Crypto Academy week 10 | Homework post for [ @fendit ] - Make your cryptocurrencies work for you.
Today i am writing a homework task for @fendit which is about making your Cryptocurrencies work for you. It is not limited to Binance only but to many more trading platforms. However, for sake of this task, we will be taking example of Binance.
Which is your risk aversion, which of these products you find the most appealing and why
Risk aversion refers to willingness to accept different levels of risk while investing. In ascending order of risk tolerance, risk aversion is classified as conservative, moderate and aggressive.
As for my risk averaion is concerned, i am having moderate tolerance to risk .
I find flexible savings more appealing because risk is lower. Although profit is low too but i am more concerned about risk than profit. Details of products are given below.
Explain in your own words fixed and flexible savings, high risk products and launch pools.
Fixed savings.
Fixed saving is a means of earning passive income on your assets after locking your assets for certain predefined period of time. In simple terms, we can say that, fixed saving refers to, locking funds for certain time like a week, month, year etc and earn interest on it. The interest rates are set by exchange. It varies from exchange to exchange. Longer the period of shaking, more is the interest rate.
Flexible savings
Flexible saving is another type of staking wherein a user stakes his assets but does not stake it for fixed interval of time. Here a user can withdraw from the contract at any point of time. When flexible staking is compared to fixed staking, interest rates are low here.
High risk products
As the name implies, there is a varying degree of financial risk involved in these products. The high risk products offered by Binance are:
Screenshot from my binance account.
- Defi staking.
- Dual saving (investment).
- Liquid swap.
DeFi Staking.
Screenshot from my binance account
DeFi staking ( Decentralized financial) staking is a staking service offered by Binance with generous interest rates. As far i checked, it doesn't need any technical knowledge for user to participate in the service. You just need the crypto asset with which you want to participate and that's it .
While starting , you will have to select period of staking for which you want to lock your assets. So it is just like a fixed staking but one point to note is that, you can avail the option of early redemption, but then you will have to bear the disadvantage of losing the interest that you were anticipated to earn after completion of the staking period
Binance offers variable interest rates on different products and for different time intervals. You can stake for a minimum period of one day to months.
.
DeFi staking is included in high risk products because binance does not hold any responsibility in case of of any mishap like on-chain attack during locked period, as you can see in the risk warning in the image above.
Dual investment.
It is a non-principal-protected financial high risk product offered by Binance wherein two currencies are involved. A user need to have one currency to invest. Before entering in dual investment, user has to select striking price ( price which you anticipate your asset to be at the time of expiration of contract) against a fixed interest rate. The final currency in which yield is determined is based on the striking price and the price of asset at the time of expiration of contract. The final yield is received in BTC or BUSD.
Let's take an exampl
Suppose I invest 1 BTC In dual investment on 21 April 2021 and the product expires on 21 may 2021 at an interest rate of 30% at an strike price of 15000 USDT.
Now one of the two situations will arise, either the price on expiry date will be lesser or greatee than strike price.
Remember, if the settlement price is lower than striking price , you will get yield in BTC.
If the settlement price is higher than striking price , you will get yield in BUSD.
- If the BTC/USDT settlement price is less than $15,000, i will receive yield as BTC ( as mentioned above) , equal to (30 / 365 × 30%) BTC that is 1.024 BTC.
- If the BTC/USDT settlement price is greater than $15,000, i will receive earnings of (30 / 365 × 30%) USDT, so i will be paid back 1 × (30 / 365 × 30%) USDT, or 15 369 USDT.
Liquid Swap.
Here you can provide liquidity to the pool amd inturn get benefitted by receiving profit from the transaction fee and flexible interest. The question remains, If it is so simple, than why is it a hugh risk product. It is because, here you are susceptible to impermanent loss.
Screen shot from my binance account
Just like UNISWAp, a pair of assets has to be added by liquidity provider. And as for redeeming ia concerned, it is more liberal here because you can redeem at anytime and you can even redeem one of the two assets.
Screenshot from my binance account
On Binance, there are two types of liquid swaps as you can see in image above.
- Stable .
- innovative.
In stable investment, as the name implies, the price of invested pair is hardly affected by market forces. While in case of, innovative investment, the price of pair is affected by market forces. Therefore, stable investment is more profitable than innovative.
Launch Pool
Binance launch pool is a way of new tokem farming on Binance proportionate to the BNB tokens dedicated for the new launchpool.
You can stake your assets for a predefined period and earn interest on hourly basis. Moreover, you can exit from pool anytime along with newly earned tokens. So it is build on flexible staking terms. The new token farmed are later traded once they are registered on Binance.
Show and give detail on how to set the investment you chose in Binance. If you don't use Binance as your exchange, let us know which alternatives you have in your own exchange and simulate the process of investing in Binance.
Setting an investment on Binance.
Setting investment is very easy on Binance. Let me explain setting fixed savings on Binance.
Log in to your Binance account.
Click on top right corner. a drop down menu will appear. Look for option * Finance* and click on it.
The first option under *Finance * is Binance Earn . Click on it and next page to open is
Click on "Fixed terms" and you will see interface as shown below.
- Under fixed terms, click on staking as encircled above. Next page to open is
In the above images, you can see tokens listed, swipe down to look for token you want to stake. Say SOL, click on stake now and you got to see
Fill the details like amount, duration of staking and than mark it and click on "confirm purchase" and you are done.
Thank you for being part of my lecture and completing the task!
My comments on your work:
All three tasks were correctly performed
General comment:
You certainly do understand what you're talking about and you explained it really well and simple, which is really valuable in my opinion. Good job!
Thank you for taking part.
As a suggestion for future tasks that you perform, I'd include a conclusion or pay a bit more attention to markdowns so that you can polish till the last detail in your work.
Overall score:
7/10