Coinbase crypto exchange has launched a Dai rewards program that will see its clients earn a 2% APY for holding this stablecoin in their accounts.
According to the blog post on July 29, this product will be available in six countries, which include:
- the U.S.
- United Kingdom
The move comes as another boost to Maker, which is Dai’s parent and currently the leading DeFi with a total value locked (TVL) of $1 billion, 27% of the total DeFi market value.
Back in 2019, Coinbase rolled out a similar initiative for the USDC stablecoin with rates as high as .125%; this was, however, slashed by 90% this year. The U.S. based crypto exchange has since noted that stablecoins have quite a role to play in the crypto ecosystem when it comes to volatility elimination.
These digital assets have grown significantly, comprising $12 billion of the crypto market, it's no wonder Coinbase has such faith in them:
“This is one reason stablecoins have grown to a market cap of more than $12 billion, as people use them to hold funds without volatility, transfer funds quickly and cheaply, and gain exposure to the U.S. dollar.” reads the blog.
Notably, the new Dai Rewards by Coinbase will be issued to accounts with as low as $1, with the initial rewards set to be distributed within five days. With the current market lows in savings rates, they might just be another asset class with a better deal than wall street bankers at the moment. But that isn't to say that traders aren't already voicing their displeasure for such a low rate. Comparing the rate at which Coinbase offers vs many other exchanges and DeFi apps, it is quite low. For example, Nexo offers 8%, Compound does 7.28%, or Celsius sitting at 5.93%.
Also, crypto investors get to control their digital assets at any time based on the aspect of decentralization. Dai holders can withdraw their rewards as well as funds at any time. The downside, however, is that crypto exchanges are risky than traditional banks.