Stablecoins 101: The Secret Sauce Behind Your 6% APY

So, you want to earn a 6% APY on your savings, but you’re not comfortable with the wild price swings of cryptocurrency. That’s smart. So, how does Renalta do it?

The secret sauce is a special kind of cryptocurrency called a stablecoin.

Understanding stablecoins is the key to understanding how you can get the best of both worlds: the high returns of the new crypto economy and the stability of the U.S. dollar.

What Exactly is a Stablecoin?

As the name suggests, a stablecoin is a type of cryptocurrency that’s designed to have a stable price. Unlike Bitcoin, which can be very volatile, stablecoins are built to hold their value.

The most popular stablecoins, including the one we use at Renalta called USD Coin (USDC), are pegged to the U.S. dollar. This means that 1 USDC is designed to always be worth $1.

Think of it as a digital dollar. It has all the benefits of a cryptocurrency—it’s fast, global, and accessible 24/7—but without the price drama. It’s the key difference between volatile crypto and stable crypto.

How Does It Stay Stable? The “Piggy Bank” Method

How can a digital coin hold its value so well? It’s actually pretty simple: for every 1 USDC that exists, there is one U.S. dollar (or a similar, safe asset) held in a real-world bank account.

It’s like a giant, transparent piggy bank. The company that creates USDC, called Circle, is regulated and regularly audited by top accounting firms to prove that the money is really there. This 1-to-1 backing is what gives USDC its stability.

How Do Stablecoins Get You a 6% APY?

This is the most important question. If USDC is just a digital dollar, how does it earn such a high return?

Here’s the key: stablecoins are the key that unlocks the door to the world of DeFi (Decentralized Finance).

In the DeFi world, there is a high demand for borrowing digital dollars. Borrowers are willing to pay a high interest rate for these loans, and they put up extra collateral to make the loans super safe. We explain this in detail in our article about how we can offer 6% APY.

Renalta uses your USDC to fund these safe, high-yield loans. The interest paid by the borrowers is then passed on to you in the form of a 6% APY.

Why This is a Game-Changer for Your Savings

Stablecoins are a revolutionary technology because they let you have it all:

• The Stability of the Dollar: You don’t have to worry about your savings losing value overnight.
• The High Yields of DeFi: You can finally earn a return that beats inflation and helps you build real wealth.
• The Flexibility of Crypto: You can move your money quickly and easily, without the delays of the traditional banking system.

At Renalta, we handle all the technical stuff for you. We convert your dollars into USDC and put them to work in the safest corners of the DeFi world. All you see is your savings account growing at a rate you could only dream of with a traditional bank.

Ready to see what stablecoins can do for you? Open a Renalta account today and start earning a 6% APY on your savings.