What’s on offer

The simplest product is a fixed deposit of tokens. Bitbns, a homegrown crypto exchange founded in 2017, offers a Fixed Income Plan (FIP) where users can invest a specified amount in USDT (Tether) or Bitcoin for a set period of time and a set rate of return. The return varies between 8% and 40% annualized for maturities of 30-365 days. Another platform, ZebPay, allows investors to deposit their cryptos for seven, 30, 60, or 90 days. The return depends on the period chosen by the investor. The returns are deposited into the trading wallet along with the principal at the end of the deposit period. ZebPay offers an annualized return of 1.30% on Bitcoin, 2% on Ethereum, 6.5% on Binance Coin and 7.5% on Polygon (Matic). Tether and Binance USD are yielding a higher rate of 9% and 8%, respectively. ZebPay also has an open term deposit where you can transfer your crypto assets back to your trading wallet at any time. The returns are lower than the fixed deposit system and are deposited into your wallet on a daily basis.

Another crypto lending platform, Vauld, offers similar fixed deposits, with Bitcoin and Ethereum earning 6.70% and Matic earning 7.23%. Some tokens like CAKE and AXS generate annual returns of up to 42%.

Cashaa, which claims to be the world’s first cryptocurrency financial institution with physical branches, has launched savings accounts along with term deposit products. It allows users to store, buy, sell and earn interest without risking assets for unknown DeFi (decentralized finance) projects, the platform says. The crypto bank also has unblocked deposit accounts where one can earn up to 13% returns. The fixed deposit plan, which offers up to 24%, locks up funds for one to twelve months. Bitcoin and Ethereum earn 8% interest. USDT earns 20%. The rate increases by 4% if the investor chooses to earn interest on their token, called CAS. They pay interest every day.

UniFarm, which guarantees APY up to 250%, is a crypto farming solution that offers various projects to investors. Users can stake any token and receive multiple tokens as a reward, the platform says. For example, if there is a UniFarm pool with tokens $ORO, $MATIC, $REEF, $CNTR and $FRONT, you can stake any of these tokens and start earning all the tokens as a reward. If APY falls below what the platform has promised, after eight weeks of farming, it will introduce additional $ORO tokens to pay for the required APY. The average APY for projects was 40-50%, says Tarusha Mittal, COO and co-founder of UniFarm. “We offer a guaranteed APY of at least 35%, which can go as high as 250%. But in several cases (cohorts), APY goes beyond 1,700%,” she adds. Yields vary by project. UniFarm earns from the fixed development fee charged by each project that is included in the cohort. Others earn by lending to institutional players and wagering the coins.

How it works

The platforms use staking algorithms and over-collateralized lending to generate high returns. Overcollateralization is the provision of collateral that is more than sufficient to cover potential losses in the event of default. For example, Vauld’s loans to its customers and institutional borrowers are overcollateralized by at least 150% and are typically repaid within 30 days. Security here refers to supported or accepted crypto coins.

Crypto staking is a strategy used by crypto platforms on behalf of their clients (lenders) to generate returns. It’s a mechanism used by many cryptocurrencies to verify their transactions. Think of staking as the crypto equivalent of depositing money into a high-yield savings account. When you put money into a savings account, the bank lends it to others. In return, you receive part of the interest from the loan. Similarly, if you use your digital assets to participate in the operation of the blockchain and maintain its security, you lock your coins. In return, you earn rewards calculated in percentage returns. The reward is in the form of additional tokens of the cryptocurrency you wagered and will be credited to your wallet.