The recent launch of Revix Savings Bank, which pays 12% per year on USDC, a stablecoin secured by the US dollar, is a prime example of how decentralized finance (DeFi) and blockchain technology are surpassing traditional financial markets.
The beauty of this product is that the proceeds are paid in USDC, which is backed by 1: 1 US dollars.
“It’s not only a way for South Africans to protect their wealth by earning more than inflation, but also interest paid in USDC, not in rands,” says Bret Hope Robertson, head of investment at Revix.
The chart below compares Revix Savings Vault’s annual return with average bank income in SA and the US.
The average SA bank pays only 5% per year, while consumer inflation is 5.9%. This means that you lose value in real terms by investing in a traditional bank savings account.
“This is not even taking into account that over the last 10 years the South African rand has depreciated by about 4.3% per year against the US dollar. The direct result is that the wealth of the average South African, as measured by international standards, has depreciated by 4.3% each year for the past 10 years, ”says Hope Robertson.
The caustic effect of inflation on the rand is shown in the diagram below.
“Practically, if you kept your savings in a South African savings account for 10 years, it lost about 46% of its international purchasing power. Given that we have not even taken into account US inflation in this calculation, it is clear that a reliable savings account can no longer be a viable way to preserve wealth, ”says Hope Robertson.
Traditional offshore savings accounts also do not provide shelter from this predicament given the technical and legal challenges of investing in offshore accounts. This prompted Cape Town-based crypto-investment company Revix, backed by financial services group Sabvest, which is listed on the JSE, to launch its savings bank with 12% a year.
“This is a perfect example of combining the power of crypto and DeFi to bring a solution to South Africans. Revix Savings Vault allows you to keep an account in US dollars without having to jump over any hoops, while providing a profit of 12%, ”adds Hope Robertson.
How is this possible?
DeFi rewrote the rules of the savings account.
For most people, the word cryptocurrency still means only bitcoin, but the crypto landscape has expanded exponentially and become much more than just bitcoin. DeFi is a whole ecosystem of financial services that work without a central authority and are available to everyone. DeFi may indeed be the next step in the evolution of the global banking and financial system, but it is already changing what investors think of one of the oldest and most reliable investments, a modest savings account.
To understand how DeFi turned the concept of a savings account upside down, one need only look at the numbers. Let’s imagine that a bank offers its customers + 1% return on their savings. Behind the scenes, this bank then lends this money to another customer at + 5% interest and gets + 4% profit.
What if this customer could safely lend his savings directly to others, while earning a full profit of + 5%? DeFi makes this kind of direct transaction between people possible by eliminating intermediaries.
Using decentralized applications built on DeFi protocols (D’apps), you can lock your crypto in the repository and earn APY [annual percentage yield] at the time of blocking. Unlike traditional savings accounts, savings banks use these protocols to provide you with the full return you deserve.
This new generation of savings accounts was largely enabled by a certain type of cryptocurrency called the stablecoin. Understanding stablecoins is key to understanding savings stores.
What is stablecoin?
Stablecoins are different from traditional cryptocurrencies because they are backed by assets such as the US dollar or gold. In other words, it’s just token versions of the U.S. dollar, gold or other reserve assets. This helps keep their prices stable so they are not exposed to the same level of volatility as other cryptocurrencies.
Stablecoins are designed to be the middle ground between traditional cryptocurrencies and fiat currencies such as the US dollar. Although they are still a type of cryptocurrency and can be used as a form of payment, they do not experience roller coaster ups and downs.
Thus, stablecoins and savings banks are an effective solution to the erosion of wealth as a result of the devaluation of local currency. A USDC-based savings repository allows you to efficiently convert your savings into US dollars while earning 12% of the profits on your stablecoins.
In this way, you avoid the depreciation that would be affected by the retention of rands (+ 4.3% increase), and earn an additional 12% on these assets. Assuming you get 12% on the balance of your savings bank, this twofold increase will result in + 16.3% of the net return on your South African rands. Compare that to the actual profitability of your average traditional savings account, and the difference is staggering.
How to start saving and earning 12% in USDC
Revix, saw the value of attracting USDC Savings Vault to South African investors at the outset. For more than a year, Revix’s flexible savings account, denominated in U.S. dollars, offered an interest rate well above the rest of the market.
Now the reliable Revix USDC Savings Vault repository has been upgraded to offer investors even more annual returns. This allows you to effortlessly earn interest using your USDC holdings as well as a high yielding US dollar savings account. The only difference is that you will get much more profit than any dollar savings account can offer.
As of May 6, Revix’s Savings Vault is offering an annual return of 12% of your USDC. A minimum investment of 100 USDC is required for qualification, and the minimum lockout period is 30 days to avoid attracting fees. Conditions apply.
Introduced to you by Revix.
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