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How To Earn Fixed Interest Rates in DeFi Today

Exploring the backbone of any financial system & where you can go to earn fixed yield and rewards in DeFi

DeFi Slate 📈

Apr 1, 2021

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Getting fixed rates in DeFi is a new way to earn in our anti-fragile system, a primitive thats been around since financial institutions existed themselves.

88mph pioneered the initiative with their fixed rate lending protocol.

In todays piece we outline how you can start earning fixed rate yield in DeFi.

Leggggo!

-Andy

🙏 Big Ups To Our Great Sponsor Aave: Earn Interest & Leverage Your Assets with Aave, a non-custodial money market protocol leading the #DeFi charge.

Shoutout to Frontier.xyz: A Chain-Agnostic DeFi Aggregation Layer Bringing DeFi To The Masses Via Their Mobile App, Download it Now!

How To Earn Fixed Interest Rates in DeFi Today

In the current DeFi world as we know it, we are exposed to all different types of risks and opportunities that do not exist in TradFi. It really is amazing. That being said, there are some f*cking basic concepts that we still haven’t been able to really get down pat.

And that’s NOT a shot at the amazing developers who spend their precious time building for everyone.

Without them, we are nothing.

But it is an objective truth in a nascent industry where we coexist. The two biggest financial concepts that we can see blossoming in DeFi are fixed rate loans & undercollateralized borrowing.

They go hand in hand really.

In order to borrow in an undercollateralized manner (think house mortgage), we need a fixed interest rate for all parties involved to agree on. Imagine if your interest rate was variable on your $1m home, so much so that your mortgage payments swayed +/- $2.5k every month due to a lack of liquidity. We put up with it now, but this long term is no bueno.

As we can see on Aave - on the day of writing this post, the interest rate on borrowing USDC shot up from 12% to 15% rather instantly. This is because there is more demand to borrow stablecoins (since people want to borrow stable assets and use them to long crypto).

There are two aspects to lending and borrowing with DeFi:

Using it to go long/short on certain assets (thus creating the variable rates)
Using as a means of earning yield (being the LP which profits off those in the first category)

But there are many other use cases for interest rates in the financial system were creating which we can integrate into our community:

Credit
Mortgages / Loans on assets
Undercollateralized borrowing
Stabilization of the system itself (fixed rates come in heavy here)

And I think 88mph could absolutely tackle this sector of DeFi, which some would consider to be untouched.

Why Fixed Rate Investing:

The ‘DeFi bank account’ thesis of holding stablecoins in fixed interest accounts ONLY works if you can get stable rates for x period of time
We are currently seeing a rise in the 10Y bond yield & desire for ‘stability’ in current system
Rates available in DeFi right not oust any TradFi system

How To Get Fixed Rates in DeFi:

88mph is a protocol where you can lend your crypto assets at a fixed interest rate or buy floating-rate bonds. Earn $MPH tokens through system rewards. The genesis of 88mph was in late Q4 2020 when they introduced fixed rate yields into DeFi. After a notable roadmap and development they are shaping up to be a DeFi blue chip.

In this guide we will quickly show you how to earn yield on 88mph, stake your $MPH tokens, and participate in the protocols rewards! Lets go.

Step 1: Head over to 88mph protocol website, and connect your Web3 wallet MetaMask.

Step 2: Obtain the stablecoin (or cryptoasset) of your choice listed on the front page of 88mph website. Deposit plain stablecoins or tokens - USDC/UNI/yCRV/crvSBTC - which will be put into DeFi yield protocols such as Compound, Aave, and yEarn. Choose your lending duration, then click continue. Approve the transactions on metamask & you’re all set!

After depositing in the pool, you receive a ERC-721 non-fungible token that represents your deposit. You may transfer it to another account, or even sell it on NFT markets such as OpenSea. By depositing into 88mph, you earn MPH tokens, which is continuously vested to you, then you can stake it.

Step 3: Stake your MPH, you can claim your share of rewards from the 88mph reward pool where the protocol fees and yield-farming rewards are collected.

When your lending period is over, you withdraw your principal together with the fixed-rate interest earned. When you withdraw, you need to return 30% of the MPH tokens received at the time of deposit (which will have accumulated DAI rewards through staking).

So that is how you earn staking rewards, and a fixed interest rate over a set period of time in DeFi.

Welcome to the Future of Finance!

For an in-depth protocol overview & intro to the team, check out our demo video here:

👀 Sponsor Update: mStable provides an autonomous and non-custodial infrastructure for pegged-value crypto assets. Earn maximal APY on mUSD and mBTC by collecting fees generated on lending protocols!

It’s harvest season. Farm like a pro on mstable :)

⚠️ DISCLAIMER: Investing into cryptocurrency and DeFi platforms comes with inherent risk including technical risk, human error, platform failure and more. At certain points throughout this post, we might get commission for promoting certain projects, if this is the case we will always make sure it is clear. We are strictly an educational content platform, nothing we offer is financial advice. We are not professionals or licensed advisors.

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