Alexander LorenzoCoinPicks, CoinPicks · Founder & Chief Investment Officer CoinPicks Capital 👇🏾This strategy made me 8 million dollars

How USDC Makes Money From You

22 Jun 2025 · 1 min

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1:07

In this explanatory monologue, the speaker outlines the business model behind the USDC stablecoin. When a user deposits dollars (e.g., $1,000) via a platform like Coinbase and converts them to USDC, the issuer takes the underlying fiat and invests it in safe, government‑backed debt that yields around 5%. The issuer captures the entire yield while the user retains the full principal, effectively earning a “free” 5% on the deposited funds. Because the issuer does not use its own capital, it is not exposed to inflation on its balance sheet; the yield is generated on users’ money, and the stablecoin provides a cost‑free entry point into crypto. The speaker frames this arrangement as a legitimate, zero‑cost product for users, with the government’s interest payments subsidizing the service.

Chapters

Did you know USDC makes money without spending a single dime? Let me show you. You put $1,000 into Coinbase and you swap that $1,000 into USDC. Now USDC has your $1,000 and they take it and they go buy government debt. The reason why they buy government debt, because it's like as safe as the US dollar, but they get a yield of, let's say, 5%. So USDC gets to make out on 5%, but get the guarantees of the government and we get to inject liquidity into crypto as a stablecoin. So all of the money that USDC has is technically a duplicate because you have USDC in crypto and you have a US dollar in a bond or something wherever they decide to put it. They're not losing money to inflation. You know why? Because it's not their money. USDC doesn't put any capital up. The 5% is free in their pocket. Think about it like this. Victor gives me $1,000. I take Victor's $1,000. I put it for a 5% yield. I'm getting 5% for free. Victor says, I want my $1,000. Okay, here's your $1,000 back and I get to keep all the 5% yield. What's inflation on $0? I believe it's legit because what's the product they're providing to you? The ability to get into crypto with a stablecoin. And instead of you paying for the product, they go to the government and the government pays for the product.