How to Generate Yield on Stablecoins in a Cold Wallet
AI summary
The Tangem Yield Mode is finally here.
Introducing Yield Mode
For years, crypto wallets were about one thing: keeping your assets safe. Self-custody became the gold standard; you own your keys and coins. However, Tangem is now taking that concept a step further.
With this new feature, you can generate yield directly from a simple non-custodial wallet, combining the security of verified hardware with the possibilities of decentralized finance. We're positioned to provide you with better access to new on-chain opportunities while you maintain complete control of your assets.
What is the Yield Mode?
The Yield Mode is a built-in feature within the Tangem Wallet app that enables you to interact with decentralized finance safely and transparently. With this feature, your selected assets are supplied to a DeFi protocol while your Tangem card keeps your private keys secure.
You simply set up yield mode for whichever assets you want to deploy to the yield generation protocol, Aave. When crypto is supplied to Aave, it becomes available for lending to others, and you get returns on your asset(s).
Who is Aave?
Aave is one of the most established and respected protocols in the DeFi ecosystem. Founded in 2017, developers built it on the Ethereum blockchain as an open-source, non-custodial liquidity platform that lets anyone lend or borrow cryptocurrencies without relying on traditional financial institutions. Instead of a bank managing deposits and loans, Aave uses smart contracts—transparent, self-executing code on the blockchain—to manage these functions automatically.
Users who supply liquidity to Aave’s pools provide assets for lending to other users. This design has made Aave a cornerstone of DeFi, securing billions of dollars in total value locked and cultivating a reputation for innovation and reliability.
In Tangem yield mode, Aave is the primary yield-generating protocol. When you enable the mode, your chosen assets are supplied directly to Aave’s liquidity pools. From there, they generate yield based on Aave’s variable interest rates, which are determined algorithmically by real-time supply and demand.
Tangem integrates Aave natively, so users don’t have to navigate decentralized apps or manage complex transactions themselves through WalletConnect. Everything happens within the familiar Tangem app interface. Aave’s structure provides one key advantage that defines Tangem Yield mode: funds are never locked. We’ll explain how it works shortly.
How the Tangem Yield Mode Works
Tangem Wallet users can lend on Aave via WalletConnect. However, this requires going to the Aave website, connecting the wallet, and giving approvals. It’s not convenient, especially since you must do this whenever you want to top up new tokens for yield generation.
The new yield mode centers on simplicity. Every interaction, from top-ups to withdrawals, happens through an intuitive flow that ensures complete transparency. With our smart contracts, we’ve simplified interaction with the Aave protocol for our users. Let’s explain how it works.
When you want to generate yield on an asset, you deploy your Yield mode (once per blockchain), permit it to manage the token you wish to generate yield on, and it initiates the first token supply to Aave. Afterward, whenever funds arrive in your wallet on that blockchain, our smart contract automatically supplies them to Aave. Our backend can also urgently withdraw your funds to your wallet if the Aave protocol is vulnerable.
Access your funds anytime
Complete liquidity is one of the most significant advantages of the Tangem yield mode. This means your assets are never locked away while they generate yield. Aave’s open liquidity pools, designed for instant liquidity, hold the crypto you supply. You can use your funds at any time, including the yield you’ve generated up to that moment.
Send, receive, or swap—all while the asset remains in yield mode. Behind the scenes, Aave’s smart contracts continuously rebalance supply and demand. The protocol maintains deep liquidity, allowing users to withdraw funds almost immediately. This will enable you to send, receive, and swap assets, even in yield mode, with immediate withdrawals available almost always. This flexibility makes Tangem Yield mode different from most yield generation servers on the market.
Audited and secure smart contracts
Like Aave's contracts, Tangem’s smart contract has undergone an audit and is considered secure. Tangem’s smart contract serves as a bridge between the Tangem Wallet and decentralized protocols, such as Aave. It handles asset routing, calculates and distributes yield, and executes withdrawals.. The contract interacts directly with your assets, so it must be completely trustworthy.
The audit ensures that no one can access or redirect user funds without explicit authorization from the wallet owner. It also guarantees that all actions on the blockchain are transparent and verifiable, from supplying liquidity to claiming yield.
The existence of the audit replaces blind trust with verifiable confidence. You can view the smart contract’s source code and compare it with the audited code published in our repository.
How to start generating yield on your assets in Tangem
Here is a detailed breakdown of the flow.
On the homepage, select a supported token (e.g., USDT, USDC, DAI, or other) and tap Learn more.
Review the APY and agree to the terms of use by tapping Continue.
APY (Annual Percentage Yield) is the rate of return you generate on your crypto over a year, including the effect of compounding. If you see “5% APY,” it means that, on average, you could make about 5% more crypto over a year (if the rate stays the same). APY can fluctuate over time in crypto, depending on market conditions and activity in DeFi protocols that generate the yield.
- Review the network fee and tap Supply assets.
Every blockchain transaction requires a network fee; you can view the top-up fee and maximum fees under the fee policy.
The maximum fee protects you from situations where the market is highly volatile and network fees are too high. In such scenarios, the funds will be sent to Aave automatically only when network fees fall below the specified maximum fee value.
Our smart contract automatically supplies all future USDT top-ups to Aave and deducts the top-up fee in USDT (not ETH).
This means that each time you add more USDT to your balance, Tangem’s smart contract will automatically supply it into Aave for you, but it will subtract the top-up fee first.
What does the "minimum top-up amount" mean?When you add money (a top-up), the network charges a fee. If your top-up is very small, the fee becomes a big percentage of what you’re adding, which is inefficient and costly. So we show you the minimum amount you should top up so that the network fee is no more than about 4% of what you’re sending.
This amount changes depending on the current network fee.
Why this existsThe idea is to make sure the system stays profitable and doesn’t lose money over time. By using this minimum amount, it ensures that after one year, there’s still a positive balance left (even after fees), with room to adjust later if needed.
Some blockchains (like Ethereum) have high network fees.
For those tokens, even 4% can feel like a lot. To reduce the amount you lose to fees, you can top up larger amounts at once, which spreads the fee over a larger amount and makes the fee feel smaller.
So if you top up $100 USDT and the fee is $1.45, only $98.55 gets supplied to Aave, while $1.45 covers the Ethereum transaction.
Your tokens will be supplied to Aave to begin the yield generation process.
Once your assets are supplied, you’ll see a live section showing your accumulated yield.
The app also displays contextual banners, for example, if the system delays yields or syncs network data, so you always know what’s happening on-chain.
How to withdraw your assets anytime
At any point, you can tap Disable Yield Mode to move your assets back to your Tangem Wallet balance.
How Yield Mode compares to traditional interest-yielding services
Tangem closes the gap between independence in crypto and financial simplicity, offering a model where you are the bank, and your wallet is the gateway to smarter asset management.
Feature | Tangem yield mode | Bank interest |
|---|---|---|
Custody | 100% user-controlled (self-custody) | Bank-controlled |
Access | Instant, global, 24/7 | Restricted by bank hours |
Transparency | Fully on-chain and auditable | Opaque interest mechanisms |
Yield Type | Lending yield | Centralized, low-rate interest |
Control | Verified by Tangem card | Requires trust in third parties |
Typical APY | Variable (often 3–10% depending on protocol) | <2% average |
Frequently Asked Questions
1. What is Tangem's Yield Mode?
The Yield Mode is a built-in feature in the Tangem Wallet app that allows users to accrue yield on their crypto directly from their self-custodial wallet. It integrates with the Aave decentralized finance (DeFi) protocol, enabling users to lend assets and generate returns while retaining complete control over their private keys.
2. How does Tangem Yield Mode work?
When you enable Yield Mode, your selected assets (such as USDT or USDC) are supplied to Aave’s liquidity pools via Tangem’s audited smart contract. Aave’s protocol uses these funds for decentralized lending, generating yield that is automatically credited to your balance. You can access, send, or withdraw your funds at any time.
3. What assets are supported in Tangem Yield Mode?
Tangem Yield Mode currently supports stablecoins and select tokens compatible with Aave, including USDT, USDC, and DAI, with more assets planned for future updates. Supported tokens will appear automatically in the Tangem app’s Yield Mode section.
4. What is Aave?
Aave is one of the most reputable and secure DeFi protocols in the crypto ecosystem. It operates as an open-source, non-custodial liquidity platform built on Ethereum. Aave manages deposits and loans through smart contracts, allowing anyone to lend or borrow assets transparently and safely.
5. Are my funds locked when generating yield?
No. One of the biggest advantages of Tangem Yield Mode is complete liquidity. You can withdraw your assets (and any accumulated yield) at any time. Aave’s liquidity pools are designed for instant access, and Tangem’s integration ensures immediate withdrawals whenever you choose to exit.
5. How secure is Tangem's Yield Mode?
Tangem’s smart contract is fully audited and acts as a transparent bridge between the Tangem Wallet and Aave. It manages asset routing, yield distribution, and withdrawals safely on-chain. The audit guarantees that no one can access your funds without your explicit authorization and that all operations are verifiable.
6. What is the difference between a top-up fee and a network fee?
The network fee is the standard blockchain network fee that the user pays when enabling or disabling Yield mode. It’s the regular fee required by the blockchain, not Tangem. This means it is sent directly to the network validators, just like any other normal transaction.
The Top-up fee is an additional fee deducted from the user’s outgoing amount to Aave to cover the network costs that Tangem paid on the user’s behalf earlier. When the user tops up funds to be supplied to Aave, we pay the network fee ourselves (e.g., in ETH) so that the transaction can be processed.
We then convert the network fee we paid into the currency the user is sending later (e.g., USDT). When the user makes a withdrawal or transfer, we deduct that equivalent amount from the amount supplied.
Example
- The user tops up USDT on the Ethereum network.
- To supply this top-up to Aave, Tangem must pay a transaction fee in ETH.
- Tangem pays that ETH fee upfront.
- When the USDT is supplied, Tangem deducts an amount of USDT equal to the amount of ETH spent.
- This deducted amount is the Top-up fee.
10. Can I withdraw my funds anytime?
Yes. You can tap Disable Yield Mode in the Tangem app at any moment to move your assets and any earned yield back to your main Tangem wallet balance.
Conclusion
By integrating Aave into Tangem, we’ve combined the best of DeFi with Tangem’s hardware-level security. You also benefit from the zero complexity by avoiding Wallet Connect whenever you want to check on your yield. This unlocks an entirely new category of financial behavior, like non-custodial yield generation or the amateurs who like to HODL for the long term. For the first time, crypto holders can generate yield like DeFi veterans, without needing to understand the intricacies of liquidity pools or yield farming. There’s no hidden custody and no opaque backend operations. You always know where you’ve supplied your funds, which protocol generates yield, and when.
