In an announcement on Wednesday, the company stated that it had launched a Coinbase USDC Reward program through which it will reward US customers with 1.25% APY (annual percentage yield) rewards for each of their stored USDC deposits on their Coinbase accounts. According to the accouchement, holding the stablecoin is all users have to do to qualify.
Coinbase partnered up with CENTRE last year to issue the USD Coin launching it in October 2018. The plan was to offer a better alternative to users of the controversial stablecoin kingpin Tether. Since its launch, the two companies have managed to issue at least $1 billion of these stablecoins. As explained by Coinbase, the USD Coin offers price stability by being backed by a reserve asset.
“USD Coin maintains its stable price because you can always redeem one USD Coin for one US dollar. It has both the functional benefits of crypto — you can instantaneously send it anywhere for free and hold it without a financial intermediary — along with the stability that the US dollar backing provides.”
The rewards from this program will be issued every month and users will be able to use these rewards to purchase any other cryptocurrency supported on the Coinbase platform or keep holding the rewards for higher returns. This is a neat way for Coinbase to reward its users for loyalty. According to Paul Katsen, Coinbase’s product manager, the exchange is trying to build more ways through which its customers can grow their wealth on the platform.
In addition, Coinbase is seeking to increase convenience for its users who would like to earn interest on their funds. More often than not, they have to transfer their funds to a bank account on which they hold a savings account.
“One of the things we know is a bad customer experience is having to move your money back and forth from Coinbase to a bank account [to] earn a little bit of interest in the bank account,” Katsen said. “We’re trying to bring some of these experiences together but make them crypto-first and on Coinbase.”
The rewards will be financed through Coinbase’s other product lines including profits from the exchange’s custody service, trading activities and treasury management among other models.
“We can pull from the profits we generate as a business to reward our customers for storing their assets on the platform,” said Max Branzburg, Coinbase’s product director. “We’re fortunate to be able to do that as a profitable business,” he added.