall for high APR %: When you stake your crypto, you will usually be quoted an APR for your investment. Some lending platforms may offer very high APRs as a way to attract investors, but these high APRs may be unrealistic and involve additional risk

Safe USDT lending typically offers yields of less than 2%.

Stick to well-known DeFi protocols: Look for protocols that have liquid markets and choose protocols that have been audited by reputable auditors for added security.

How is the yield generated?

The lending yield on USDT is generated from:

  • Lending and Borrowing: On platforms such as AAVE, USDT token holders can contribute their USDT to liquidity pools, which can then be accessed by borrowers who provide collateral assets. These borrowers take out loans by borrowing against the collateral assets they have deposited. In exchange for the loan, borrowers pay an annual percentage rate (APR) to the token holders (i.e. lenders) who have added their USDT to the liquidity pools.

What are the risks of lending USDT?

We strive to make lending as safe and transparent as possible, however, it’s important to consider factors that may influence whether a particular lending option is appropriate for you.

  • Smart contract risks: Defi platforms like AAVE, have inherent risks associated with smart contracts. These contracts can be exploited or hacked by a malicious actor
  • Counterparty risks: If you use a centralized lending platform, you may be exposed to counterparty risk. This is the risk that the other party in the transaction may not fulfill their obligations and default on the contract.
  • Protocol security risks: The collateral for USDT may include loans and receivables from third parties, which implies a collateral risk. There is also a risk of unknown bugs in the protocol and the USDT investment in general.

Keep in mind that this is not a comprehensive list of all potential risks associated with lending.

What is USDT?

USDT is the native token of the Tether protocol and it is used to perform various important functions within the platform.

Store of value: USDT is used as a unit of measure for value exchanged on any supported blockchain. Users can interact with it by sending it to others, buying and selling on exchanges or OTC markets, or using DeFi for lending and staking. Tether tokens enable businesses, including exchanges, wallets, payment processors, financial services and ATMs, to easily use fiat currencies on blockchains.

What are the tokenomics of USDT?

The total supply of USDT can increase or decrease depending on demand for the token and the actions of Tether Limited, the issuer of Tether. As USDT is pegged to the US dollar, the total supply is typically closely tied to the amount of US dollars held in reserve by Tether Limited to back the issued Tethers. It’s important to note that Tether Limited claims to hold sufficient reserves to back the outstanding Tethers, but this has not been independently audited, so the exact total supply of Tether at any given time may be difficult to verify.

There will be times when the quoted price on exchanges may trade above or below $1, but this is usually speculation based on market volatility and does not mean that USDT is not pegged at 1:1 with USD.

Tether is a stablecoin meant to mirror the value of the U.S. dollar. The idea was to create a stable cryptocurrency that could be used like digital dollars. USDT is the most popular stable coin and even acts as a dollar replacement on many popular exchanges! According to their site, Tether converts cash into digital currency, to anchor or “tether” the...Read more

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