Cake DeFi is a Singapore-based staking, lending and liquidity pooling platform that allows users to deposit on various tokens to earn yields.
Despite the “DeFi” name tag, Cake DeFi is a management platform that offers a set of features built around a variety of DeFi products.
Cake DeFi offers three main products: Lending, liquidity mining, and staking– Each produces different yields and has different requirements. Users can earn about 6.5% on loans of digital assets such as BTC, USDC and ETH. You can also earn over 80% in Liquidity Mining.
Cake DeFi was founded in 2019 by Dr. Julian Hosp (CEO) and U-Zyn Chua (CTO).
The company is based in Singapore.
Julian Hosp MD has a wide range of experience, from trauma surgeons to professional kite surfers. In 2015, Hosp co-founded a mobile wallet with TenX, a cryptocurrency-enabled Visa card.
Hosp and Chua helped sell TenX tokens and helped the project raise $ 80 million in June 2017. It was one of the biggest ICOs at the time. However, the project faced great challenges in the challenges and hardships of the 2018 crypto market crash.
Hosp broke up with the project in 2019 and caused a lot of controversy – Addressed here in his blog post..
TenX has been rebranded to MimoPreviously, it appeared to be a staking and liquidity pooling platform for EUR stable tokens called Parallel. Complete shutdown in 2021..
U-Zyn Chua I am a principal investigator of DeFiChain project Since January 2019, it has played an integral role in the CakeDeFi ecosystem.
DeFiChain DFI token
Cake DeFi has built many services around DeFiChain (DFI) tokens.
DeFiChain is a non-Turing complete blockchain aimed at enabling decentralized financing with Bitcoin. DeFiChain runs on a PoS consensus mechanism to secure the latest Merkle route to the BTC blockchain.
DFI went live in August 2020. Its price peaked in April 2022 with a market capitalization of $ 2.34 billion.
The project is run by the Singapore-based DeFi Foundation, which is led by Cake Founders Dr. Julian Hosp (Chairman) and U-zyn Chua (CTO).
Cake defy loan
Cake DeFi loan fees are competitive with true DeFi counterparts. If the price of native coins rises during the lending period, we will advertise a “guaranteed” base APY with bonus returns.
The deposit is lent out in “batch” where the user deposits digital assets (BTC, ETH, USDC, or USDT) and the coins are locked for 4 weeks with an option contract. The batch lasts 28 days and starts and ends on Friday.
After 4 weeks, the user can automatically roll over to the next batch, withdraw the entire principal and return to Cake Wallet, or withdraw only revenue.
Cake does not charge user fees. Receive commissions directly from your partner.
If the spot price of an asset ends in a certain range, you will get a bonus. For example, assume the following:
- The spot price for BTC on the start date is $ 10,000.
- Loan batches offer 5% APY in BTC and a 2.5% APY bonus BTC return if the BTC spot price is at least $ 12,500 at the end of the 28-day period.
- Enter the batch at 10 BTC.
Situation # 1: BTC spot price at expiration is $ 10,500.
Get 5% APY at 10 BTC, or 0.0375 BTC-5% APY in 28 days of batch. Your account has about 10.0375 BTC and you can choose to roll over to the next batch or withdraw it altogether.
Situation # 2: The price of BTC at the time of expiration is $ 2,500. (pain)
Still get 5% APY. Similar to the example above, you will receive approximately 10.0375 BTC in return.
Situation # 3: The price of BTC at the time of expiration is $ 13,000.
You will get 5% APY and an additional 2.5% APY bonus, for a total APY of 7.5%. At the end of the batch, you will get a total of 10.0565 BTC:
- Our Principal (10 BTC)
- Our 5% APY (0.0375 BTC)
- Our bonus 2.5% APY (0.01896)
Cake claims that both principal and earnings are fully guaranteed and that there is no risk due to the “potential bonus”, but it doesn’t really explain how. The team did not provide comments when contacted.
Cake DeFi provides a shared liquidity mining pool that allows users to earn a paired yield between popular coins and DFI tokens.
These liquidity pools pay a yield of 68% or higher (subject to change). Cakes cost 15% for all rewards.
Rewards are paid directly to the Cake Platform wallet every 12 hours. The initial reward can take up to 24 hours.
These rewards are paid in both pairs, so if you add liquidity to your BTC-DFI pool, you will be paid the same amount of BTC and DFI.
Users can withdraw coins from the liquidity mining pool at any time.
Users can stake (“bake” the masternode) in real time to earn staking rewards. Cake currently offers two masternodes, DFI (up to 31.7% APY) and Dash (5.7%).
Cake freezer ?
More hardcore Cake users can choose to “freeze” or lock up DFI for up to 10 years. In return, they receive daily cash flow with locked-up funds and an 85% rebate on staking fees.
To use Cake Freezer, simply choose to lock your DFI for a minimum of 1 month (or a maximum of 10 years). Your funds will be automatically allocated to the liquidity mining pool. Bonuses will be staggered based on the duration of the lockup.
For example, suppose you freeze 10,000 DFI for a month. The basic APY will be 89% and the freezer APY will be about 92%. You will receive a reward of approximately 500 DFI for one month.
Or let’s see what happens when we run a full send in DFI. Suppose we are very bullish on the Cake platform, DFI Token, and we will make sure that both are within 10 years.
In the last 10 years, the freezer APY has jumped to about 108%. At the end of this period, 10,000 DFI will be about 42,000 DFI.
Final idea: Is Cake DeFi legal?
Cake DeFi is a fairly unique product compared to its crypto yield kin. Cake DeFi is a centralized company like BlockFi and Celsius. With this service, you can keep your funds safe through a variety of yield-generating activities. It provides some guarantees, but there is nothing substantive to support the guarantees that are out of the question of marketing.
However, the opportunities available are different. Most crypto accounts offer yields only on asset lending, but Cake gives users access to much higher returns through liquidity mining and staking.
How can Cake offer 80% APY? Well, like most other liquidity mining and staking opportunities, Yields are paid on DFI managed by the CakeDeFi team. Therefore, the actual “yield” you get depends on DFI’s ability to maintain its price and sell it (the most popular exchanges are Kucoin and Binance, elsewhere. Support is limited).
These tokenomics do not work well for the long-term support of DFI, so a “freezer” product that locks DFI for 10 years seems like a dangerous suggestion.
The dispute with TenX should not be ignored, but it does not appear that this product was created maliciously. The company itself is based in Singapore and is subject to different regulatory agencies than US-based companies.
However, despite the suspicious allegations of guaranteed returns and the lack of company response to clarify, the product does not appear to be illegal. The token itself, surprisingly, has maintained its value well these days.
As always, this guide is not financial advice or approval. Digital assets carry risks, and there are platforms for managing assets that pose another risk.