Analyst Insight

By analysing the on-chain metrics for USDC on Aave V3, our risk model classifies this as a conservative capital preservation play. While yields are moderate, the high safety score (82/100) prioritises principal protection.

The current APY of 1.60% is supported by a Total Value Locked (TVL) of $2,336,277. This pool is currently trading 46.5% below the category average. This yield compression often occurs in under-utilised markets.

Risk Context: With a Safety Score of 82/100, this liquidity pool is positioned for long-term holders seeking compound growth.

Yield Mechanics: How It Works

Understanding the underlying structure is crucial for assessing sustainability. The 1.60% APY displayed for USDC is primarily derived from interest paid by borrowers on the Aave V3 protocol.

Supply & Demand

When you deposit USDC, you become a liquidity provider. Borrowers pledge collateral (like ETH or BTC) to take out loans. The interest rate fluctuates based on the Utilisation Rate (currently 60.28%). With moderate utilisation, rates remain stable, ensuring liquidity is available for withdrawals.

Risk Strategy & Management

While Aave V3 is a reputable protocol, no yield is without risk. Based on the current Safety Score of 82/100, the following approac may suit (DYOR):

• Smart Contract Risk: Ensure you are comfortable with the audit history of Aave V3.
• Liquidity Risk: With a TVL of $2,336,277, slippage is a potential concern for whales.
• Strategy: More suitable for a 'Set and Forget' strategy.

Frequently Asked Questions

Advanced Tools

Enhance your stablecoin yield data analysis with our suite of tools:

• Profit Calculator: Forecast compound interest earnings.
• Safety Audit: Deep dive into the risk factors.
• Liquidity Depth: Analyse market dominance and slippage.