Low risk crypto investment and optimal return will be possible on Oh! Finance
Market maturity
Modern civilization has traded goods and services since forever, where supply and demand, current/future stocks, speculation, etc, are important driving forces to regulate the market prices. The traces of the 1st institutionalized stock exchange go back to the late 13th century in Bruges (Belgium, Europe). The 1st savings banks were established in the 18th century in Europe as well.
Thus investing via traditional finance vehicles goes a long way back and has had time to mature to the current state we are today. Crypto is in its infancy by comparison: Bitcoin was born in 2009, Decentralized Finance (= “DeFi”) really exploded in 2020, growing from around $1B in total value locked ( = TVL) to $186B nowadays (source: https://defillama.com/home). To this date, crypto remains controversial with some official bodies (think governments wanting to regulate it like traditional finance), but the fact is that more and more institutionalized money is being poured into crypto since 2020.
The expected trend is that crypto is here to stay and has yet a long way ahead to reach similar volumes traded in traditional finance. Money shouldn’t just evaporate from crypto from one day to the other and it has the potential to be a safe investment option in a diversified portfolio and be just as legitimate as traditional finance. Being early usually means opportunities with better potential returns than in a matured market. Crypto is still exploring a lot of exciting new venues, is characterized by a very dynamic environment often paired with innovation and is much less tied down by the heavy anchors and overhead of traditional finance.
Moreover, financial institutions like banks have shareholders and layers of corporate management claiming major parts of the profits, leaving the savings account customers with the breadcrumbs. To the point that interest rates are below inflation rates, so in effect, you lose buying power by leaving your money in a bank.
Regulation
An important part of the attraction of crypto and the rallying cry for a vast proportion of crypto users is the lack of centralized regulations: Meaning it can innovate fast and offer financial incentives unheard of in traditional finance. It can also draw a lot more investors who would be excluded by financial institutions because they don’t pass their vetting process or don’t meet the thresholds to access more lucrative investment products.
A possible drawback for risk averse investors may be precisely the lack of regulations: Higher risk of rogue operators (but remains to be proven that it’s less prevalent in traditional finance…), higher volatility (up or down) compared to traditional finance. Although with some basic checks, security precautions and common sense, it is possible to commit funds in low risk crypto ventures. More responsibility is undoubtedly placed in the hands of a crypto user.
Thresholds to invest in crypto
The technical threshold to invest in crypto may initially seem higher than traditional finance: Unlike a bank or a broker, you can’t just walk in an agency, talk to an advisor, sign a bunch of papers to open bank accounts, forced to sign countless exclusion closures in their contracts, forced to take insurance, hand over your money and hope for a return beating the inflation rate. Like any new business, a crypto user has to learn a few basics on how to get into crypto (“wallet”, “contract address”, etc), a future article will give a basic rundown on this topic.
Though today, banks are reducing their overheads like reducing the number of premises, less ATMs, less customer facing staff. They are encouraging their customers to go online and proceed themselves to understand and sign up to their different investment proposals. Crypto is already at that online stage, but with less intricate onboarding.
On the other hand, the financial threshold to invest in Decentralized Finance (= “DeFi”) is way lower than traditional finance: Anyone can enter crypto, regardless of how much they are willing to invest (from a few dollars to millions), their personal finance situation, their appetite level for (or lack of) risks, their geographical location, etc.
In DeFi’s, there are no background checks like if you want to borrow (collaterals will be required in return though), there is no need to identify yourself (you are 17 years-old and legally should be 18 years-old in your country before being able to invest? not an issue), nor constraints about being allowed or not to trade tokens.
Getting into crypto just means a computer/mobile phone, access to the internet and not being blocked to access crypto websites/applications. Plus the ability to transfer fiat money to the crypto space to start. No contracts to sign, no intermediaries, just you and direct access to financial crypto products, like proposed on Oh! Finance.
DeFi: You are in control
You are in total control in DeFi: You decide how, when, where you invest your assets, you know exactly how much you have on your balance at any time, you choose the projects to invest in as a function of the risks you are willing (or not) to take.
DeFi is also very community driven and passionate: It’s easy to find help, advice, and information on the different social media platforms where the projects are interacting. It’s quite common to be able to talk directly with the founders or developers of a project. You can join the Oh! Finance community to ask questions, get support, propose and discuss ideas to optimize investments, get information about future plans and follow the development progress: This is the complete opposite of a traditional corporate institution, usually more akin to blackbox than a transparent one. Plus, you don’t have to deal with a top heavy organisation and shareholders claiming their piece of the pie.
Oh! Finance will allow you to take full control of your USDC investment, to cut the middleman like a bank and thus keep more of the profits for you, and to invest your fiat money through a low risk approach
Investment on Oh! Finance
A basic parallel can be drawn between some traditional finance and DeFi investment opportunities:
- Trading stocks — Trading crypto tokens on centralized or decentralized exchanges
- Trading on currency exchange rates — Arbing to take advantage of the price differences of a same token residing on different exchanges and blockchains
- Savings account — Yield farming of single sided staked stablecoins like USDC
In order of risk level on the point of view of return on investment, from high to very low: 1, 2 and 3.
Oh! Finance is the 3rd option, what it exactly does will be explained in a future article. You will invest USDC.e on the Avalanche blockchain and enjoy interest on it just like on a savings account, but with an expected return rate of 10 to 21%.
Such high returns are possible because crypto can offer amazing innovations to generate high interest rates and the crypto project teams are typically lean and cut the fat regarding overhead costs. They are not burdened by high fixed operational costs of corporate institutions and don’t deal with the distribution of benefits to corporate management and shareholders.
About OH! Finance
Oh! Finance is an optimized yield-generation protocol, focused on reducing risk and increasing volume exposure. Start earning industry-leading interest rates on stablecoins in just a few clicks: https://oh.finance
Follow us on:
