Fixed Yield vs. CeDeFi: What is The Difference?

Midas.Investments, a major crypto investment platform, aims to create profitable investment tools for users by developing various types of strategies. These strategies combine working with different crypto assets and various protocols and don’t require investors to master the craft of trading in the volatile decentralized finance market. 

Depending on the market condition, risk appetite, and knowledge of DeFi, investors can choose from different strategies that the Midas team has developed over the years. The first and foremost investment strategy is Fixed Yield, which allow investors to earn high APY (Annual Percentage Yield) rates on their crypto assets. 

This strategy is pretty straightforward, but its potential is also capped. On the other hand, some strategies, particularly CeDeFi strategies, make use of a variety of DeFi protocols and crypto assets to offer higher returns. CeDeFi strategies are largely new and can be a bit confusing for newbies. They also have a rather complex mechanism that can make them inappropriate for some investors. 

All in all, choosing the right investment strategy can be overwhelming at times. To address this issue, we will explain both fixed yield and CeDeFi strategies and give users a clear overview of both, allowing them to find which model best fits their needs and risks. 

Fixed Yield Strategies

In fixed yield strategies, investors earn industry-leading yields on their staked cryptocurrency assets. As of now, APY on staked Bitcoin sits at 6.5%, 7.8% on Ethereum, and 11.6% on stablecoins like USDT and USDC. Investors are projected to earn more than 20% on their staked CVX, the highest amongst custodial crypto investment platforms. 

The reward is usually paid out in the form of staked cryptocurrency and delivered on a daily basis. However, users can earn extra rewards through Midas Boost, which activates higher yields for receiving payouts in $MIDAS, the native coin of the Midas platform.

All fixed yield strategies are low-risk investment tools. That is because these strategies tap into liquid protocols like convex pools and stablecoins to offer rewards. The Midas team has more than 30 yield-generating strategies, details of which can be found on the Midas wiki

For instance, one such strategy provides liquidity on the mUSD+3Crv liquidity pool, with an expected APY of 8% to 10%. mUSD is a stablecoin issued by mStable and backed by a basket of stablecoins, including USDT, USDC, DAI, and more. The protocol has not been exploited over the past two years, and mStable contracts were last audited by Certik. 

Regularly, the Midas team examines total payouts made to investors across all tokens and initiates a 10% payout split to the MIDAS market, which will provide a consistent and sustained flow of liquidity to the new MIDAS market.

CeDeFi Strategies

More recently, Midas.Investments has unveiled three new “CeDeFi” strategies aimed to create new opportunities for Midas users. CeDeFi is a hybrid investment model that aims to bridge the gap between CeFi and DeFi, combining the former’s reliability with the latter’s high profitability. In short, this concept offers investors the best of both worlds.

The three CeDeFi strategies are “Soft Long on ETH,” “Soft Short on ETH,” and DeFi Token Farming. The first two strategies aim to generate 45% ROI and 25% ROI through price movements of ETH and rewards for providing liquidity. The third strategy is a basket of incentivized liquidity pools with DeFi tokens on popular AMMs (like Curve) that can generate up to 40% ROI.

To invest in these strategies, all users need to do is purchase the tokens that represent these strategies — DFTFLP (DeFi token farming LPs), SSETH (Soft Short on ETH), and SLETH (Soft Long on ETH). In order to further simplify the process, the Midas team has incorporated automated algorithms. The approach reflects DeFi, creating various smart contracts that manage assets under lending protocols such as borrowing, lending, and soft leverage. However, users don’t need to connect Web3 wallets, sign numerous transactions for confirmation, and pay fees for each of them.

Despite employing automated algorithms, Midas is using portfolio monitoring tools to compensate for any shortcomings that otherwise make these strategies unsuitable for traditional investors who do not have access to the necessary tools. 

Notably, these strategies do not provide yields and the number of tokens will not change. Instead, if the strategy performs well, the price of the token will appreciate and, in turn, the USD value of the portfolio will increase. The strategies mirror the experience of the Midas team, but we do not guarantee any ROI. The expected ROIs are based on current calculations.

Users also need to have an overall grasp of the market conditions before investing in CeDeFi strategies. That is because each strategy is suitable for certain market conditions. Therefore, there is a chance for investors to lose money in these strategies. For instance, if a user invests in Soft Short on ETH and the ETH price appreciates, they will endure a loss.

When users want to exit a CeDeFi strategy, they just need to swap their tokens. There will also be a performance fee if the strategy has generated profit. The fees will be 15% of the weekly profit and deducted directly from the strategy shares each week. In order to benefit Midas token holders, 2% of the 15% will be used toward a MIDAS token buyback. 

Conclusion

Midas users have the option to choose from different available investment tools on the platform. However, it is pertinent that they first understand how each strategy works, the risks associated, and whether it fits their investment and risk appetite. 

The first and foremost investment strategy is fixed yield strategies, which allow investors to earn high APY rates on their crypto assets. These strategies are low-risk, but their potential is also limited. 

On the other hand, there are CeDeFi strategies. These strategies offer ultra-high ROI, but they don’t come without risks. Each CeDeFi strategy is suitable for certain market conditions and users are responsible for deciding when to invest in the strategy, thus they take the risks.

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