We are excited to unveil our latest feature: UGLYCASH Earn, a loyalty program with an APY that remains high even when traditional banks adjust rates in response to fluctuating Federal Reserve policies.

In this initial phase, UGLYCASH Earn offers:

This offer represents UGLYCASH's commitment to providing innovative financial solutions that benefit our users. By leveraging the power of eUSD and decentralized finance, we're frequently able to offer rates that significantly outperform traditional savings accounts.

Electronic Dollar (eUSD) is a stablecoin, which is a type of cryptocurrency designed to maintain a 1:1 peg with the U.S. dollar. The revenue generated by eUSD has a track record that suggests it's generally above the average APYs on the market. However, it's currently below our promotional rate of 7.1%.

Image Source: Investopedia & DefiLlama

The APY is paid out from UGLYCASH’s own funds based on the revenue generated on UGLYCASH’s eUSD holdings. To gauge interest in UGLYCASH Earn, we're temporarily subsidizing the difference between the current eUSD yield we receive and the promotional rate we’re offering you. This subsidy allows us to offer 7.1% APY to a limited number of users.

Most analysts believe the global economy is heading into a new low-rate cycle*, potentially lowering savings accounts .5% by end of year and 2% by the end of next year.*

As savings account rates decrease, UGLYCASH Earn APY offers an alternative tied to a completely different source.

*Source: Morningstar

Our goal with UGLYCASH Earn is to provide a feature that consistently offers above average APY on savings, even as market conditions fluctuate. By leveraging the innovative structure of eUSD and its ability to capture yield from various DeFi opportunities, we aim to maintain competitive rates for our users over the long term.

The current promotional period serves as both an introductory offer and a way for us to assess user interest and product performance. As we gather more data and as market conditions evolve, we'll be better positioned to expand UGLYCASH Earn while ensuring its long-term viability.

When users transfer funds to UGLYCASH Earn, they purchase eUSD, which is held by us. Since our total holdings of eUSD increase when the funds coming into UGLYCASH Earn increase, the amount of revenue we earn on our eUSD holdings also increases. This allows us to offer our users very competitive rewards.

eUSD is entirely backed by yield-bearing stablecoin lending positions. The yield comes from lending protocols like Aave and Compound. Currently, Compound holds $1.84 billion in collateral across 17 markets, while Aave has $21.15 billion in locked liquidity over 15 markets.

Where does the yield come from?

Both Compound and Aave work the same way: lenders deposit stablecoins into a smart contract. Borrowers deposit their other cryptoassets into the smart contract as collateral, and then borrow the stablecoins that lenders had deposited. But borrowers can only borrow a fraction of their collateral value.

For example, if you deposited $100 in ETH and the borrowing limit was 80%, you’d only be able to borrow up to $80 in stablecoins.

If a borrower’s collateral begins to devalue, Compound will automatically sell it for stablecoins in order to make sure the lender gets their funds back – similar to a bank selling your house to recoup their funds if you stop making your mortgage payments. Borrowers pay lenders a yield based on a formula in the smart contract – the higher the percentage of stablecoins that have been withdrawn in loans, the higher the interest rate borrowers are charged. For example, you can inspect the current market for USDC on Compound here.

In these lending markets, borrowers are typically crypto traders who want to borrow capital against some crypto they already have in order to place further trades. They might take on significant risk, and may lose money. But because their collateral is always on hand, and because the lending platforms can automatically sell for stablecoins any time collateral starts to fall in value, we believe the risk to lenders (and thus to eUSD) is low.

You may have heard of past issues with yield-bearing crypto apps like Celcius or Terra/Luna. The difference here is that Celcius was taking users’ stablecoins and secretly trading them into various other risky assets or lending them out, whereas we only hold eUSD, and eUSD’s underlying capital utilization is always 100% transparent.

Celcius lost money by investing users’ funds into Terra/Luna via the UST stablecoin, which was a shaky economic experiment that the Reserve team called out as irresponsible years before it collapsed – you can learn more about it here. eUSD does not utilize any of these kinds of experimental (“algorithmic”) stablecoins.

So what are the main risks then?

We believe that the main risks for eUSD holders are:

(1) the risk that the eUSD or lending protocol smart contracts get hacked, which is always an unavoidable risk with DeFi applications, but is mitigated by extensive code audits, which all applications involved have undergone, and

(2) the scenario where lenders’ collateral falls in value faster than the lending smart contracts can sell it, which would leave eUSD holders with reduced value. However, scenario 2 is substantially mitigated by eUSD’s additional degree of overcollateralization by Reserve Rights holders, which you can inspect here any time, and which at the time of this writing is a pool of capital worth about $18 million.

How does UGLYCASH generate that revenue?

Recently, the governors of eUSD launched a revenue-sharing program for fintech companies that contribute to the growth of eUSD's usage and market capitalization. UGLYCASH has joined the program, enabling us to receive a portion of the revenue generated by platform funds.

This unique structure allows UGLYCASH to offer higher APY rates through UGLYCASH Earn compared to traditional savings accounts, because we're tapping into the innovative financial mechanisms of the cryptocurrency ecosystem while maintaining the stability and familiarity of US dollar-pegged assets.

APY products from banks are popular among individuals seeking simple and predictable tools to generate earnings. Currently, these products offer exceptionally high APYs compared to historical levels, primarily due to the Federal Reserve's elevated interest rates. This makes these products particularly attractive to the average person in the current economic climate.

However, these conditions are not permanent. When the Federal Reserve eventually lowers interest rates, APYs offered by banks are likely to drop. This means users will have to choose to either accept much lower returns or seek alternatives that may require more sophistication or risk.

UGLYCASH Earn combines the familiarity of a traditional savings experience with the benefits of decentralized finance yield opportunities. With this brand new feature in our banking app, users get:

Remember, while UGLYCASH Earn offers exciting opportunities, it's important to consider your personal financial situation and goals when making decisions about your money. We encourage you to review all terms and conditions to ensure UGLYCASH Earn aligns with your financial needs and objectives.

Learn more about UGLYCASH Earn in our FAQs below

UGLYCASH Earn is not insured by the FDIC. UGLYCASH Earn are not deposits or other obligations of Bangor Savings Bank, and are not guaranteed by Bangor Savings Bank. UGLYCASH Earn is a loyalty program that allows users to earn eUSD rewards based on their eUSD holdings. The program is funded with UGLYCASH's own funds. The Annual Percentage Yield (APY) is accurate as of 7/31/2024. The APY is set by UGLYCASH and can change at any time.1 Electronic Dollar (eUSD) is a stablecoin, a type of cryptocurrency that is intended to match the price of the US Dollar.

UGLYCASH Earn is available in both the USA and Latin America. Other features and conditions mentioned above apply only to US users.

UGLYCASH Earn is a loyalty program that allows eligible members to earn rewards for holding eUSD in UGLYCASH. To be eligible, you must:

UGLYCASH distributes rewards daily, based on the eUSD balance in your UGLYCASH Earn account for that day — the more significant your eUSD balance, the greater the rewards.

Balances held in your UGLYCASH Earn account are automatically part of the loyalty program. If you’d like to opt out of the loyalty program, do not hold funds in your UGLYCASH Earn account. If you currently have funds in your Ugly Cash Earn account and want to opt out, transfer your funds to your UGLYCASH Checking account.

How to transfer funds from your UGLYCASH Earn account to your UGLYCASH Checking account:

The UGLYCASH Earn rewards rate (APY) can vary, depending on market conditions, strategic marketing objectives, and the overall sustainability of the program to ensure long-term benefits for all participants. The current rewards rate can be seen in the UGLYCASH Earn account section on the Home Screen. For our current APY, please reference the UGLYCASH Earn Dashboard on the home screen of your app

The APY rate is set by UGLYCASH and can change at any time. We will notify you if the APY changes.

Visit our eUSD FAQ page to learn more.

UGLYCASH Earn rewards are not FDIC insured. UGLYCASH Earn rewards are not deposits or obligations of Bangor Savings Bank and are therefore not guaranteed by Bangor Savings Bank.

If you have further questions regarding the UGLYCASH Earn loyalty program, please reach your dedicated Advisor through the “Your Advisor” banner, found on the app’s Home Screen.