Decentralized finance is taking the world by storm as the digital asset industry evolves with new and reliable products for savings and investments within the crypto ecosystem.
DeFi is the ultimate challenge to TradFi, also known as “traditional finance”. The novel concept is still unknown to many across the globe but already caters to millions of satisfied customers with billions of dollars at stake.
Cake DeFi is one of the leading companies in the space. The firm holds a license under Singapore’s Payment Services Act (PSA), and is in the process of applying for a crypto license in the European Union, similar to the PSA.
With the ratification of that law by EU member states, it will be possible to move from said license to a MiCA (Markets in Crypto-Assets) license in 2024, which will then be valid throughout the EU.
Finance Feeds had the opportunity to speak with Dr Julian Hosp, Ceo & Co-Founder, Cake DeFi, to know more about the platform, its product, and the DeFi space.
Do you see DeFi taking over the world of finance or operating in parallel with TradFi in the years to come?
This very much depends on where DeFi is headed. If DeFi becomes regulated, then it has a good chance to break out of its current niche. DeFi also isn’t for the everyday investor, especially one that is not crypto-savvy. This is also where Cake DeFi comes in – we offer a centralized platform for anyone to access DeFi applications and services.
In the long run, if those two obstacles to mass adoption can be overcome then DeFi has the potential to be a disruptive force to the legacy financial system.
For those who don’t know, what is the difference between lending, freezer, liquidity mining, and staking, and what is most popular among investors?
Cake DeFi gives you three options to generate cash flow and a passive income: Lending, Staking and Liquidity Mining. Lending is the act of lending your cryptocurrencies in exchange for a guaranteed return of up to 7%. Our most popular product is Staking as it is relatively low risk, offers competitive returns, with low barriers to entry and understanding. Staking validates transactions on a PoS blockchain and customers get rewards in return. Cake DeFi operates fully transparent masternode pools that enables and allows to currently earn staking yields of around 30% to 40% that gets paid out twice a day (every 12 hours). Liquidity Mining is the process of providing liquidity to a liquidity pool to facilitate trades on a Decentralized Exchange (DEX). Users have to provide a pair of cryptocurrencies in order to reap Liquidity Mining rewards, which are directly distributed by the blockchain – these can go up to as high as 100+% and pay out rewards twice a day too.
Cake DeFi also offers a Freezer that allows users to generate higher returns if they lock their cryptocurrencies from 1 month to 10 years.
How much has the business grown?
Cake DeFi has, at last count, over 600,000 customers in 191 countries. This is over ten times the number of customers we had at the beginning of 2021. In 2021, we paid out US$230M in rewards to our customers. In 2021 Q4 alone, we paid out U$74M. Cake DeFi only makes money when our customers make money, as we take a small fee from the rewards they earn. As a startup that is under 3 years, we are very strong financially – we are cash flow positive and have a financial runway of at least 4 years.
Cake DeFi launched a $100 million corporate venture arm. How did it come about and how can startups apply?
In order to grow and innovate, we have to leverage and engage with external technologies and startups. In the long run, this leads to the disruptive products Cake DeFi is known for. We have therefore decided to commit US$100M for the next two years to invest in and work with startups in new areas of disruption.
Interested companies in the Web3, Metaverse or Gaming industry can apply for funding from the Fund by sending an email with the project details to [email protected]. CDV will be in touch with shortlisted projects. Venture capital firms or investment funds interested in co-investment opportunities or strategic partnerships may also reach out for further discussion.