I have started looking at a variety of options that I could use as a crypto stablecoins savings account for the short, mid, and long-term. I’m thinking of minimizing my risks on my crypto investments by allotting a portion of my crypto into stablecoins.
For those who are not familiar with stablecoins, these are crypto assets that are pegged to a currency, most popularly, with the US Dollar.
The top 5 stablecoins according to Coinmarketcap (as of the time of writing) are – $USDT, $USDC, $BUSD, $UST, and $DAI.
By the way, before we continue, please be informed that this is not a piece of financial advice and should not be treated as such. I’m just sharing on this blog my experiences on crypto trading, investing, etc. If you need financial advice, I highly suggest that you get in touch with a professional financial advisor.
And also, don’t forget to always Do Your Own Research (DYOR), in order to protect your hard-earned money from huge risks and also to protect yourself from unnecessary stress. Keep in mind that crypto is a very volatile and high-risk market.
Anyway, going back to the topic…
My Current Savings Account
I don’t have much cash on my savings account since I started a bit late in prioritizing saving money (which I kinda regret TBH). But, as they say, it’s better late than never LOL!
Anyway, since savings accounts in traditional banks here in the Philippines offer very little interest, I have opted to open accounts with various digital banks. I do have some small savings on CIMB, Diskartech , and KOMO.
And since, I have been dabbling in crypto for almost a year now, I have decided to also save some stablecoins in crypto to diversify my savings portfolio.
Advantages and Disadvantages of Saving Crypto (Stablecoins)
Some of the Advantages
Higher Yield than TradFi
The biggest advantage is of course – higher yields. Traditional banks offer way less than 1% annual interest, digital banks offer around 2 – 4% annual interest while crypto savings account offers 5% or more interest. (Please keep in mind that the interest rates that I have mentioned here are subject to change and might have decreased/increased by the time you read this post.)
A Lot More Options to Earn
One option is that you can pair up your stablecoins with other crypto and become a liquidity provider with the protocol of your choice. Bear in mind though that you will be subject to Impermanent Loss when you do this.
Great Remittance Alternative
If you’re an OFW working abroad and if you’re saving some money to send to your family, then saving your money in stablecoins might be a great alternative for you. Sending money using crypto can also be cheaper.
You’re in Control of Your Money
This is one of the advantages of saving money in crypto (stablecoins) that made me decide to do this. After reading the news about the situations of other people in other countries, I have decided to save some money in crypto.
I’m from a country that some international community perceives as somewhat politically unstable and I’d like to secure my future by making sure that at least some of my savings are somewhat resistant to possible adverse events in the future.
Some of the Disadvantages
No Local Insurance Coverage
Unlike traditional savings accounts, crypto doesn’t have any coverage with PDIC (for Philippines savings account) as of yet. But if crypto adoption continues to grow in the coming years, then who knows, we might be able to have one in the future.
In the past year that I have been exposed to crypto, I have read various news articles about crypto protocols that have been hacked and funds were drained. Luckily, I have not experienced this myself.
We all know that similar risks also exist in banks. In the Philippines, we’ve heard of various banks that have had a similar ‘hacking’ situation as well.
Higher Cost for Users
Transactions in crypto require gas fees (depending on the blockchain). As of the time of writing, all crypto that I use requires gas fees.
Not as Convenient for Everyone
Crypto might be perceived as non-convenient, especially for people who are not familiar with how various applications work. But as I have mentioned earlier, if crypto adoption continues to grow, then we might see a lot of changes and improvements that will make using crypto easier for a lot of people.
Why I’m Going to Save Some Stablecoins
I have decided to save some of my money on various applications and protocols using stable coins primarily because of the high-interest rate that they offer.
Another reason is that stablecoins are less volatile than other crypto tokens. As I mentioned earlier, stablecoins that I have decided to use for my savings are pegged to the US Dollar. They do get de-pegged sometimes but they often get back to the peg price.
This is also my way of minimizing my risks on my crypto investments. As we all know, crypto prices fluctuate A LOT!!!
By keeping a portion of my portfolio in stablecoins, I can also ensure that I will always have some funds to use in case I see a huge opportunity to profit by buying crypto tokens that I think are on a huge discount.
My Crypto Stablecoins Savings Allocation
For the short-term, I’m thinking of less than a year, thus, I need my stablecoins to be easily accessible. My main purpose is to use this to buy more crypto and as a small emergency fund as well that I can easily convert to fiat.
Having said that, I’m using two applications for my short-term crypto (stablecoins savings):
Binance is my main crypto trading platform and it just makes more sense for me to use Binance as one of my short-term stablecoins savings options.
As of the time of writing, Binance offers 7% APY for both $BUSD and $USDT on Flexible Deposit. Please be informed that it does change from time to time.
For now, I’d like to think that I’d be holding $Luna for quite some time (perhaps 1 – 3 years or longer) depending on the developments that will happen to the Terra ecosystem. Having said that, it just makes a lot of sense for me to use Anchor Protocol.
Anchor Protocol offers 19.49% APY for $UST deposits. $UST is the stablecoin of the Terra ecosystem.
The $UST that I earn by staking $Luna on Terra Station Wallet and the $UST that I earn by holding $bLuna are both deposited back to Anchor Protocol.
I have not decided yet if I’m going to use it to buy more $Luna or if I’m just going to keep my $UST there to earn more interest.
Mid to Long Term
As of now, I defined mid-term for me as 1 year to 3 years in crypto and long term for longer than that. Crypto is a fast-moving space, there’s so much development going on and of course, my decisions will change depending on what I will perceive as less risky for me as I go along in my crypto investing journey.
I have opened various accounts already with some of the companies I linked below. But, I have not deposited any stablecoins as of this time.
Here are the available options that I’m considering using for my crypto (stablecoins) savings account.
As of now I already have opened an account with Nexo, Gemini, and Crypto.com but I have not deposited yet any stablecoins. I did deposit some $CRO on my crypto.com account though in order to qualify for their debit card.
I will be trying some of these soon and I will be linking here the articles once they are posted.
Crypto is slowly changing the banking industry (and other industries too) and it’s really an exciting time to be alive. I can’t wait to see what’s gonna happen next.My Crypto Stablecoins Savings Account Options Click To Tweet