What People Should Know About Decentralized Finance? Is it Safe?

October 06 12:28 2021

It is understandable that many savers and investors, especially those new to digital assets, are unsure about the safety of decentralized finance (DeFi). Cryptocurrencies as a whole remain an innovative area of finance, and DeFi is a greater innovation still, albeit one that is rapidly growing in popularity.

Users are naturally attracted to DeFi by the high, stable APYs available on investment strategies, particularly on stablecoins – cryptocurrencies pegged to fiat money, such as USD Coin (USDC) and USD Tether (USDT), both pegged to the US dollar. DeFi has the power to transform the way we interact with our finances, including the way we bank, borrow, lend, and so much more. But perhaps for some these APYs – often 10% or more – make DeFi look even more suspicious. How can a stable passive income of 10% or more per annum be safe and reliable?

It is natural to be skeptical, especially when it comes to such a nascent area of the market. Though the DeFi segment has now grown to more than $100 billion in managed assets, it remains a small part of the crypto universe, with the overall cryptocurrency market cap sitting at nearly $2 trillion (as of August 17, 2021).

The nature of DeFi also leaves it open to certain risks, as large parts of the ecosystem run purely on automated smart contracts. In many ways, this is why users flock to DeFi in the first place, as it allows for quick, autonomous transactions. However, this completely permissionless nature of DeFi can make it harder to implement security strategies than it is for the big centralized exchanges, such as Coinbase or Binance.

Best of both worlds

At Yield App, we are looking to get the best of both worlds. While offering market-beating APYs on a range of stablecoin and digital asset strategies, we allow our users to avoid the complexity and risk frequently associated with DeFi. We do this through adopting proven traditional portfolio risk management practices combined with regulatory compliance and advanced technology and cyber-security measures. This is then all overseen by a team of highly skilled portfolio managers and analysts to ensure our users’ assets are as safe as they can possibly be.

Our aim is to make digital finance available to everyone, everywhere. As a result, using the YIELD App is as simple as opening an account, depositing assets (which can be done directly with a credit or debit card), and clicking “invest”. However, we do require our users to verify their identities via a Know Your Customer (KYC) process that corresponds to the highest global standards. This means users must provide proof of identity, and, from September 30, proof of residence.

While we have made every effort to ensure this process is as simple and seamless as possible, we believe adhering to the highest regulatory standards is incredibly important. Not only does it allow us to keep our own users safe, but it also ensures the entire ecosystem becomes more secure for all participants.

Experienced team

In addition, the experience of our team should fill even the biggest DeFi sceptics with confidence. Our team consists of highly-experienced professionals from across the globe with a strong proven track record, allowing us to offer a more inclusive digital banking experience to all of our users.

Our CEO and Founder, Tim Frost, has been involved in the world of cryptocurrencies since 2014 and has a great deal of experience working with early stage blockchain startups. He helped accelerate blockchain companies at the likes of QTUM, NEO and Paxful, and was also a founding member of digital banking platform Wirex and one of the first backers of EQIBank. He has transferred this expertise and know-how to the tools and products that have been developed for Yield App.

To support the adoption of DeFi and digital asset wealth management, YIELD App constantly seeks out innovative and experienced partners. For insurance, we are working closely with a nascent DeFi platform that is in the process of developing a cutting edge insurance solution for cryptocurrency and decentralized finance: Steady State Finance. We plan to be one of the first platforms to utilize this product upon its launch to maximise protections through increased insurance cover of assets held on our platform.

YIELD App is a fully licensed and secure DeFi wealth management platform that our users can trust, and we are seeing this trust reflected in our numbers. In Q2 alone, we grew our on-platform assets threefold to $145.8 million. Crucially, our research has found that the majority of our users fall into the 36-50 age bracket, showing us that it’s not just the younger population that is willing to entrust their money to DeFi.

We believe that DeFi has the ability to transform finance forever, democratizing it in a way that traditional banking simply cannot, and we plan to be at the forefront of this revolution. By taking security seriously and working with key partners, we aim to make the experience of entering into this exciting asset class as rewarding as possible for our users while working to make the ecosystem safer for all involved.

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Website: https://www.yield.app/