USDT & USDC Earn Up To 30% Interest On Compound, Are Big Players Involved?

ShapeShift CEO Erik Voorhees recently highlighted that USDT and USDC stablecoins have been earning over 20% interest on Compound.
By Coingape Staff
Circle’s USDC Closes Gap With Tether’s USDT With 8 Billion Mints in 2025

Highlights

  • USDT and USDC boast exorbitant returns on Compound.
  • ShapeShift CEO Erik Voorhees speculates the surge to be linked to involvement of large financial players.
  • Earlier, ShapeShift crypto exchange reached a settlement with the SEC and paid $275,000 in charges.

ShapeShift CEO and Founder Eric Voorhees recently raised concerns about the decentralized finance (DeFi) arena by pointing out the extraordinary returns being generated by stablecoins such as Tether (USDT) and (USDC) on platforms like Compound. This statement comes amid the latest update on SEC and ShapeShift fiasco that witnessed the latter paying a fine.

Advertisement
Advertisement

ShapeShift CEO Highlights Exorbitant USDT & USDC Returns On Compound

The ShapeShift CEO highlighted that stablecoins like USDT and USDC have attracted about 20% to 30% returns from collateral loans on Compound. In a tweet, Voorhees remarked, “Trustworthy stablecoins (USDT, USDC, etc) across defi are earning 20-30% right now on trustworthy platforms (Compound, etc), where they’re being lent out with overcollateralized loans.”

While these returns may appear lucrative on the surface, Voorhees expressed surprise at the unprecedented rates and raised questions about the underlying dynamics driving them. Moreover, he speculated the possibility of large financial players having a role in USDT and USDC interest surge as they might have converted bank fiat to stablecoins. He pondered, “How can rates get this high without enticing large financial players to convert bank fiat into stables and earn that yield?”

Furthermore, he labeled the initiative as “one of the best risk-adjusted trades in the world right now.” However, he highlighted that his speculations might be wrong as he might be missing out on something. Hence, he asked the crypto community, “Am I missing something?”

In response to these queries, a user shared his observation regarding the unsustainable nature of the current rates due to a “stables squeeze.” He attribute the cause to farmers/leverage traders as Binance’s farming pools have recently spurred attention. Voorhees acknowledged the validity of their observation and stated, “This is probably the right answer I’m just surprised by the degree.”

Also Read: Conflux Network Announces First Hong Kong Dollar-Backed Stablecoin

Advertisement
Advertisement

ShapeShift & SEC Settlement

The ShapeShift crypto exchange reached a settlement with the U.S. Securities and Exchange Commission (SEC) on March 5, in response to allegations of operating as an unregistered dealer. During the period from 2017 to 2019, ShapeShift allegedly offered securities without registering with the commission.

To resolve the SEC’s claims, ShapeShift agreed to a cease-and-desist order and a $275,000 fine. The agreement marked a significant development, causing ShapeShift’s token FOX to plummet by over 9% to $0.078.

Earlier, in January 2021, ShapeShift announced plans to overhaul its business model, discontinuing direct crypto asset exchanges through its website and ceasing to act as the counterparty to customer transactions. By July of the same year, ShapeShift began winding down its corporate structure.

ShapeShift defended its decision by underscoring its dedication to immutable, non-custodial decentralized finance, a principle it has championed since its inception. Ultimately, the exchange distributed more than 60% of its 1 billion FOX tokens to over one million clients.

Also Read: Senator Cynthia Lummis Drafts Key Bill for Stablecoin Regulation

Advertisement
Coingape Staff
CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.
Why trust CoinGape: CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journalists and analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.