I recently came across depositing our crypto purchases so that we get Fixed interest. Ex: Vauld app.
I really didn’t understand the business model behind it and RISKS associated. Because how could a company provide a fixed interest rate. Are they going to trade our crypto, make money and then give it back?
If in that case, we are adding one more layer of the risk out there.
Also, how does that company profit doing this?
I am completely new to the crypto world, plz do consider.
Thank you
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The company doesn’t trade but it lends the cryptos to other prospective borrowers who need money to trade. The company charges the borrower a higher rate of interest than it pays you and thus makes profit. You make gains too by lending. Btw yes it’s definitely risky. It will depend on how good the company is in recovering money.
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I’m not sure if this is correct.
But I heard that they keep 95% of cryptos in cold storage.
Then, how is lending possible ?
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