After LUNA hyped, I think that it is better for platforms that provide staking services and for investors to stay away from investing heavily in stablecoins in order to achieve easy and quick profits.
The principle of proving staking in these currencies has proven that it has a point of failure and then the return is like 8 and 10 you will lose if the link between these coins and the value of 1 dollar is broken.
So I don't think this is good news, especially if Coinbase stock investments was bad and the cryptocurrency start a bear market, how will USDC be able to pay the 8% APY?
given that USDC is pegged to actual USD assets, what is the likelihood that in time some of its owners will exit this market, creating another catastrophe in the stablecoin industry? im not being pessimistic here but we need to consider worst possible scenario. we can't say, the people behind USDC will forever be loyal to their project. at some point, they may feel exhausted and just want to cash out their share.
it is a good question, how can they sustain the APY offered to their customers?
In response to stablecoins being risky from hugeblack, I don't think we should fully compare luna (a non collateralised stablecoin) with one that is. Sure if you've put funds into the coin, there'll probably still be somewhere and it might not take much to prop it back up (perhaps 20% or something to restore the peg). I don't think anyone running a stablecoin well has decided to mint coins and give them away or has expectations of losing their billions somewhere else (it's likely they're invested to bolster company profits - likely in stocks or bonds - so can just easily be used to restore the peg). Stablecoins may die out when crypto stops growing, that's not happened yet and their main purpose currently is to offer faster transfers (when fast exchanges aren't needed, neither will they).
They may be incurring a loss on that usdc or using it for other products or assets.
I'd say 3% is probably a stable amount that can be offered to customers if you don't lock funds, I've seen uninsured investment services last quite a long time after offering over 5% fixed interest for locked funds which could be what circle are doing.
They might also be able to get higher interest on loans given to crypto related companies but with good backing/insider knowledge to be more assured those loans won't collapse.