Liquidity pools across decentralized exchanges remain an excellent way to earn passive income on crypto holdings. Both Unsiwap and Pancakeswap present tremendous opportunities on this front. Unsurprisingly, stablecoins are the way to go for users with less risk appetite.
Uniswap Has Outspoken USDC Dominance
There are many ways to analyze the various liquidity pools across decentralized exchanges. Some will look for the highest APR, although it is often better to compare the volumes and liquidity. In addition, users who provide liquidity to a pool will earn a share of trading fees, making highly liquid pools of great value. Although there are no additional rewards to be earned – such as UNI tokens – these pools remain rather appealing.
Confirming the growing dominance of USDC on Ethereum, it is also the most liquid stablecoin on the Uniswap platform. Pools for USDC/ETH, USDC/USDT, and WBTC/USDC can be found in the top three, with a DAI/USDC pool in the #8 spot. Although there are pairs for UST too – like ETH/USDT – it is far less liquid and notes much lower trading volume. That doesn’t mean users shouldn’t provide liquidity, as contributing to the pool can yield more than acceptable returns.
Depending on the fees one wants to charge for trading, USDC/ETH at 0.05% and 0.3% present good options. The first pool has over ten times the volume of the second one but also generates lower fees per transaction. However, due to its higher volume, it seems to offer higher profitability for users. Interestingly, both pools are nearly equal in TVL, at $330.91 million and $340.2 million.
Moreover, the 0.05% USDC/ETH pool often has 7-8 times the 24-hour volume of the 0.3% pool. Even if fees are 600% lower, a volume improvement of 700-800% will generate slightly better returns. The introduction of Uniswap V3 has certainly made things much more interesting for liquidity providers and how they approach these pools.
USDT Is More Popular On PancakeSwap
Remarkable, the more popular stablecoin on PancakeSwap is USDT, along with BUSD. USDT is found in three of the top seven trading pools ranked by liquidity, whereas USDC only appears twice. Additionally, BUSD is found in three of these pools. The native stablecoin of BNB Chain remains very prominent on this decentralized exchange, which is good to see.
What is even more interesting is how the top USDC liquidity pools on PancakeSwap are tied to other stablecoins. These pairs represent USDC-BUSD and USDC-USDC. One would expect USDC/BNB or USDC/CAKE to be pretty popular, but they are nowhere in sight. As such, users can earn an APR of up to 2.02% by using USDC on PancakeSwap across the most liquid pools or up to 43.38% when dealing with GMT-ÚSDC.
Keep in mind users can earn CAKE tokens when providing liquidity to PancakeSwap pools. They can stake that CAKE to earn even more rewards, unlocking additional passive revenue over time.
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