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USDC is a stable coin, pegged to USD, so there should be no risk (or very little) from owning some. However, the lending rate for USDC is between 3% and 13%: https://defirate.com/usdc/

Since higher return comes from higher risk, I wonder where is the risk for lending USDC? I cannot see much more than USD lending. Maybe hacking risk? Something else?

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The borrowers on DeFi lending pools cannot lend from a bank, because of technical risk (hacks) and the nature of the business. The borrowers are mostly cryptocurrency traders. However, they can still make profitable trades despite the lending rates. An example include foreign traders that do not have access to Dollar based banking.

More information in this article: Interest-bearing cash.

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