When you deposit USD with DimeFi, we automatically convert the USD to USD-pegged stablecoins. This way, we can put your dollars to work with institutional borrowers as well as decentralized finance (DeFi) to earn yields.
What are stablecoins?
USD-pegged stablecoins (such as USDC) are cryptocurrencies with value pegged to the U.S. dollar. This means that your USDC principal will not lose value to the price movement of non-pegged cryptos like Bitcoin or Ethereum. However, stablecoin might lose value in events like stablecoin depeg. To better understand the risk of lending funds to DimeFi, please refer this article.
How does DimeFi provide high yield for stablecoins?
Currently, our assets are spread across some of the largest digital asset institutional borrowers as well as two of the largest DeFi platforms, Curve and Convex, to earn yields. We take a cut to cover our operational costs and pass the remaining rewards back to our members in the form of interest.
In order to generate high yields from DeFi, we may convert USD Coin further into other USD-pegged stablecoins.
What are the DeFi platforms you work with and how do they offer rewards?
DimeFi has high standards when it comes to selecting which DeFi platforms we invest. Platforms with which we work have at least $100 million in assets under management, follow the best-in-class security best practices, and are routinely audited by security experts. The stablecoins to which we convert our assets are also backed by over-collateralization, which protects against potential depeg risks.
Curve Finance is a decentralized exchange running on the Ethereum blockchain. It's the largest DeFi exchange managing over $9.59 billion assets (according to https://defillama.com as of 05/15/2022) and audited by well-known blockchain security experts.
We lend our assets to Curve's liquidity pool to support its trading activities. Every time someone makes a trade, we receive a portion of the trading fee in return.
Convex Finance is a DeFi platform for Curve liquidity providers to earn additional interest rewards. Convex has more than $9.09 billion in assets (according to https://defillama.com as of 05/15/2022) under management as of writing, with audits for its security protection.
DimeFi leverages Convex to boost our earnings from Curve while maintaining high liquidity for our assets so that you can withdraw whenever necessary.
What are the risks?
All investments carry some degree of risks. Traditional investments like stocks, bonds, mutual funds, and ETFs can lose value, even all of their value if the market conditions sour. DeFi investing involves risks that are different from those in the traditional markets. To learn more about the risks of DeFi investing, please visit this article.