When we talk about crypto, we usually focus on the trading opportunities: the chance to bottle lightning by pouncing on emerging currencies or seizing sudden valuation changes.
However crypto is as much about yield as it is about brilliant trading plays.
Unlike in the old fiat world, you can earn huge returns by lending your crypto assets right now. The flood of new entrants, and the galaxy of ambitious projects that require liquidity, has created a huge demand for borrowed currencies, which means major rewards for those who lend.
Nowhere is this truer than on DeversiFi. In fact, we’ve just announced a new feature that will provide yields of up to 19%.
This is great news for the people who lend their money, and it’s a big deal for crypto, too. With this feature, we’re allowing all kinds of people to make big returns. As well as the savvy traders who want to boost their portfolios with quick-fire investments, we’re catering for those who want a steady, passive income.
Here’s a brief explainer on how our yield feature works, so you can make it work for you.
What our yield feature involves
We started out with just one yield opportunity, allowing you to earn yield by lending USDT (a stablecoin pegged to the US Dollar) and receiving compound USDT, or CUSDT, in exchange. This opportunity provided initial yields of 7%.
However we have now added a second option, again involving USDT. This time you can provide your stablecoins to the Anchor protocol and receive aUST in return.
Anchor, for those who don’t know, lends coins and tokens to other blockchain projects and DeFi users, and shares the rewards with the users who deploy these assets.
USDT is one of the most popular currencies on the platform – and aUST (the ‘a’ stands for Anchor in case you were wondering) is its yield-earning counterpart.
Anchor is actually hosted on the Terra blockchain, not Ethereum. But with our new feature, you lend your coins to DeversiFi and we will pass them over to Anchor. The aUST tokens will come in the opposite direction.
How you earn
By exchanging USDT for aUST, you instantly become eligible for yield. And this yield comes in two specific streams:
- Collateral. Anchor borrowers have to stake tokens (either ETH or Luna) for the right to borrow USDT. Anchor passes on the native blockchain staking yield from these two tokens.
- Interest. Borrowers also have to pay interest on their borrowings, and a portion of this interest goes to the lenders.
Why our yield feature goes further
There’s nothing unusual about a yield programme in itself. Lots of other protocols lend assets to support the global ecosystem.
However, because DeversiFi is built on layer 2 (i.e. off the main Ethereum blockchain), there’s no cost to participate, so you get the entirety of your yield without any frustrating fees.
When you invest in an Ethereum layer 1 protocol – in other words, a protocol that’s built on the main blockchain – you’ve got to pay gas fees for every type of transaction, including depositing and withdrawing your funds (gas fees, in case you’re not familiar, are the fees that Ethereum charges to use its computing power. We’ll tell you more about this here).
You have to leave your funds for a decent length of time, and make considerable investments, to mitigate the cost of the gas fees. If you have, say, $10,000 invested on the main blockchain, you’re going to have to wait about a year to make the fees back, which is completely impractical.
However, DeversiFi is built on top of the main blockchain. In other words, we’re connected to Ethereum, but we’re also independent. This means we suffer none of the congestion of the main Ethereum blockchain, so there’s no need to charge hefty fees for a slice of our computing capacity.
This makes the whole process dynamic, as well as user-friendly.
If an exciting new token comes along, or you spot an opportunity to gain value by investing in an alternative currency, you can jump on it. And you can build up your portfolio gradually with small investments, without feeling you have to make a huge commitment to outweigh the gas fees.
This flexibility allows your funds to keep working, all the time. There’s no opportunity cost to anything you do and you don’t have to perform any complex calculations to determine what your returns are going to be.
What are the risks?
As Anchor is hosted on Terra, not Ethereum, you are taking on certain risks. These include:
- Solvency risk – whether the Anchor Protocol can protect its lenders from any principal haircuts.
- Return risk – the yield and principal of your aUST tokens are determined by the Terra blockchain.
While the potential rewards are considerable, it is important to consider these factors before you make your decision.
Ok, so now you’ve got the full picture…
… If you want to lend your coins and earn yield, click the button below. And if you have any more questions, please reach out to our support team.