Though all Cake DeFi services are tailored to help you generate passive income on your crypto in an easy, secure and transparent manner, it's important to find the right one that fits your financial situation, needs and strategies to maximize the chances of success with your crypto investments.
In this article, we provide clear and easy-to-understand information on our key services: Crypto staking, YieldVault and Liquidity Mining. We also analyze the pros and cons of each service, so you can make an informed decision on which one is best for you.
So, are you ready? Let’s dive in.
But first, what are DeFi services?
DeFi services, or Decentralized Finance services, are a new way to access financial services without reliance on centralized entities such as banks and brokers. These services are powered by blockchain technology and offer users access to financial products such as loans, savings accounts, exchanges, investments, and more - all in a peer-to-peer fashion that is faster and cheaper than centralized systems.
What are the advantages of DeFi services?
There are numerous advantages to DeFi services including increased privacy and anonymity for users, the ability to maintain control over funds at all times, fewer fees and commissions than with traditional banking options, no need for credit checks or bank accounts, automated smart contracts that execute as intended without manual oversight or risk of fraud or error.
DeFi also has potential implications in terms of democratizing access to capital markets and creating greater global economic inclusion. Ultimately DeFi serves as an exciting addition to the existing range of financial services available today by providing people with improved access to wealth creation opportunities.
What are the disadvantages of DeFi services?
One potential disadvantage of DeFi services is the still nascent and evolving state of blockchain technology. Although this innovation has shown tremendous promise, it is still in its early stages and in some instances, may not be a reliable or secure enough system to trust with financial transactions.
Additionally, there are concerns about the levels of decentralization among DeFi projects which could lead to issues related to censorship resistance. There have also been reports of rug pulls and exit scams within foreign trading platforms that offer DeFi services, leaving users with no recourse for recovering lost funds.
Finally, regulatory uncertainty surrounding this type of service model means there may be limited protection for customers from fraud or loss due to third party actions.
For more information on DeFi and DeFi services, click here.
What is crypto staking?
Crypto staking is a process in which crypto holders volunteer to participate in verifying transactions on the blockchain. When you participate, you need to stake your crypto for a specific period of time. In return, you will receive crypto staking rewards based on the type and amount of crypto you have staked during that period.
What are the key advantages of a crypto staking service?
- Easy-to-use - crypto staking doesn’t require technical knowledge or skills. With just a click of a button, you can participate in crypto staking and start generating rewards on your crypto.
- No lock-up period - though staking your crypto for a longer period of time will yield more rewards, you can choose to unstake it at any given moment (except for ETH, which you won’t be able to unstake before the Shanghai upgrade).
- Low-cost - you don’t need to commit a huge amount of crypto to participate in crypto staking. In most cases, you can stake for as little as $1 worth of crypto.
- Accessibility - our Crypto Staking service is available for both web and mobile users.
- Competitive yields - users of our Crypto Staking service can generate rewards at reasonably competitive yield percentages (i.e., DFI yields are at around 12% APY).
- Covered by cakeELITE - you can further boost your Staking rewards if you sign up for cakeELITE membership.
What are the key disadvantages of a crypto staking service?
- Limited to a specific type of crypto - you can only can only participate in crypto staking if you own Proof-Of-Stake (PoS) cryptocurrencies such as DASH (Dash), DeFiChain (DFI), Ether (ETH), and Polygon (MATIC).
- May be subject to stricter regulations - in March 2023, the US Securities and Exchange Commission alleged that Coinbase’s crypto staking services constitute unregistered securities. At the same time, the New York Attorney General’s office listed Ether (ETH) among several cryptocurrencies listed on Kucoin that the regulator viewed as securities. That said, how these developments will affect crypto staking service providers worldwide is currently unknown.
For more information about our Crypto Staking service and how to start using it, click here.
What is YieldVault?
Simply put, YieldVault is a tool that allows users to easily generate crypto rewards with just a few clicks, while also enjoying the added-value of transparency.
What are the key advantages of YieldVault?
- Ease-Of-Use - YieldVault simplifies the process of earning negative interest rates on DeFiChain. Rather than spending time to understand the complexities involved in the process or taking on the risk of making mistakes and losing funds, you simply need to allocate funds into YieldVault, sit back, relax and enjoy the rewards generated.
- Transparency - all YieldVault transactions happen directly on the blockchain. This means that you can always verify what's happening with your investments, and that the rewards can be tracked and verified on-chain through the wallet address given on our Transparency Page.
- Generate rewards on popular crypto - You may choose to receive the same type of cryptocurrency that you've allocated as your preferred payout (e.g., if you allocated BTC, you will receive rewards in BTC). However, to maximize your gains and generate competitive crypto rewards, you should choose Decentralized USD (DUSD) as your preferred rewards payout.
- No lock-up period - though allocating your crypto into YieldVault for a longer period of time will yield more rewards, you can choose to withdraw it at any given moment.
- Low-cost - you don’t need to allocate a huge amount of crypto into YieldVault. In most cases, you can allocate for as little as $1 worth of crypto.
- Covered by cakeELITE - you can further boost your Yieldvault rewards if you sign up for cakeELITE membership.
What’s the key disadvantage of YieldVault?
- Available on mobile - YieldVault is only available on the Cake DeFi mobile app.
- Reasonably competitive yields - although YieldVault offers reasonably competitive yields, they are relatively low as compared to the yields generated from our Crypto Staking and Liquidity Mining services.
For more information about YieldVault and how to start using it, click here.
What is liquidity mining?
Simply put, liquidity mining is an innovative way to reward users that have allocated a pair of crypto assets in order to provide liquidity for decentralized finance (DeFi) projects. This pair consists of two different cryptocurrencies, such as Bitcoin and DFI (e.g., 1 BTC = 1,000 DFI). As such, it is important to maintain the predetermined ratio between these two currencies in order to maximize the rewards given. The rewards typically consist of the same type of crypto pairs that were initially allocated by the user.
What are the key advantages of liquidity mining?
- Highly competitive yields - users of our Liquidity Mining service can generate rewards based on highly competitive yield percentages (e.g., EUROC - DUSD is at around 21.51% APR).
- Generate rewards on two types of crypto - liquidity mining rewards are based on the crypto pair that you allocate.
- Ease-of-use - though liquidity mining can be a complex and expensive endeavor, our Liquidity Mining service allows you to participate without having technical skills and knowledge, and without having to own a huge amount of funds.
- Accessibility - our Liquidity Mining service is available for both web and mobile users.
- Covered by cakeELITE - you can further boost your Liquidity Mining rewards if you sign up for cakeELITE membership.
What are the key disadvantages of liquidity mining?
- Market volatility - since DeFi tokens tend to be more volatile than other assets, there's more risk for sharp swings in prices which could lead to losses for liquidity miners who have staked their funds for long periods of time.
- Impermanent loss - this occurs when a user provides capital at one price and then withdraws at a lower price.
- Crypto pairs are required - to participate in liquidity mining, you must allocate a pair of cryptocurrencies or must be willing to convert a portion of your crypto into another type of crypto to make a liquidity mining pair.
- Ratio must be met and maintained - there are specific ratios to be met and maintained for each liquidity mining pair.
For more information about our Liquidity Mining service and how to start using it, click here.
So, which Cake DeFi service is right for you?
Our Crypto Staking service is perfect for you if:
- You’re a novice or a mid-level crypto investor.
- You have limited funds.
- You own a PoS cryptocurrency.
- You can take on the risk of crypto staking services being subject to stricter regulations.
Our YieldVault service is perfect for you if:
- You’re a novice crypto investor.
- You have limited funds.
- You want to generate passive income on Bitcoin and other popular cryptocurrencies.
- You put more importance on ease-of-use than high yields.
- You are risk averse.
Our Liquidity Mining service is perfect for you if:
- You’re an advanced crypto investor.
- You have enough funds to meet the required ratio of liquidity mining pairs.
- You own more than one type of crypto / don’t mind swapping a portion of your crypto into a different type of crypto to make a liquidity mining pair.
- You have high risk tolerance.
Still not sure which Cake DeFi service is the best fit for you? Check out the explainer video featuring our CEO and Co-Founder, Julian Hosp, below.
And that’s it! We hope that by giving you simple explanations and non-technical descriptions of our Crypto Staking, YieldVault and Liquidity Mining services, you will be able to determine which service works for you best.
Also, if you want to use our services but have not signed up for a Cake DeFi account yet, click here to start generating passive income on your favorite crypto.
So, what are you waiting for? Sign up now and take control of your financial destiny!