Emirati Investment in Binance’s Stablecoin USD1

In March, Emirati state-owned investment firm MGX invested $2 billion in Binance via Donald Trump’s World Liberty Financial stablecoin USD1.

Now, Binance Chain is distributing USD1 and generously incentivizing its use at rates that reached 99% APR (as of 3:20 UTC, July 15).

Crypto yield farmers were quick to find ways to cash in on the sudden partnership, and have already unearthed an incredible and possibly irresponsible annual percentage return (APR) available to early users of the stablecoin.

By looping Binance Chain-based USD1 on Euler Finance against the world’s largest stablecoin, Tether (USDT), yield farmers have earned 99% APR on the presidential stablecoin.

Euler Finance’s APR for a Binance Smart Chain USD1/USDT Loop

As of 03:20 UTC, July 15, the 99% figure is not a typo. This rate is nowhere close to the 4% APR available in savings accounts or the 10% variable average return of the S&P 500. USD1 has launched on a decentralized finance (DeFi) platform at an APR that would double a user’s money if that rate persists for 12 months.

However, the APR is currently subsidized by Binance and other protocol incentives, making it uncertain whether such high rates will continue.

Loop USD1/USDT Loans to Increase Yields

Achieving the 99% APR requires looping—using loan proceeds as collateral for additional loans. This common practice among DeFi yield farmers increases leverage by inflating their principal for yield payout calculations. Euler Finance is one of many protocols that simplifies this multi-step process.

Read more: Trump-affiliated USD1 has $0 in excess reserves

Leverage, however, comes with risks. The higher the leverage, the greater the chance of forced liquidation by platform market-makers if prices fluctuate.

Besides sensitivity to price fluctuations, users face various risks associated with third-party smart contracts, along with custodial and managerial risks from Euler Finance, Tether, World Liberty Financial, Binance Chain, and other Binance entities.