Updated July 1st, 2022.

I have sold all of my USDC (and wrote about why here) and have withdrawn my USD from Voyager. Given the recent issues with Voyager's exposure to Three Arrows Capital, I don't find the reward worth the risk. As I mentioned in this article, your USDC in Voyager is not insured.

NOTE: Voyager has now temporarily suspended trading, withdrawals, and deposits. You can read the news here.

This excerpt from Voyager's user agreement sums it up nicely:

“(1) Voyager will use Customer’s Cryptocurrency to engage in staking and lending activities. Loans made by Voyager may not be secured. Customer has exposure to both Voyager’s and each Borrower’s credit risk. In the event of a Borrower default, Voyager does not have an obligation or the ability to return affected Cryptocurrency back to Customer’s Account.” 

In no way is any of the below to be construed as financial advice. Right now, I don't think it's a good idea to have any cryptocurrency, stablecoin or otherwise, in a custodial wallet. Non-custodial wallets like Metamask with a hardware wallet.

I've used a Ledger hardware wallet for nearly a year and strongly encourage our readers to consider purchasing a hardware wallet, which starts at $59.

Hardware wallets like the Ledger S or Nano X are the most effective ways to protect your NFT and crypto assets from scams. The following links contained below are affiliate links and we may receive a small commission at no cost to you if you choose to make a purchase. You can read my full affiliate disclaimer disclosure here.

If you want to manage your crypto assets and not risk them with a custodial wallet (meaning someone else has your keys, and in events like the ones unfolding today, could be at-risk of being frozen or worse), consider this product. You can shop for Ledger Hardware wallets by clicking here. 

This blog post may contain affiliate links to products or services that pay us a commission if you make a purchase. We never recommend products that we haven't personally used ourselves and encourage you to read more about our affiliate disclosures here. 

Spending money on NFTs is risky and expensive, inflation in the US is up to 7%, cryptocurrencies have been volatile, and the best interest rates from banks pay a whopping 0.65% APY. 

Given the risks in all corners of finances today, you may be wondering what you should do with the cash in your bank account knowing that the dollar is losing value. 

I’m here to break down a strategy I’m using with some of my cash in the bank to earn 9% interest on a stablecoin called USDC through the Voyager App. 

If you’ve been following this blog and are into NFTs, pay attention. We’ve written before that NFTs are risky and that you should never spend money you cannot afford. 

But it’s also challenging to look at profits that sit in the bank and do nothing. 

I’m going to dive into Voyager, an app that pays interest rates up to 12% on various cryptocurrencies and stablecoins. Voyager has suspended trading, withdrawals, and deposits. As mentioned below, the worst-case scenario has happened as they work to recoup lost funds on a major loan to a now insolvent company (3AC).

You can sign up to earn $50 of free Bitcoin when you download the app and trade at least $100 here. 

You can also use my voyager referral code for $50 of free Bitcoin when you sign up: 96A2D1800

Voyager recently doubled their sign-up bonus, increasing it from $25 in Bitcoin to $50 in Bitcoin from 6/1/22 through 12/31/22.

Note: I am not a financial advisor and this is not financial advice. Voyager is federally insured for USD but is not Federally insured for any cryptocurrency you hold. They also are not responsible if they lose your cryptocurrency, which we’ll get into more below. Update: well, Voyager has now suspended trading, deposits, and withdrawals. It's a sobering lesson that the fine print of agreements is extremely important to read.

How I Earn $94.16 Per Month on USDC Interest from Voyager

Source: Twitter

Current Total Earnings from Voyager USDC Interest (November 2021 - May 2022): $584.71

Like many of you, I’ve been fortunate enough to save additional money during the pandemic. I quit my job, started a business, and kept looking at the safety net in my bank wondering what to do with it to make my money work for me. 

Enter Mark Cuban. 

On November 4th, Mark Cuban tweeted advice to those looking for new career prospects: convert 4 months of expenses saved in crypto to USDC to earn 7% on a defi platform and then find a new job they like. 

This was enough for me to more seriously dive into interest-earning on crypto native platforms and that’s when I came across Voyager. 

I do not recommend putting all of your savings into Voyager but I’m going to break down how much USDC I bought, and how much I earn and I’ll answer questions about Voyager in detail. 

In total, I’ve purchased $12,500 in USDC and have made $150.39 in rewards from Voyager in 2 months. 

I still have 6 months of cash savings in the bank, a 401k that’s been paid into for 8 years, and two income streams. 

My last payout was $94.16 and this month, the payout will be $94.87. 

Voyager USDC interest rewards are compounded each month, and over the course of the year, you can earn 11% APY, which for my deposit, would be $1,375 in additional income. 

The interest earned from USDC in Voyager is the equivalent of earning $0.66 per hour (assuming you work 40 hours per week for 52 weeks per year). 

How Can I Calculate My Monthly Voyager Earnings for USDC? 

You can calculate the monthly interest payment on your USDC by dividing the interest rate (9%) by 100, dividing that number (.09) by 12, and multiplying that number (.0075) by your deposit amount ($12,500). 

With a deposit of $12,500, it equals $93.75. 

If you are curious about the potential returns of higher investment in USDC, you can set your monthly target income number and divide it by .0075. 

For example, if you want to make $60,000 annually in passive rewards from Voyager with USDC, you would divide that by .09 to get $666,666. 

If you want to make $1,000 in monthly rewards, divide that number by .0075 to get $133,333. 

If the math is too much here, see the calculator we created (linked below).

Earning interest isn’t going to be the strategy to dramatically increase your net worth, but if you have money sitting in the bank and feel comfortable taking risks, you can earn a higher APY than what your bank would offer. Before you do this, make sure you read the full article as I talk about the risks of making this investment. 

UPDATE: I created this handy Voyager Interest Payout Calculator for USDC Here so that you can view payouts on principal investments ranging from $100 to $20,000 month-by-month for a 12-month period and total earnings after a year.

Here's a snapshot of the Voyager USDC Interest Payout Calculator (link above to the full Google doc):

Source: StartWithNFTs.com

If this chart looks appealing and you want to start earning interest on USDC with Voyager, you can sign up to earn $25 of free Bitcoin when you download the app and trade at least $100 here. 

You can also use my referral code for $25 of free Bitcoin when you sign up: 96A2D1800

How Can Voyager Afford to Pay 9% Interest on USDC?

Voyager earns money by loaning out cryptocurrency, taking a spread fee on buy orders (if they buy crypto for less than what an investor expected to buy it at, they take a fee), and plan to introduce a debit card that would earn revenue through fees. 

You may be thinking that if traditional banks can only pay 0.55% interest rates, how is it possible for Voyager to pay 9%. Is it a Ponzi scheme? Will these rates last forever? 

Voyager is paying 9% on USDC as “marketing spend” with revenue that is generated from trading. 

In effect, it is a high teaser rate to incentivize people to sign up and build a network effect of using the platform. 

Mastercard has partnered with Voyager to make USDC spendable in the form of a debit card. 

All the work to convert USDC to dollars and pay a vendor in fiat is done behind the scenes and Mastercard/Voyager would take a % of that spend as profit. 

Voyager is likely building out something much bigger than a spendable cryptocurrency. With USDC, it can be tied to a smart contract that can provide functional use for lending, borrowing, and more. 

Currently, borrowing rates on USDC have been seen as high as 14%. 

For example, you could use Bitcoin as collateral to take out a loan in USDC, spend that money and pay the loan back without losing your Bitcoin. 

Given that Bitcoin, Ethereum, and other cryptocurrency prices move up and down at price, some people would prefer to pay on a high-interest loan versus selling those assets. 

It also works the other way — you could use USDC as collateral to get a loan in Bitcoin. If you think Bitcoin is low and will go back up, you could get a loan, in Bitcoin, sell if it rises in value and pays back the loan, keeping the difference: 

Source: Coinrabbit

Voyager uses Celsius to “manage certain assets” which means they likely loan out USDC with over-collateralization (the collateral is worth more than the loan) and gets a cut of the interest: 

Source: Celsius

The interest rates shown on Celsius are below 9%, but Voyager makes money in other ways, like taking a small fee when it saves you money on a cryptocurrency buy order. E.g. if you place an order to buy Ethereum at $2,400, but Voyager is able to get it at $2,350, it will take a fee on that $50 difference. 

I highly recommend reading Voyager’s User Agreement, which goes into some detail about the rewards program, how rewards are calculated, and how they are paid, but this is (as a non-lawyer), the most important part: 

“(1) Voyager will use Customer’s Cryptocurrency to engage in staking and lending activities. Loans made by Voyager may not be secured. Customer has exposure to both Voyager’s and each Borrower’s credit risk. In the event of a Borrower default, Voyager does not have an obligation or the ability to return affected Cryptocurrency back to Customer’s Account.” 

When you buy USDC (or any other cryptocurrency) from Voyager to earn rewards, you are subject to the risks they incur by using this to earn a profit and are not obligated to return the money to your account. This is why the SEC is keeping an eye on Voyager, Celsius, and Gemini. 

Is My Voyager Deposit Federally Insured?

There has been some confusion about this, so pay attention. 

Cryptocurrencies held on Voyager are not FDIC insured. 

USD held on Voyager is FDIC insured: 

Source: InvestVoyager.com

I have not seen much written up about how Voyager lends out the cryptocurrency you deposit, the risk profile of those borrowers, and the risk of your deposit going to zero. 

In order to charge 14% interest (or whatever Voyager charges) in order to pay its customer’s 9%, there is going to be a risk. It’s just not clear how risky their staking and lending program is. 

Not many websites or reviews of Voyager have talked about this. There is a chance you could lose all your deposited cryptocurrency that is earning interest on Voyager. Please keep this in mind moving forward. 

What is a Stablecoin? 

A stablecoin is a cryptocurrency whose value is tied to another asset like the US Dollar. 

For example, each USDC is backed by $1 USD, so the value of USDC stays at or near $1. 

Circle created USDC and the company’s CEO Jeremy Allaire confirmed that 100% of USDC is backed by US Dollars and short-duration US treasuries. You will have to take him at his word for it, but you can also check independent audits.

If I buy 10 USDC for $10, Circle is keeping that 10 US Dollars in a treasury, but another platform like Voyager can loan out USDC for interest and pay you the difference without affecting the backing of the stablecoin. 

Stablecoins solve three pertinent problems in cryptocurrency: 

(1) People may not want to take loans on a cryptocurrency that is volatile in price 

(2) It can be expensive to move traditionally money (USD) into cryptocurrency networks and vice versa 

(3) People may not want to sell cryptocurrencies like Bitcoin and Ethereum but want to leverage their gains in the cryptocurrency networks 

Is Voyager Safe to Use? 

No — Voyager could lose your cryptocurrency deposits and not be responsible for the losses. 

The company is publicly traded (VYGVF) and is US-based. However, safety isn't always as simple as a yes or no. I felt comfortable enough putting some of my money into a high-yield situation with Voyager, but the reality is that the money could still go to zero. 

There are 3.2 million verified users on the app (as of 12/31/21), but Voyager lost money in Q1 2022 ($28.3 million), citing the loyalty and rewards program. 

Apparently, the losses have been reversed, but it is something to keep in mind. 

You also have to consider that the stablecoin, USDC, is managed by Circle. They’ve been transparent in what assets they hold to back the USDC, but that could pose additional risk. 

It’s unlikely that your cryptocurrency would instantly go to zero in Voyager. It is a public company. It has revenue streams and has been willing to lose money as a business to pay out the rewards program. However, I would confirm that in Q2 the company is profitable (or close to it). Too many months of losing money may pose more risk for holders of interest-earning cryptocurrencies in their platform.