CeFi, DeFi: The renewal of Savings

These days banks have the monopole of savings rate but a new trend is coming up to bring new adversity. It offers new rates and new rules providing an alternative to the old financial system. In this article you will see what can the alternatives on Fiat bank saving accounts(Fiat is currency such as Dollar, Euro, Yuan…) within the crypto ecosystem.

Disclaimer: This is not a financial advisement. Investing is at your own risk. This article only goal is to provide information and explanation on this new system growing up.


Definitions


Stablecoin

stablecoin is a reproduction of a currency such as dollar. It can be provided by a companyTether with USDT, Circle with USDC) or by a smart contract (DAI). Those entities or programs ensure that they have one dollar in the blockchain equals one dollar in the banking system.

 

 

Centralized Finance  (CeFi)

Centralized Finance is very similar with our current banking system. You have an entity/company in which you invest your funds. These companies provides large amount of financial product which is a mix between traditional banks and new economy.

 

Decentralized Finance (DeFi)

Decentralized Finance retakes the idea of no middle man as wanted Satoshi Nakamoto the Bitcoin founder. The process is fair and transparent while allowing everyone to use it. It’s permissionless and automatized by smart contract running on Blockchain applications.


Earnings


Banking system

In current banking system we can earn money by putting our money into financial product. In France we have the “Livret A” a flexible earning placement which provides 0,5% per year

It doesn’t even repay inflation.

CeFi

Current CeFi such as Coinbase,Nexo,Crypto.com are providing a lot of financial product within which stablecoin (crypto that is pegged to the dollar).

You can earn up to 12% per year

DeFi

DeFi product such as SushiSwap,Aave, Oasis (cf my article on Oasis here) are providing earning with lending, farming, liquidity provider program. 

It can goes from 2% to 30% per year depending on the platform and period.


CeFi


Centralized finance platform such as Binance or Crypto.com, on which I did an article a year ago, provides good rates while having the insurance of a company if there is any trouble (fund loss, helpdesk…). They provide currency exchange platform (including Fiat), borrowing & lending, earnings, derivatives, and many more.

They make money mainly on exchange transaction fees. For them the goal is to attract user to have a maximum of volume to improve their revenue.

They provide a lot of earning possibilities and aspire to become the Bank 3.0.

Binance

Crypto.com

 

 


 

DeFi


 

Lending

Aave

Aave is a remarkable Lending & Borrowing platform. You can borrow by putting a collateral asset such as ETH and borrow a stablecoin.

The lenders who provide liquidity are rewarded by an annual yield percentage:

Rates can change according to the market needs and you can withdraw your fund at any time.

This solution allows lending and borrowing without middle man. The trust is now on the smart contract.

SwissBorg

SwissBorg is a company that provides Yield (revenue) when providing asset for them. They have an algorithm that select the best platform yield percentage and gives you daily reward with a security in case of loss (special program, insurance…) .

This is a good use case of Company using DeFi.

Liquidity Providers

Uniswap

Uniswap is the most used decentralized exchange platform. To be sure that their is liquidity on their exchange assets, they reward people who provide liquidity. They will be rewarded by getting tax fees of the transactions on this pair.

Let’s say you have ETH and DAI you can provide liquidity by putting ETH & DAI into the Liquidity Pool.

You’ll get a percentage of the fees as a reward (according to the amount you provide divided by total pool amount) as you can see above.


Yield Comparison

USDC CEFI


 

Crypto.com

6% On flexible Terms

8% if Premium

12% If Premium and 3 Month Fixed terms Period

Binance

5% on Flexible Earning

Instant withdraw

Up to 8% on fixed terms savings

SwissBorg

Average of 20% with Premium

Standard 10%

1 Day to withdraw


USDC DEFI


Aave

At time of writing:

Around 8%

Oasis

At time of writing:

 Around 8%

Compound

At time of writing:

Around 8%

In this example I used Yield percentage on USDC the most secure stablecoin on the market at the writing time of this article. It is backed by Circle Square company with many audits on their accountability to verify that every USDC on the crypto market is backed by US dollar.

 

 

 

 

 

Conclusion

 

 

 

To conclude, there is a lot of ways to invest your sleeping money elsewhere than in your Bank account with low interest.

 Of course this new bank and new world may not be as secure as this big company bank yet they have the merit to offer an alternative.

Afterward, if you want to stay in more centralized way as in your bank you can use centralized platform that offers security. 

If you want by conviction to fully avoid bank system DeFi offer a great opportunity to be sure that you have financial liberty and freedom. Be careful if a bank can be robbed so is those platforms. Even if the risk stay very low, their isn’t 100% security in neither in those solutions only pros and cons. Then it’s up to you to make your own decision according to figure on the right.

On my side I’m lucky enough to have Swissborg Premium so this is where I rather put my money. Yet I’ve used DeFi & CeFi and I was very please by the services, I just went where the yields are higher (and provides enough security).

 

Hope this article can help you to rethink on how to use your money and gives enough information to improve your knowledge on that part.

Don’t hesitate if you have any questions regarding this topic!

 

CeFi, DeFi: The renewal of Savings Made by Guillaume Niay

Oasis DeFi Platform 

What is Oasis?

Oasis is a platform for decentralized finance launched in November 2019 by MakerDAO.

You can use it to exchange token,borrow DAI (stablecoin soft-pegged to the US Dollar) and earn savings.

 

Secure protocol built on Ethereum

Oasis is built on top of audited and formally verified smart contracts created by Maker, the industry leader in secure decentralized finance.

Completely permissionless

You—and only you—control your assets. Oasis is a decentralized, non-custodial platform, accessible using an Ethereum-supported wallet.

“Decentralized Finance (DeFi) is the movement that leverages decentralized networks to transform old financial products into trustless and transparent protocols that run without intermediaries.”

My curiosity on crypto and blockchain environment has brought me to this point. Thanks to Hasheur and CryptoMatrix I’ve learn a lot about DeFi. I now understand better why this can be an huge revolution in finance sector.

 

 

Why I decided to use it?

ETH 2.0

Personally I was very happy with my Crypto.com app account with good staking benefit (up to 16%). Yet, I wanted to stack Ethereum to prepare myself to become a main validator with 32 ETH for Ethereum 2.0 and earn validations rewards.

Meanwhile I was accumulating ETH I was a bit disappointed with the staking reward I was getting (only 3% earning per year) which is still incredible compared to traditional saving account but far from other staking rewards (CRO 16% per year).

DEFI

Afterward, I heard a lot about DeFi and I started to do some research about it. I found out it could resolve my problem by optimizing my earning.

I can still play the long term HOLD and getting profit from it. I looked on several solutions and I’ve chosen the one from the best organization in this area: MakerDAO. So I followed up and went on the platform linked to the organization: Oasis.

 

 

Step

  • Buy Ethereum
  • Get Metamask
  • Transfer fund to Metamask
  • Borrow DAI
  • Reinvest your DAI
  • Pay your Debt

ethreumdapp

 

OASIS Tutorial

 

Buy Ethereum

First you need to buy Ethereum. I suggest you to buy on Crypto.com app which is a great application to enter the crypto world easily. You can buy crypto by your credit card or bank transfer (no transaction fee at this date) and you can download the app on this link. You will see how great is this app is with the review I’ve made on this article.

Get Metamask

Second Step will be to have a web wallet. The easiest way is to have Metamask a google chrome extension or directly on your Brave crypto wallet. Brave is an amazing web browser and you can find why on the article I’ve made here. You can download Brave on this link if you want to support the website. So now we need to transfer our fund to Metamask. Normally you can copy your crypto address on Metamask.

 

 

 

 

Transfer your fund to Metamask

Metamask

 

Now you can go on your Crypto.com app: Crypto wallet -> ETH -> Transfer -> Withdraw.

Withdraw your ETH to your metamask address you’ve copy. Once done your should have your ETH on your Metamask!

OASIS Borrow

Go on OASIS Borrow to start and connect your Metamask. Now let’s start borrowing!

ETH_collateral

As you can see their is currently NO FEE on borrowing with ETH and BAT.  

So what are we doing right now? We are borrowing DAI (USD stablecoin) at 0% Fee

Yet as you can see you have something called liquidation ratio. If what the value you have in collateral is below this line you will lost the amount you borrowed plus liquidation fee 13%. We will make several scenario to see what can happen.

Let’s say I borrow 1000 DAI (1000$), put 10 ETH as collateral and have as above 150% of Liquidation Ratio.

Worst Scenario

In this bad case the price will go down and goes below your liquidation ratio. In this example ETH goes under 150$.

You will loose the amount you’ve borrowed (1000$).  You will have a 13% penalty because you went under liquidation ratio (130$).

In this case you will loose around  1130$ of ETH. Moreover your ETH have less value. You have to understand the risk of it as their is in any financial market.

Most Cases

In most cases you don’t put you at risk and are putting a good amount of collateral to be sure you are well above liquidation ratio.

In that scenario price almost didn’t move. So you had change your DAI to CRO to  stack them 1 year at 16%.

After this year you decide to pay your debt. So you pay back what you paid 1000$ in DAI which you’ve converted from CRO and your Ethereum and have earned at 16% during this time.

Best Scenario

Now let’s say that Ethereum price rise up. So you still have your collateral that has more value right now and you have earn CRO at 16% during one year.

You are winning a lot! Imagine that CRO also have a better price than where you made your deposit, then you had made a great investment.

You won from staking and from Ethereum price rising up! Eventually, you can easily paid your debt with the profits made.

So add value according to your economical situation. Play with finance will always be risky so be careful there is no guaranteed money.  Always look to be above the liquidation ratio and normally if the market stands or go higher you should make profit.

When you have set up your borrowing information and collateral you can generate the amount of DAI you want to have.

Vault

Vault DAI

In my scenario I have a collateralize ratio up to 280%. Right now ETH price is at 212$ so I’m well above my liquidation price which is at 112$ ETH.  

Reinvest my DAI

After generating my DAI I will go again on my crypto.com app and look at my DAI deposit address.

So go on your wallet -> transfer -> deposit -> DAI. Copy the address and from OASIS in your Wallet Balance click on send in the DAI line. Then enter the amount you want to transfer and paste your crypto.com DAI address.

Wait for the validation of your transaction (around 5 minutes) and you will have DAI in your crypto.com app. 

Then you can stake at the high earning rate of crypto.com:

  • Keep it in DAI up to 10% (*if less than 500 MCO stacked)
  • Change it into CRO and earn up to 16% (*if less than 500 MCO stacked)

In the first case you will be sure to earn 10% of your earning. In the second one it is 16% but the CRO price can go down or up which can impact your return on investment!

Pay your Debt

When you decide that you want to close your smart contract loan you can easily do so by going into Paying back button in Oasis.

It will close your Smart contract and here it comes to an end!

PROS & CONS

Decentralize finance is a very interesting tool which has a lot of benefit. Let’s have a look at the advantages and disavantages.

Advantages

 

 

You can earn from this platform:

  • stability fee low (even 0%)
  • Flexible reimbursement without time constraint
  • Decentralize leverage if Ether price rise up                   

 

No third party and you keep your privacy. You are not tracked. Sites is fully decentralized but teams works on security. It is a main subject very well handle with constant improvements and audits.

Moreover you don’t risk a centralize entity to stole and go away with your fund, it’s fully yours. Their can’t be any frozen account which is a big plus.

Disadvantages

risk

 

 

Financial risks from value as we saw earlier:

  • Stability fee (6% for USDC)

  • Liquidation threshold

  • Liquidation penalty                                        

 

If their is a hack their is not centralize company to help you (even if in reality MakerDAO foundation find way to help his users). 

Indeed, most of the time institution like banks are keeper of your funds and guarantee the security of it and provide you a support team for any problems.

Conclusion

Finally I gave you all my knowledge about OASIS and Decentralized Finance. It’s up to you to use it. I hope you have learn new things.

in my opinion, I have found a good answer at one of the issue I have. Now i have to make sure everything goes well until I have my 32 ETH!

ETH bullrun

Don’t hesitate to reach me if you have any question about this article. Have a good day!

Guillaume Niay

Source:

https://www.reddit.com/r/MakerDAO/comments/g33ato/oasis_walkthrough_video_available_on_yt/

oasis.app

makerdao.com


Crypto.com app

Crypto.com is a smartphone application that aim revolutioning banking. You can buy/sell and transfer cryptocurrency or FIAT(US Dollar,Euro,Japanese Yen …).

You can track cryptocurrency market and compare price chart with USD,EURO,Bitcoin. 

 

 

This application provides more options. You can use the crypto invest tool made for beginners. You put your investing profile and the money you want to invest.

Afterward they are according to you a trading bot that will help you to make a portfolio. You will then see how your investment is going day by day without having to do anything.

 

 

One of the most interesting widget of this app Crypto Earn. It allows you to stake and earn crypto. Their is several options for getting interest per year.

The first one is the flexible. It’s staking amount you can withdraw at any moment. The rest you have to keep it one month or three month. Perfect for person who want to Hold & gain crypto by doing so.  

Without staking MCO and depending on which crypto you’re staking. You can see the earning rate above.

Last options are crypto credit that I’m not recommanding as the interest rate is high. Eventually you have a FIAT wallet to stake your currency as you do with your bank.


MCO

 

 

MCO is the utility token of this application. It allows you to get the VISA Card (even if their is a free MCO card). Visa is a Crypto.com partner and that’s why it’s, for me, the most interesting banking project right now.

Their is various card options. The first one is free and then you have to stake MCO to get a better card. The advantages of getting a better card, they can be reward or purchase rebates on Spotify,Netflix and so on. You can see all information here

MCO can be useful to get more earning percentage on Crypto Earn with 500 MCO staking (approx. 2000 dollar). You can have discount on credit invest. Normally when you use crypto invest it takes 18% of the profit made. Instead with MCO staking it’s at 9%.

CRO is drop yearly by holding MCO. You can find MCO price charts here.

You can find more information about MCO token right here.


CRO

 

 

CRO is a blockchain for the exchange plateform created by crypto.com.

The token can be stack as the blockchain work as Proof of Stake.  You can stake it on the exchange for 6 month to get 20% interest per year. You can also get rebate on your trading fee. It works a little bit as Binance coin for comparison. Their is event of 50% off crypto currency called: syndicate. 

The number of CRO you stacked allows you to purchase an amount of this crypto with 50% discount. It has rules but it’s very interesting to make profit without doing anything.

Moreover you can pay e-card/gift card with CRO and get cashbacks. This is the final aim of this product: offering to merchant a way of buying/selling good with low/without fees.

This technology would allow you to pay in all currency or crypto you want everywhere at low fees.

You can find price charts of CRO here.

Eventually, If you are interested in this project you can download the app with this link:

https://platinum.crypto.com/r/nsrzskeq5j