88mph.app — Fixed-Rate Deposits: How they work, how to use them, and how to make them work for you.
What is a fixed-rate deposit?
88mph allows users to earn fixed-rate interest on their deposits, based on a chosen timeframe ranging from 7 days to 365 days.
Deposits also generate a one-time, upfront reward of $MPH tokens vested over a 7 day period. There are various trade-offs for the duration chosen. Longer durations receive more rewards, but also require the user to wait longer for their deposit to mature. MPH offers various fixed-rates depending on the asset deposited. These rates are shown below. It should be noted, that the APY is based on the underlying asset, so if you think your asset will appreciate in a year, you will be earning APY on top of the appreciation.
Depositors can withdraw their deposit at any time, regardless of its expiration date, but they will be required to return 100% of the rewards they were given when they deposited. This can be leveraged to their advantage in several ways. That’s what this article is about.
Guide: How to take out a fixed-rate deposit with 88mph
Essentially, fixed-rate deposits allow users to deposit their assets into a contract where they earn fixed-rate interest with customizable maturity dates. Many platforms offer the ability to earn interest on deposits, but 88mph is the only platform that gives users up front rewards (that they get to keep) in addition to this interest.
Depending on the asset deposited, a percentage of rewards will need to be returned upon maturation of the deposit. These specific percentages can be found on the deposit interface.
These rewards are vested (unlock slowly) over a 7 day period. The depositor is then free to use these rewards however they please. 88mph offers staking, where the user can earn weekly dividends in the form of $DAI (yes, you can earn stablecoins just for parking your $MPH into a contract). Another avenue to generate (more) passive income is to provide liquidity on uniswap and then begin earning $MPH via the liquidity mining interface. With the new release of $MPH/$ETH pools on Onsen, users can also provide liquidity on the $MPH/$ETH pair and earn $SUSHI rewards daily. Again, all of this can be done with the $MPH given up front upon depositing funds.
Ok, so how is this done?
Hop over the deposits page on the 88mph website
Depositors can choose which asset they would like to deposit. Rates vary based on the type of asset deposited. There are several ways to maximize profits/hedge potential losses, which are described in more detail further below.
Next, click “Add” on the far right
Which will bring up the following screen
From here, depositors can choose how much they want to deposit and how long they want to deposit it for. The results will be calculated automatically, in real time, and they can then decide how to proceed.
For other pairs, like $yCRV for example, that require depositing into Curve, 88mph has implemented an in-house “zapper” that does all the work for the user. In the example of $yCRV, all one has to do is choose from $DAI, $USDC, $USDT, or $TUSD and the zapper will convert and deposit for the user with the click of a button.
That’s it. Depositors can then hop over to the $MPH Vesting page to track their rewards as they unlock. A little bit will unlock at a time over a 7 day period, at which time all rewards will be accessible and ready for use.
Should one decide that they want to withdraw early, they can do so, penalty free (however, interest earned will remain in the pool). All they have to do is return 100% of the $MPH that they were given initially.
How to use fixed-rate deposits to hedge against downside risk on $MPH price
Ok, so if someone want to get exposure to $MPH, but they are worried that the price might go down, what should they do? That’s a fear many have. “What if I’m buying the top?” “What if it goes down and I lose my money?” Well, fortunately 88mph offers users a way to receive $MPH exposure without actually having to expose themselves to this risk.
In the scenario of hedging, we are going to use a stablecoin deposit. This can be done with other assets, but it makes more sense to use a stablecoin as it doesn’t expose the user to any risk if the underlying asset (the one they’re depositing) goes down. Let’s look at the rates. As of now, $yCRV offers the best APY on temporary rewards. This is important, because we are wanting to receive as many temporary rewards as possible.
How does one obtain $yCRV? Well, 88mph does the heavy lifting for the depositor. They have built an in-house “zapper” which will do all the swapping efficiently.
Ok, so in this example, we are depositing 1500 $yCRV and are receiving 19.85 $MPH in temporary rewards over a 7 day period.
Great, now we have some exposure to $MPH once the vest is complete. So now what?
Well, if the price dumps and the depositor wants out of the project, they just return the rewards and get their deposit back penalty free (minus gas and tx fees). This is the hedge. They have zero price impact and the rewards are sent to the burn address and removed from the circulating supply.
In this strategy, we never intended to let the deposit mature to 1 year. We used that duration to maximize rewards (either for staking, price speculation, or LP’ing) at a rate of over 50% (currently).
The user is now free to deploy capital (their stablecoin deposit) to “buy the dip” and accumulate more $MPH at low(er) prices or move on to greener pastures; whichever they desire.
How to use Fixed-Rate Deposits to Accumulate more $MPH
This strategy is a bit different and exposes the user to a bit more risk, but also retains the ability to hedge should $MPH price fall beyond what the user is comfortable with.
In this example, the user will want to take out a fixed deposit on something they think will increase in value short/mid term. Currently the two options are $BTC or $UNI. Both have performed incredibly well in the last few months.
We’ll use $HBTC in this example. Below is an example of someone using a $HBTC deposit as a hedge and then unwrapping when it was in profit to purchase more $MPH on the dip with those profits.
The deposit appreciated in value and the rewards were returned in order to purchase more $MPH at a lower price.
Again, this is just for accumulating more $MPH while hedged. Once the user decides to purchase $MPH spot, they become exposed to downside price risk and also lose exposure to the asset they had in the deposit.
It should be noted that for this strategy to be effective in time-sensitive situations, users will want to hold an equal or higher amount of $MPH in their wallet so that they can return the rewards from their spot holdings if the 7-day vest has not yet ended.
In Summary
Earning fixed-rate interest on crypto deposits provides an easy, low risk way to utilize capital efficiently.
There are plenty of ways to minimize/maximize one’s trading. Some may be totally fine with just buying spot and holding through dips or DCA’ing.
The goal of this article is to highlight one of the many tools 88mph offers users through their various instruments.
Fixed-Rate Deposits ultimately allow users a low risk way to earn fixed interest on their deposits over a set period of time. This is just one of the methods one can leverage the utility of this specific instrument to their benefit.
