USD1: Trump-Linked Stablecoin Achieves 99% APR on Binance Chain

In March, MGX, a state-owned investment firm from the UAE, invested $2 billion in Binance through Donald Trump’s stablecoin, USD1. This partnership has led to Binance Chain distributing USD1, offering remarkably high incentives, with annual percentage rates (APR) reaching 99% as of 3:20 UTC on July 15.

Key Takeaways

Investment by MGX: Emirati state investment firm MGX invested $2 billion in Binance using Trump’s USD1 stablecoin.
High APR: USD1 has reached a staggering 99% APR, appealing to yield farmers.
Yield Farming: Early users leverage Binance Chain and Euler Finance to achieve this impressive APR.
Risks Involved: The high APR comes with risks including price volatility and exposure to smart contract failures.

While the 99% APR sounds enticing, it comes with substantial risks. Higher leverage increases the chances of forced liquidation by market-makers if market prices fluctuate. Users must also navigate various risks associated with third-party smart contracts and the custodial risks from entities like Euler Finance, Tether, World Liberty Financial, and Binance Chain.

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Crypto yield farmers quickly jumped on this lucrative opportunity, discovering an astonishing and potentially risky APR for early adopters of this stablecoin. By integrating USD1 from Binance Chain within Euler Finance, which is tied to the world’s leading stablecoin, Tether (USDT), yield farmers managed to earn 99% APR on this presidential stablecoin.

This figure isn’t an error. Unlike the typical 4% APR from savings accounts or the 10% average return from the S&P 500, USD1 has debuted on a decentralized finance (DeFi) platform with an APR that could potentially double an investment if sustained over a year.

However, it's important to note that this APR is currently supported by Binance and other protocol incentives, meaning it may not maintain such a high level for long. Nonetheless, the yield is significant enough to attract attention during its launch phase.

Achieving the 99% APR necessitates a strategy known as looping, where borrowed funds act as collateral for additional loans. This practice, common among DeFi yield farmers, enhances leverage by inflating the principal amount used for yield calculations. Euler Finance is one of several protocols that streamline this multi-step process.