ICYMI: How You Can Fight Inflation With USDC

This article was originally published in April 2022. 

Rising costs are driving investors to rethink where to put their money. Interest rates are rising, but the rates you can get at your local bank are still not very attractive. 

Circle, a peer-to-peer digital payments company, allows investors to buy USD Coin (USDC), with an attractive 5% interest rate for long-term investments (12 months or longer). Most banks are offering interest rates below 1%, according to bankrate.com. 

According to Circle’s website, the company updates interest rates weekly. 

USDC is a cryptocurrency, but unlike most coins, it is a stable coin. It is tied to the U.S. dollar, so its price does not fluctuate as much as other cryptocurrencies like Bitcoin BTC/USD and Ethereum ETH/USD. 

See Also: USD Coin Founder Circle Doubles Valuation Ahead Of SPAC Merger

The latest consumer price index (CPI) data, an index that roughly tracks inflation, came in at 7.9% year-over-year. But, if you had most of your cash invested in USDC with a 5% interest rate, you would only have about 2.9% of inflation to deal with. 

“The demand to borrow USDC is high. And the interest rate that borrowers are willing to pay is high,” Circle CEO and Founder Jeremy Allaire said. “And that is the source of those yields. You have borrowers and to put it fairly simply, the other side of that borrowing ... and I’ll use Circle yield as an example because it’s the one I understand probably the most. You lend us USDC, and we lend it wholesale to institutional borrowers.”

Click here to watch the full interview with Jeremy Allaire. 

While it’s still not ideal to have costs rising at such an alarming rate, there are creative ways to help alleviate the burden of inflation and USDC is one of them. 

Photo: Courtesy of Circle.com