How to earn 50% annual profitability without volatility
I have recently found a way to earn high returns on our stablecoins. And I would like to write about it, but in order to really understand what it is all about I have to start at the beginning. The fascinating world of cryptocurrencies is reinventing the financial system on many levels.
This has been called "DEFI" or "decentralized finance." Within all that framework that includes the creation of synthetic assets as occurs for example in Synthetix, or the exchange of cryptocurrencies in Uniswap, and a long etc. There is a sector that covers what is called "money market" that is, money markets.
An example of this could be Compound or Aave in Ethereum, Pancake in Binance, etc. These are smartcontracts where money is traded, in these protocols you can borrow money, "borrow" or lend it, "lending".
Those who borrow money can use that loan to leverage themselves against other cryptocurrencies or in favor of other cryptos, thus increasing the potential earnings by x1, x2, x3, x10 ... Borrowers pay an annual rate of interest on those loans. On the other hand we have the lenders, who are the ones who lend money, they deposit for example DAI, USDC, tokenized Bitcoin, whatever. And they receive an annual return. These returns usually range between 3-10% right now, but vary over time depending on the demand for each asset.
Those who lend money are much safer than those who borrow, since their cryptocurrencies are backed at all times by a value of 100% or more. That is, at all times there is a deposit greater than the one we have borrowed that supports our loan. The risk of lenders or providers is that the protocol fails, that is, the Compound code, Aave, or whatever we use. There are also centralized alternatives, this is more mainstream. Some examples are famous exchanges that have this service such as Binance or specialized applications and that give higher returns such as SwissBorg, BlockFi or Nexo.
BlockFi and Nexo are clearly the market leaders, giving an annual return of between 9-12% on our stablecoins (USDC, USDT, BUSD, DAI, PAX, GUSD, TUSD, etc).
When it comes to decentralized protocols as I have said, the important thing is that the code is audited by security analysts so that it does not fail. In the case of centralized sites such as Nexo or BlockFi, the important thing is that the company itself is trustworthy, is insured in case of hacking, there are public audits, etc. I like BlockFi because one of its investors is Coinbase, the largest and most legally integrated company in the world of cryptocurrencies.
A triple A company that stands out for its good work and is already listed on the NASDAQ. Still, obviously there is risk of investing in BlockFi, but that, the fact that they are insured and as a computer scientist, seeing that the web is really excellent. In addition to having millions of users.
They are some of the metrics or variables that I contemplate to trust or not a service of this type. By the way, I wrote a review about BlockFi where I explain how it works, all its features and how to receive $ 10 as a guest. Well, what happens if I tell you that I have found an app in this category that will provide us with an annual interest of 50% on our stablecoins?
Earn 50% annual interest in stablecoins
The App itself is called Valora App. I naturally thought it was a scam because if the market leaders offer around 10% interest in stable cryptocurrencies, an annual profitability of 50% is impossible because the money has an interest and It does not matter if it is BlockFi or Nexo, it may vary a bit depending on the site due to different subjective factors such as the security perceived by investors or for legal reasons in each country, etc. But the money market is unified globally and there is no reason for such a distortion.
Well, reading I realized that it is actually a promotion, that it is not that they offer this annual interest in a "natural" way, but rather that it is temporary in order to attract new users to the platform.
In fact, although we can put the amount of money we want on the platform. From $ 1000 we no longer perceive that profitability. This is logical because otherwise we will ruin the platform that is losing money by giving such profitability.
Therefore, all this fits me more. It is simply an offer, exactly the same as when an exchange waives its commissions to promote itself or a store takes almost all of the profit margin temporarily.
But if it is a promotion, even if it suits me, it does not give me security, because who assures me that the company is trustworthy, that it will not go bankrupt due to negligence, etc.
As well. Doing some research I found that one of the investors is the investment firm Andreessen Horowitz. A venture capital fund that I already know and like a lot, they handle funds worth several billions of dollars and have a good reputation in the world of venture capital and specifically in the world of cryptocurrencies, in which they were one of the pioneers within their sector.
I finally decided to try the App and now I am writing this article. If you want to know how I'm doing, you can follow me because I will publish an article about this App again later, both to tell if it has gone well and the expected interest has been generated and to tell if it has gone wrong and it is a company that does things evil. Either way, luck is cast.
What you need to know before trying Valora App
I am not affiliated with Valora App, I do not earn anything for talking about it nor do I earn anything because you use it. I really have my misgivings about this App and I am a defender and fan of open source wallets where we own our private keys.
Now, I always take a risk to be able to make money, even being invested in Bitcoin carries a possibly high risk.
Anyway, if someone decides to use this app, they must know at least the following things:
Although the wallet is non-custodial, that is, we are the only ones with access to the funds, it cannot be verified as it is not open source. In addition, they do not give us the private keys, only a seed phrase, which means that we can probably only restore our wallet using that App.
Another relevant thing is that the App is only for CELO. That is, as an ethereum wallet. Since CELO is a smartchain like Ethereum, actually a modification of it.
The wallet supports CELO, which is like Ether and CUSD and CEUR, which are two stable tokens, one pegged to the dollar and the other to the euro.
You should also know that the promotion will end one day.
Oh and a word of advice: the app recommends adding funds from various affiliated exchanges. These, from what I have read in forums, charge you a good commission for taking the CUSD out. But Valora also gives you the public key of your wallet so you can actually send your CELO, CEUR, or CUSD from wherever you want. I used Kucoin and they only charged me 0.3 $ commission for withdrawing my money. Mining fees are very low in CELO unlike Ethereum, probably because it is used so much less and there is less congestion. They have not charged me a 0.5 $ commission for the gas used.
It is quite simple to use.
And finally, remind you that cryptocurrencies have the risk of regulation by countries, risks of technological failures and risks of centralized entities as in traditional businesses, when it is the case, and this is it.