This is a really attractive concept. I’m wondering though is this more like a fund with a certain level of risk than a savings account? The deposits are not FDIC insured like most savings accounts and while it doesn’t say explicitly on a DeFi bank site I’m assuming it comes with the risk of potential 4-10% plus losses as well.
There is the potential for loss, where there isn't really with FDIC accounts, but I am personally comfortable with it, as long as smart portfolio allocation is used.
"DeFi lending is highly collateralized, often over 100%, which means you have access to your funds at all times, even if a borrower defaults. However, as with all digital currency products, Donut is not FDIC insured."
"The DeFi ecosystem relies on the integrity of our partners’ closely governed and audited smart contracts. While we are confident in Compound’s extensive security and risk management practices, we encourage you to use discretion when investing and consider potential risks of this emerging technology."
I love this idea. It's always interesting to learn more about various topics and DeFi seems interesting. I have seen block fi offering up to 10% on your crypto assets stored with them. I never took the time to dive deep into it because I think you have to be based in USA or at least I don't think Canadians can sign up with these USA based companies.
Great article. Investment community definitely needs more information about mentioned topic!
Thank you, Denzel!
This is a really attractive concept. I’m wondering though is this more like a fund with a certain level of risk than a savings account? The deposits are not FDIC insured like most savings accounts and while it doesn’t say explicitly on a DeFi bank site I’m assuming it comes with the risk of potential 4-10% plus losses as well.
There is the potential for loss, where there isn't really with FDIC accounts, but I am personally comfortable with it, as long as smart portfolio allocation is used.
"DeFi lending is highly collateralized, often over 100%, which means you have access to your funds at all times, even if a borrower defaults. However, as with all digital currency products, Donut is not FDIC insured."
"The DeFi ecosystem relies on the integrity of our partners’ closely governed and audited smart contracts. While we are confident in Compound’s extensive security and risk management practices, we encourage you to use discretion when investing and consider potential risks of this emerging technology."
Thanks Robert! That is a great explanation of how the risk is mitigated. I am going to do some more research.
Let us know what you come up with! I'd love to learn even more if you find anything worth sharing.
I love this idea. It's always interesting to learn more about various topics and DeFi seems interesting. I have seen block fi offering up to 10% on your crypto assets stored with them. I never took the time to dive deep into it because I think you have to be based in USA or at least I don't think Canadians can sign up with these USA based companies.
It's certainly a really interesting concept and I'm excited to be diving into it with Donut!