What’s On Offer
The simplest product is a fixed deposit of tokens. Bitbns, a homegrown crypto exchange founded in 2017, offers a fixed income plan (FIP) where users can invest a certain amount of USDT (Tether) or Bitcoin for a fixed period and rate of return. The rate of return varies between 8% and 40% annualised for tenures of 30-365 days. Another platform, ZebPay, allows investors to deposit their cryptos for seven, 30, 60 or 90 days. The return depends upon the period the investor has chosen. The returns, along with the principal amount, are deposited into the trading wallet at the end of the deposit term. ZebPay is offering an annualised yield of 1.30% on Bitcoin, 2% on Ethereum, 6.5% on Binance Coin and 7.5% on Polygon (Matic). Tether and Binance USD earn a higher rate of 9% and 8%, respectively. ZebPay also has an open term deposit where you can transfer your crypto assets back to your trading wallet any time. Returns are lower than in the fixed deposit scheme and are deposited into your wallet daily.
Another crypto lending platform, Vauld, offers similar fixed deposits where Bitcoin and Ethereum earn 6.70% and Matic 7.23%. Some tokens such as CAKE and AXS earn up to 42% annualised yield.
Cashaa, which claims to be the world’s first cryptocurrency financial institution with physical branches, has launched savings accounts along with fixed deposit products. It enables users to store, buy, sell and earn interest without risking assets to unknown DeFi (decentralised finance) projects, says the platform. The crypto bank also has ‘no lock-in’ deposit accounts where one can earn up to 13% returns. The fixed deposit plan, which offers up to 24%, locks funds for one-12 months. Bitcoin and Ethereum earn 8% interest. USDT earns 20%. The rate rises 4% if the investor chooses to earn interest in their token, called CAS. These pay interest daily.
UniFarm, which guarantees APY of up to 250%, is a crypto farming solution that offers various projects to investors. Users can stake any one token and get multiple tokens as rewards, says the platform. For example, if there’s a UniFarm pool of tokens $ORO, $MATIC, $REEF, $CNTR and $FRONT, you can stake any of these and start earning all the tokens as rewards. If APY falls below what the platform has promised, it will introduce additional $ORO tokens after eight weeks of farming to pay the required APY. Average APY on projects has been 40-50%, says Tarusha Mittal, COO & co-founder, UniFarm. “We offer a minimum guaranteed APY of 35%, which can go up to 250%. But in several cases (cohorts), APY goes beyond 1,700%,” she adds. The returns vary across projects. UniFarm earns from the fixed development fee that is charged from every project entering the cohort. Others earn by lending to institutional players and staking the coins.
How It Works
The platforms use staking algorithms and over-collateralised lending to generate high returns. Over-collateralisation is provision of collateral that is more than enough to cover potential losses in case of default. For example, Vauld’s loans to its customers and institutional borrowers are over-collaterised by at least 150%, and typically repaid in 30 days. Collateral here refers to supported or accepted crypto coins.
Staking crypto is a strategy used by crypto platforms on behalf of their customers (lenders) to earn returns. It is a mechanism used by many cryptocurrencies to verify their transactions. Think of staking as crypto equivalent of putting money in a high-yield savings account. When you deposit money in a savings account, the bank lends it to others. In return, you receive a portion of interest earned from lending. Similarly, when you stake your digital assets, you lock up your coins in order to participate in running the blockchain and maintaining its security. In exchange, you earn rewards, calculated in percentage yields. The reward is in the form of additional tokens of cryptocurrency that you had staked and is credited to your wallet.