Introducing Floatify: Easily Earn Interest by Lending Out Money in Your Bank Account
It used to be that only banks could benefit from earning interest by lending out money, and consumers would earn interest at an average rate of 0.09%. But thanks to lending protocols like Compound built on Ethereum, now anyone can lend out their money to earn 5–10% interest!
Until now, however, this required knowledge of how to buy Ether, convert it to stablecoins such as DAI or USDC, and interact with Compound from a wallet like MetaMask. For most people, this is too complicated, and consequently they’ll never be able to take advantage of these high interest rates.
Introducing Floatify
That’s where Floatify comes in. After creating your account and completing the on-boarding with Wyre, anyone in the US (with the exception of users in these states) can deposit money into Compound’s protocol and start earning 5–10% interest with just a few clicks. Whenever you want to withdraw your money, it’s a click away and will hit your bank account a few days later.
Simple as that!
Floatify is live now, so give it shot and provide some feedback!
How Does it Work?
Like traditional loans given by banks, you are supplying your money so someone else can borrow it. Unlike these traditional loans, you are not using a bank nor does anyone negotiate loan rates, terms, or have to worry about not getting paid back.
Instead, users can supply their funds to a pool which contains the funds supplied by all users. Other users can borrow money from this pool at an interest rate determined by the market. The loans these borrowers take are collateralized loans, meaning they must supply about 1.33x the value of the loan as collateral before they can get the loan. If the loan isn’t paid back by the borrower, he or she loses their collateral, which pays back the loan. As a result, there is very little risk of lenders losing money.
The interest rates are computed about every 15 seconds based on supply and demand. If there are a lot of suppliers putting money into the pool and few borrowers, interest rates will drop. If many users are borrowing money but supply is scarce, interest rates will rise. Borrowers will want to borrow funds from Compound because they can do so instantly, with comparatively very low fees, and no application process, as there is no bank to deal with. Lenders will want to supply funds because, as there is no bank, they do not have to directly or indirectly pay the costs of an institution creating, processing, and enforcing loans.
We’ll be publishing an article soon that goes into more detail about how it works behind the scenes. In the meantime, check out our How it Works and FAQ pages for more information.
Learn More
Right now, Floatify is an easy way for Americans to earn interest on their money. Down the road, we plan to expand where Floatify is available, and the functionality provided. Floatify will become a way for anyone in the world to access a stable currency, lend and borrow money, and send cheap and near-instant transfers to anyone, even across borders. This functionality all exists today on the Ethereum network, but is currently too complicated for most people to use.
By storing users’ funds in a stable cryptocurrency, lending out funds on their behalf, and providing a debit card linked to these funds, all of the above benefits can be provided without any familiarity with cryptocurrency. Floatify will act as a custodian to enable access to these services to anyone with a smartphone and will decentralize over time as the technology allows.
Remember that Floatify is beta software, and is not without its risks. Check out this article and our security page to learn more about the risks involved with Compound. The Floatify contracts have not been audited, but you may review them here.
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