Compound📈Deposit and Borrowing Yields💰
Crypgoat and @astothart give us an inside look at the average yield for lending and borrowing on Compound
We know that creditors and borrowers are active on Compound, the crypto lending protocol that currently has nearly $17.5 billion in assets earning interest on the platform.
But exactly how much are stablecoin borrowers and lenders earning on these activities, and how are yields differing for these two groups? Let’s take a look…
As Crypgoat points out in a particularly compelling bounty submission, lending yields for Stablecoins peaked in February of this year, hitting highs of 10.4% for USDT and 9.0% for both DAI and USDC. In the time since, however, those figures have dropped significantly, falling to 5.3% for USDT, 4.2% for USDC, and 3.4% for DAI.
Crypgoat also noted that USDT generally carries higher interest rates, indicating a possible risk premium on Tether. The same trends can generally also be seen when examining borrowing.
@astothart, meanwhile, noted that the difference between the highest supplying rate and the lowest borrowing rate among stablecoins is typically between 0 and 1%, showing that it’s possible for clever users to strategically supply a stablecoin while borrowing another of almost identical value and earn a profit.
Constantly switching markets, however, isn’t a very practical strategy, so instead @astothart suggests looking at the differences between the maximum
monthly average annualized supplying rate, and the minimum monthly average annualized borrowing rate
among stable coins.
As can be seen in the graph above, the difference between these two values is often negative. That means it costs a bit more to borrow than you can earn supplying it, or more simply put, that users can’t realistically expect to earn a profit on equal amounts of supplied and borrowed value.
