Your Savings Account Sucks

If you’re looking for a way to jumpstart your savings, you should absolutely consider Beanstalk Protocol, a decentralized protocol on the Ethereum Network built for people who have been burned by the traditional banking industry over the last decade. 

Read more to understand why saving is broken, how Beanstalk remedies this problem and what you can do right now to build your wealth without gambling. 

Beanstalk Protocol Saves the Idea of Saving 

Saving is dead. Your father (or grandfather’s) method of stashing cash over decades at >0% interest rates no longer applies in a world with near zero interest rates for the last 10+ years. 

As a result, many Americans and USD holders have been driven to pile their money into stocks, real estate and other assets that are essentially propped up by Jerome Powell and his associates at The Federal Reserve via low rates and monthly bond-buying. This isn’t saving, it’s borderline gambling.

You need something that builds wealth like stocks but retains the flexibility of a savings account...

Stablecoins: Digital Dollars

If a dollar bill had a baby with the blockchain, ‘stablecoin’ would be the lovechild. Currently, there are a few popular stablecoins on the market (USDC, GUSD, USDT, DAI) and most exist on large, centralized exchanges (e.g. Coinbase, Gemini) to help facilitate crypto trading and lending. 

For many of us who are in a race to grow our savings without taking excessive risk or falling victim to inflation, stablecoins have provided a great opportunity to do so; many platforms offer 10%+ rates for holding stablecoins.

Stablecoins aren’t insured by the FDIC like your bank deposits are, however, centralized exchanges comfort us with 2 main claims: 

• Each stablecoin is backed by $1

• There is some minimal insurance (e.g. $100 million) that pays in the event of a major security breach (e.g. all of Gemini gets hacked and digital bandits run off with your coins)

The problem is, none of this actually makes your investment any safer. We’ve already seen the founders of Tether violate their promise (which resulted in a ~$42m fine levied by the SEC)

Beanstalk Protocol: A Saver’s Savior 

Kickstarter lets you fund your projects without having to cajole a venture capitalist. SurveyMonkey helps you answer questions without going door to door. Decentralized finance lets you bank without going to the bank. 

Beanstalk Protocol exists in the world of ‘DeFi’ and is the first stablecoin to be entirely self-regulated, meaning the “bean” (the base token that serves as the dollar equivalent) would find its way to $1 by market forces vs. hollow guarantees. 

Beanstalk Protocol provides two investment opportunities and we’ll look at two different types of people to understand who would be the best fit. 

Liquid Larry Discovers Beans

Liquid Larry is a 36-year-old family man who pays a mortgage, has two middle school children and a wife. Him and his wife work full time and when they’re not dialing into zoom calls or heading to corporate offsites, they spend time planning vacations or trips. 

Larry wants to start a separate slush fun for his family vacations; he figures he can invest the money and since they can only travel once or twice a year, he doesn’t mind letting the money sit idly until he needs it. 

The thing is, when Larry and his family go abroad, they go big. He wants to earn a substantial rate of return on his savings without sacrificing liquidity - the ability to pull out when he wants. He also doesn’t want to risk any of his principal (or else he’d just buy tech stocks or Shiba Inu and call it a day). 

Larry and the Beanstalk

Larry accesses the Bean Protocol by going to “bean.money” on the browser of his Metamask wallet. He sees a few things (as of early November 2021)

• Current Bean APY is 170% (as of early November 2021)

• Current Bean price is $0.99 

• Lots of weird plant-based words like “stalk” and “seeds”

Here’s what Larry should do if he wants to earn significant passive interest this year. 

• Deposit Ethereum into the Silo 

• Ethereum will be converted to the equivalent number of Beans at the market price (near ~$1)

• Larry will take the total # of converted beans and deposit them into the ‘Silo’

• In exchange for his beans, larry receives: 

  • 1 ‘Stalk’ for each bean

  • 2 ‘Seeds’ for each bean

A stalk is basically bean-speak for shares. Larry owns shares of Apple stock, so when Apple pays dividends, he receives his share and when Apple has shareholder votes, he’s able to vote (although he usually doesn’t because if he owned enough shares, he wouldn’t be worried about vacation planning). 

Similarly, owning ‘stalk’ gives Silo owners two benefits: 

• Earning ‘interest’ in the form of new beans (half of all new beans go to Stalk owners). New beans are minted whenever price of beans rises above $1 for an extended period of time (new supply depresses price back to $1 to maintain the 1-to-1 stablecoin peg)

• Voting power when business proposals are presented on the floor. Because Beanstalk is a Decentralized Autonomous Organization (“DAO”), his vote will matter and he will receive votes in proportion to his stalk ownership 

Things Larry Will Worry About

Depositing Beans into the Beanstalk Protocol Silo provides (as of current market conditions) 100%+ APY, but there are risks Larry is aware of (and comfortable with). He knows that if Beanstalk Protocol does not ultimately gain increased adoption, the price of beans may never break $1, which means he won’t receive interest. In that case, he can withdraw his beans and exit his position. In this worst case scenario, he’ll suffer some losses depending on the prevailing price of beans. 

Larry is comfortable with this risk however because he’s chosen a responsible deposit size; if he ultimately earns the 100%+ APY, he’ll feel like a genius and his family is going to have an absolutely excellent time at Disney World. If he ends up taking some losses, he won’t need to take on a second job or put his toddlers to work. 

He feels comfortable leaving his deposit in the Silo, not just because of the compelling APY but also because his seeds will convert to stalk (over time), which will gradually increase his proportional share of new beans (e.g. interest) over time. 

There are other opportunities to potentially earn meaningful returns via Beanstalk Protocol. Like Larry, you should always understand that these investments are risky and loss of principal, while improbable, is possible.