Exploring Open Finance #2
Opportunities aplenty — taking a look at ways to earn interests by lending Stablecoins in Open Finance Protocols available today
Through Open Finance, various opportunities for earning are now possible, examples include lending, trading and no-loss lotteries. In this article, we will take a look at some of the opportunities available today.
Lending
Lending stablecoins like DAI or USDC is done by depositing your tokens in a lending protocol, in return, you will receive an interest, denoted as Annual Percentage Yield (APY). Lending Protocols?
In the current market, there are plenty of options to get started with lending, such as Maker, Compound, Aave and Trinito. Each lending protocol has their own specific interest rates for borrowing and lending, which you can easily compare on websites like LoanScan.io or Coingecko.com’s Earn
Lending Optimized
These rates or yields change over time, and if you want the best possible rates, you would need to switch back and forth from platforms which may be a tedious process. However, through the composability of DeFi, there are various projects that already do this job for you.
For example iEarn, which is, as described earlier, an automated yield optimizer for lending platforms which automatically re-balances for the highest yield across multiple protocols ensuring you get the best possible rate at any point in time.
Apart from iEarn, other yield optimizers examples are Idle Finance and Staked.us’ RAY. RAY for example currently supports on-chain lending for ETH, Dai (DAI) and Coinbase’s USD Coin (USDC) tokens via the Compound, dYdX, Fulcrum and MakerDAO’s Dai Savings Rate (DSR) smart contracts, while Idle supports Fulcrum and Compound.
Trading
Trading cryptocurrencies used to be a hassle as you would want to look for the best possible price and Decentralized Exchanges (DEXs) would also not be able to handle large volume trades easily due to the lack of liquidity supplied.
However, times have changed and with the advent of a variety of DEX Aggregators like 1inch.exchange, Paraswap, DEX.AG, Totle and 0x, it is now possible for your trades to be split across DEXs in order to get the best possible rate for your trading.
Carry-Trading
With the variety of lending protocols out there, you could potentially arbitrage the lending rates between them.
For example, if the rates to borrow USDC is at 1% on Platform A and the lending rate for DAI on the same platform is 8%, you could then trade your borrowed USDC for DAI and lend it out again, effectively receiving a 7% difference!
The lending rate for DAI on the same platform is 8%, you could then trade your borrowed USDC for DAI and lend it out again, effectively receiving a 7% difference!
No-Loss Lotteries
Another interesting application of DeFi is Decentralized Price Savings Application or in simpler terms, no-loss lotteries like PoolTogether. Take a normal lottery system, you would buy a ticket and hope that you would win the prize.
Upon buying your ticket, you would have already lost money from the ticket purchase, unless you do miraculously manage to win. However, in PoolTogether, your tickets can be redeemed back at any point in time even if you didn’t win.
The money deposited to buy tickets are pooled together and sent to Compound, where they will accrue interest for every week, and at the end of the week a winner is chosen at random from the ticket holders and they will get the entire interest accrued from the pool. This means that your capital is never lost unlike traditional lottery systems.
Conclusion
There are plenty of opportunities out there in the DeFi space and with them, come their own risks involved. Investors should always practice their own risk management before doing any transactions.
Investors should always practice their own risk management before doing any transactions
About Kysen Technologies
Kysen Technologies is a group focused on delivering a full stack solution from a set of application and tools built on top of a pool of blockchain networks. They have built Harvest Wallet, Cosmos Outpost and KysenPool
Kysen Wallet — Harvest
Harvest a self-custody wallet for stablecoins with an integrated lending and token swap interface supporting Open Finance initiatives.
Download it today : Apple | Android (Coming Soon)
Kysen Analytics — The Outpost
The Outpost is a macro-economic insights and analytics platform for the Cosmos Network. Starting with CosmosOutpost.io you can view summarized high level trends within the network chain to help make well-informed decisions
Kysen Validator — KysenPool.io
KysenPool runs full nodes with validation services providing a trusted entrypoint to a decentralized ecosystem. We operate blockchain nodes which provide infrastructure that help support blockchain networks.
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