A crypto app that makes crypto asset management accessible to everyone says it is delivering the best of all worlds by bringing the advantages of centralized and decentralized finance together in one place.
SwissBorg’s Smart Yield wallet enables investors to generate a return on their digital assets that isn’t based on whether the value of a coin is going up. The company’s systems scan a range of programs across the DeFi and CeFi space — scoring them based on risk versus reward.
An automated and optimized approach means that users gain exposure to the best programs without needing to perform endless hours of their own research. Evaluation of the best yield farming initiatives on the market also takes place on a daily basis — reducing the likelihood that lucrative opportunities will be missed.
This isn’t at the expense of protection. Risk management is at the forefront of the Smart Yield offering, and a safety net has been established to protect against smart contract risk, where bugs in underlying code are exploited to steal or lock funds. SwissBorg says 25% of all returns are put in this program for added security.
According to SwissBorg, yield is compounded on a daily basis to maximize earnings — and low barriers to entry mean that anyone can get involved in a few taps. The lack of a minimum investment period ensures crypto enthusiasts can move funds in and out of their Smart Yield account as they please, and deposits can start from 10 euros ($12.15).
DeFi and CeFi: The pros and cons
With savings accounts at old-fashioned banks offering tepid rates, interest in the yield farming programs offered across the crypto sector has grown in recent months.
All of this was sparked by the rise of the DeFi industry in 2020 — with the total value locked in these protocols surging from $671 million to $15.5 billion over the course of the year. This figure has more than doubled again since 2021 began, exceeding $40 billion at one point. Centralized finance brands have now been keen to get in on the action.
But according to SwissBorg, DeFi and CeFi have their own unique set of pros and cons.
Decentralized finance enables savers to earn a yield by lending cryptocurrencies such as ETH, USDC and DAI to others. However, the levels of interest can fluctuate dramatically depending on demand and supply – with SwissBorg claiming that, in extreme cases, this can swing from anywhere between 0.01% and 50% in a matter of hours. Many DeFi protocols are also based on the Ethereum blockchain where gas fees have been surging of late. This means that even basic transactions can cost between $30 and $70, eating into returns.
On the face of it, these downsides could make centralized finance providers a lot more appealing. This can involve lending your assets to a company that invests them on your behalf, such as by offering loans to borrowers. Although this can eliminate transaction fees, there can be the risk of a centralized counterparty defaulting — and they might not always offer transparency on how funds are being used.
Following on from Smart Yield’s launch in December 2020, SwissBorg has started to publish monthly reports that show how these wallets have been performing.
Figures covering the second half of December and the whole of January suggest that an average annual yield of 20.21% was achieved over this period.
Smart Yield wallets that support Bitcoin, Ether, Binance Coin and DAI are currently in progress, with SwissBorg saying: “Fairness and inclusivity are at the heart of SwissBorg’s identity, so we decided to find a way to make earning a yield on crypto accessible to all.”
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