CeFi Slowly Rendered Useless

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avatar of @gadrian
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5 months ago - 2 minutes read

Many people and businesses involved in the cryptocurrency world felt hard the successive waves of hits this young industry has endured during this bear market.

While the expression "not your keys, not your crypto" has been with us for many years already, the majority of people remained with a traditional finance mentality and entrusted their crypto to centralized exchanges and services.

Maybe not surprisingly, they were the hardest hit during this bear market. What was shocking was the lack of safeguards most of these businesses operated under as if we would live in a perpetual bull cycle.

I'm not sure how many of their customers got the message yet, especially the little ones who look for the easiest option available. They're still expecting governments to step in and do their job for them. If that's what they want, they should stay in the fiat world! There are plenty of rules and regulations in that space to make sure they remain slaves until they die and after that (children do inherit their parents' debts as well as assets, after all).

But here I am about to go for a rant when the purpose of this post is different.

Some of the Centralized Finance (CeFi) entities that got hit hard in the crypto space - to the point of declaring bankruptcy - during this bear market, were used by their customers for the easiness to obtain a yield on something like bitcoin, without worrying about impermanent loss or working with wrapped tokens instead of native ones.

It turned out that trusting your bitcoin to such entities was a higher risk than liquidity pools are (unless you went full degen on your choices).

But for anyone with an aversion toward impermanent loss or wrapped tokens, there is now an option to earn a yield on native bitcoin (and not only) using a "permissionless, open-source, decentralized self-custody solution that enables users to earn an in-kind yield on native assets".

For me, this is another step in the right direction of rendering CeFi platforms almost useless.

Where do we find this option? Nope, not on Hive. It's on Thorchain.

I noticed their Savers Vaults feature a couple of days ago. For bitcoin, the yield is currently 4.25% APR (variable). image.png

Where does the yield come from? From the swap fees and block rewards (1 part savers, 2 parts liquidity providers).

There is a fee to enter and one to exit the position to take into consideration, so if you start saving, you'd better leave it for a while to compensate for that. This fee is higher for higher amounts, so you might want to deposit in multiple transactions if the fee gets reduced this way.

Here's a very good explanatory post for Savers Vaults: https://medium.com/thorchain/thorchain-savers-vaults-fc3f086b4057

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