Crypto platforms started to offer returns on holding & deposits, banks should be scared

Crypto platforms started to offer returns on holding & deposits, banks should be scared

The traditional profit-gaining approach in the cryptocurrency domain has remained largely around the appreciation of price. People hold and trade BTC so that they can benefit from the appreciation in the price of the asset. However, with DeFi platforms gaining traction, the paradigm is starting to shift.

Yield farming is becoming a common practice with many platforms offering the users rewards if they stake or lend crypto assets on the platform. Platforms like Compound Labs allow users to borrow and lend cryptocurrencies on rates that are determined by the algorithm that is running under the platform. With crypto yield farming, the returns are gained in the form of annual percentage yield (APY) and sometimes in the form of a new token.

The famous twins Tyler and Cameron Winklevoss are also launching a new service on their beloved crypto exchange Gemini that goes by the name of “Earn”. The idea behind it is the same, reward customer for depositing and holding cryptos. The Earn service allows the audience to deposit their holdings in the form of BTC and other cryptos into accounts that are interest-bearing. Earn promises up to 7.6% APY while another startup, BlockFi, is offering a massive 8.6% APY. The trend has penetrated in the market. Another such project that is currently offering returns on crypto holding is LCMS.

Bithumb Global recently announced a deposit and trading event for LCMS coin on its Twitter handle. The event is offering 20,000 USDT as the amount of the total reward. 6,000 USDT is allocated for people depositing and holding LCMS while 14,000 USDT is being dedicated for the trading of the same asset. The top prize for anyone in the event is 3,000 USDT which is then followed by rewards of the magnitude USDT 2,000 and 1,500 respectively for the 2nd and the 3rd place. The rewards do go up to people that lie in the range of TOP 500. However, to gain this reward, the users are expected to pass KYC2 verification. The event is coming close to its end as 6th April is the last day of this event. This is just another example of how the cryptocurrency-reward paradigm is shifting slowly to incentize people to hold and trade cryptocurrencies.

Savings in Banking vs Crypto Returns

The cryptocurrency world has emerged to rival a parallel that exists in the form of the banking system. Be it deposit or trading, banks have made themselves an essential part of people’s financial lives. One of the biggest advantages that banks grant to their users that no one else has been able to crack is giving returns on holding the money. Savings account are typically used by people to earn interest over their deposited amount. This incentivizes people to put their money in the banks as they expect a return. With cryptos, things have been different.

People have always been attracted to the crypto domain due to the price surges. Within a decade, bitcoin has jumped thousands of times attracting more and more investors. The 2017 surge of bitcoin made cryptocurrencies prominent in the eyes of the investors and the recent bull-run is the one that has made BTC a legitimate asset. Currently, the asset is being traded at a price point of $59,860 while it is expected to go further up soon. JP Morgan has adjusted its bitcoin price target to $130,000 as it is expecting strong institutional support moving forward. So traditionally, the kind of returns that people expect from cryptos come from the price surges. However, this only attracts only a certain segment of the investors.

To attract the risk-averse strata of the population, the need is to give people stable returns, just as banks give them with their savings accounts. This need is now being fulfilled by the platforms mentioned above. Take LCMS as a use case. To earn rewards on just a deposit and trade is a big incentive for people to come into this space. Once people step into its ecosystem, they are bound to learn about the platform as well. LCMS uses blockchain for customer database management, joint product development, and idea-sharing predominantly in the domain of food and cosmetics. LCMS coin the unit of value that is valid on the platform.

Profit Sharing – The Real Decentralization

The fact that platforms are now sharing profits with the customers is commendable. The entire idea behind the cryptocurrency world is decentralization and people-empowerment. Cryptocurrencies enthusiasts have always talked about breaking hierarchies and central authorities and bring people in the position of rewards and powers instead of milking them as users. This idea of profit-sharing lies exactly in line with the core philosophy of cryptocurrencies. Giving back to the people is what stands as the main theme. With such platforms like Compound, Earn, and LCMS in platforms giving back through staking coins or events, the banking systems are challenged more than ever.

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