Tired of your 1% regular savings account?
GetSmart will revolutionize the way we save for education. But there are a lot of options out there, depending on what type of savings or investment you are looking for. These are some of the great innovations for common people available right now just on Ethereum.
(paraphrased from www.ethereum.org)
Lending
You can earn interest on your crypto by lending it and see your funds grow in real time. Right now interest rates are much higher than what you’re likely to get at your local bank (if you’re lucky enough to be able to access one). Here’s an example:
- You lend your 100 Dai, a stablecoin, to a product like Aave.
- You receive 100 Aave Dai (aDai) which is a token that represents your loaned Dai.
- Your aDai will increase based on the interest rates and you can see your balance growing in your wallet. Dependent on the APR, your wallet balance will read something like 100.1234 after a few days or even hours!
- You can withdraw an amount of regular Dai that’s equal to your aDai balance at any time.
No-loss lotteries
No-loss lotteries like PoolTogether are a fun and innovative new way to save money.
- You buy 100 tickets using 100 Dai tokens.
- You receive 100 plDai representing your 100 tickets.
- If one of your tickets is picked as the winner, your plDai balance will increase by the amount of the prize pool.
- If you don’t win, your 100 plDai rolls over to next week’s draw.
- You can withdraw an amount of regular Dai that’s equal to your plDai balance at any time.
The prize pool is generated by all the interest generated by lending the ticket deposits like in the lending example above.
Crypto-savings are the future and will support your future business.
Exchange tokens
There are thousands of tokens on Ethereum. Decentralized exchanges (DEXs) let you trade different tokens whenever you want. You never give up control of your assets. This is like using a currency exchange when visiting a different country. But the DeFi version never closes. The markets are 24/7, 365 days a year and the technology guarantees there will always be someone to accept a trade.
For example, if you want to use the no-loss lottery PoolTogether (described above), you’ll need a token like Dai or USDC. These DEXss allow you to swap your ETH for those tokens and back again when you’re finished.
Advanced trading
There are more advanced options for traders who like a little more control. Limit orders, perpetuals, margin trading and more are all possible. With Decentralized trading you get access to global liquidity, the market never closes, and you’re always in control of your assets.
When you use a centralized exchange you have to deposit your assets before the trade and trust them to look after them. While your assets are deposited, they’re at risk as centralized exchanges are attractive targets for hackers.
Grow your portfolio
There are fund management products on Ethereum that will try to grow your portfolio based on a strategy of your choice. This is automatic, open to everyone, and doesn’t need a human manager taking a cut of your profits.
A good example is the DeFi Pulse Index fund (DPI). This is a fund that rebalances automatically to ensure your portfolio always includes the top DeFi tokens by market capitalisation. You never have to manage any of the details and you can withdraw from the fund whenever you like.
Fund your ideas
Ethereum is an ideal platform for crowdfunding:
- Potential funders can come from anywhere – Ethereum and its tokens are open to anybody, anywhere in the world.
- It’s transparent so fundraisers can prove how much money has been raised. You can even trace how funds are being spent later down the line.
- Fundraisers can set up automatic refunds if, for example, there is a specific deadline and minimum amount that isn’t met.
Quadratic funding
Ethereum is open source software and a lot of the work so far has been funded by the community. This has led to the growth of an interesting new fundraising model: quadratic funding. This has the potential to improve the way we fund all types of public goods in the future.
Quadratic funding makes sure that the projects that receive the most funding are those with the most unique demand. In other words, projects that stand to improve the lives of the most people. Here’s how it works:
- There is a matching pool of funds donated.
- A round of public funding starts.
- People can signal their demand for a project by donating some money.
- Once the round is over, the matching pool is distributed to projects. Those with the most unique demand get the highest amount from the matching pool.
This means Project A with its 100 donations of 1 dollar could end up with more funding than Project B with a single donation of 10,000 dollars (dependent on the size of the matching pool).
Insurance
Decentralized insurance aims to make insurance cheaper, faster to pay out, and more transparent. With more automation, coverage is more affordable and pay-outs are a lot quicker. The data used to decide on your claim is completely transparent.
Ethereum products, like any software, can suffer from bugs and exploits. So right now a lot of insurance products in the space focus on protecting their users against loss of funds. However there are projects starting to build out coverage for everything life can throw at us. A good example of this is Etherisc’s Crop cover which aims to protect smallhold farmers in Kenya against droughts and flooding. Decentralized insurance can provide cheaper cover for farmers who are often priced out of traditional insurance.
Aggregators and portfolio managers
With so much going on, you’ll need a way to keep track of all your investments, loans, and trades. There are a host of products that let you coordinate all your DeFi activity from one place. This is the beauty of DeFi’s open architecture. Teams can build out interfaces where you can’t just see your balances across products, you can use their features too. You might find this useful as you explore more of DeFi.
Still confused? Get in touch with us and we can help you. There is a thriving and very interested Ethereum community ready to support your savings and future.