MoonPay has partnered with Axal to launch “Virtual Accounts,” enabling users to earn 6-10% APY on stablecoins like USDC and USDT through Axal Yield.
This service integrates MoonPay’s Virtual Accounts with Axal’s DeFi yield strategies, automatically routing deposited stablecoins into a diversified portfolio of lending protocols and liquidity pools. The setup requires no gas fees, no custodial risks, and minimal user intervention, with funds managed by a smart automation engine for optimized returns and risk management.
The service is live and accessible globally, though specific yields depend on market conditions and DeFi protocol performance. Note that stablecoin yields carry risks, such as potential de-pegging or protocol vulnerabilities, as seen in past events like OUSD’s de-peg in 2020.
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MoonPay’s integration with Axal Yield simplifies access to DeFi for retail and institutional users by offering a one-click solution to earn 6-10% APY on stablecoins. This lowers the technical barrier, as users don’t need to navigate complex DeFi protocols or pay gas fees, making passive income opportunities more mainstream.
This could drive broader adoption of stablecoins and DeFi, particularly among non-crypto-native users who rely on MoonPay’s user-friendly fiat-to-crypto on-ramp (supporting 170+ cryptocurrencies and multiple payment methods like credit cards, PayPal, and Apple Pay). It aligns with MoonPay’s goal of bridging fiat and digital asset worlds.
By enabling stablecoin deposits to automatically generate yield through Virtual Accounts, MoonPay enhances the utility of USDC and USDT beyond trading or remittances. Stablecoins become a viable alternative to low-yield traditional savings accounts, as noted by Axal’s CEO: “The vast majority of money on Earth sits idle in cash or low-interest accounts.”
This could shift user behavior, encouraging holding stablecoins for passive income rather than converting to fiat, especially in high-inflation economies where stablecoins already serve as a store of value. It may also increase stablecoin market caps, currently at $190 billion, with USDT ($151 billion) and USDC ($60 billion) dominating.
Axal Yield’s non-custodial model, secured by TEE-enforced signing policies and batched execution, ensures users retain control of their funds, reducing custodial risks. The absence of gas fees and manual intervention further lowers costs and complexity.
Stablecoin yields face increasing regulatory scrutiny globally, with jurisdictions demanding transparency and adequate reserves. MoonPay’s compliance (Bitlicense, MiCA, SOC2, ISO, PCI) and USDC’s regulatory alignment (audited reserves) position it favorably compared to USDT, which faces challenges in Europe due to non-MiCA compliance.
Yield Strategies Behind Virtual Accounts
MoonPay’s Virtual Accounts leverage Axal Yield’s smart automation engine to generate 6-10% APY through diversified DeFi strategies. Funds deposited into Virtual Accounts (in USDC or USDT) are routed to Axal’s yield engine, which allocates capital across a curated portfolio of DeFi lending protocols like Morpho, Euler, and Base.
The focus is on low-risk, diversified lending strategies, dynamically rebalanced based on real-time market signals. Stablecoins are lent to borrowers on DeFi platforms, earning interest from lending fees. The engine optimizes returns by reallocating funds to protocols with the highest risk-adjusted yields, targeting stable performance.
A portion of funds is allocated to liquidity pools, where stablecoins provide liquidity for decentralized exchanges (DEXs) or trading pairs, earning fees from trades. Axal’s automation ensures capital is moved to pools with optimal fee generation and low impermanent loss risk.
Users earn a share of trading fees proportional to their pool contribution. Stablecoin pools (e.g., USDC/USDT) are less prone to impermanent loss compared to volatile asset pairs, making them safer for yield generation. Low liquidity or sudden market shifts can reduce fees or cause temporary losses. Past DeFi exploits, like the 2022 Terra/UST collapse, underscore the need for careful protocol selection.
The strategy of diversified lending and liquidity pools, powered by automation, balances returns and risks but isn’t foolproof. Users must weigh protocol vulnerabilities, regulatory uncertainties, and fees against potential gains. While this could accelerate DeFi and stablecoin adoption, careful due diligence is essential to navigate the inherent risks of yield-generating strategies.