Having an article entirely talking about cryptocurrency is a first in this blog! While I have been dabbling in crypto way back in 2017 during the initial hype, I’ve never really made it a priority to create passive income from it.
So in this article, I’ll be sharing with you Cake DeFi, which is a platform that I invest in to put my crypto assets to work and make money for me.
How I Found Cake DeFi
Before, I’ve always thought that the only way for you to make money in the cryptocurrency space were in two ways: Buying the token or coin during an ICO (because it was hella cheap), then selling it high when the hype comes in, and mining Bitcoin or Ethereum and hodling it.
4 years has passed since I touched my crypto investments and my interest in it was sparked again because of the pandemic. We all needed to find alternative ways to make money, and the cryptocurrency market became the secondary market for investors to look for gains after the stock market took a beating.
Blockchain technology has evolved since then, and more people, governments and investors have shifted their views toward virtual assets or currencies. There are more ways now to profit from crypto and there are better regulations that keep an eye on the space.
Ever since I found out that I still had crypto on my Coinbase account, I had been wondering what I was going to do with it. I could’ve simply held the asset until its value grew, then sell it. Or maybe I could mine some BTC and deal with all the mining stuff.
But sometimes, I get lazy with doing all those things. So I look for other ways to get to where I want to be in a more efficient manner. Going through YouTube, I found a video from another Finance YouTuber talking about Cake DeFi.
Although I didn’t have too much experience or technical knowledge about crypto, the platform got my interest enough for me to look more into it.
Long story, short. I signed up, moved some of my BTC to Cake DeFi, and now I earn passively from the platform.
What is Cake DeFi?
Cake DeFi is a platform that puts your crypto to work and generates cashflow passively. They take care of all the technical aspects behind the scenes, so you don’t have to. They started back in 2019, so they are a fairly new company. They have a line up of products that cater to different types of crypto assets, with varying risk factors. I will cover those products later on.
Founders
The people behind the platform are co-founders Dr. Julian Hosp and U-Zyn Chua. You could say that these two guys are blockchain experts because they have been in the game for a very long time.
Dr. Julian Hosp
Dr. Julian Hosp is an Austrian Pro-Kitesurfer, Medical Doctor and Serial Entrepreneur, and the CEO and Co-Founder of Cake DeFi.
He quit being a Medical Doctor and moved to Asia to start his own business back in the early 2000’s. He’s seen his fair share of successes and failures, and has founded four businesses: I-Unlimited, TenX, Rivet APP and Cake DeFi.
He has some presence online, so you can check out his website and his social media accounts to learn more about him.
U-Zyn Chua
U-Zyn Chua, on the other hand, is the CTO and Co-Founder of Cake DeFi.
He is based in Singapore and has been involved with cryptocurrency back in 2009 when he read about Bitcoin’s whitepaper in some cybersecurity forum.
He got into crypto mining and ran one of the very first Bitcoin exchanges in Southeast Asia in 2011 until it got shut down by regulators. Since then, he has worked on his project known as DeFiChain, which is what Cake DeFi uses.
Products
Cake DeFi currently offers four types of products in their platform that helps generate cashflow passively for their users.
Liquidity Mining
I’m not going to go over the technical details about this since I’m not an expert in this space yet. I’m learning too, but liquidity mining is the act of providing liquidity to decentralized cryptocurrency exchanges in order for them to operate.
I’m going to link a Medium.com article here that explains Liquidity Mining.
In Cake DeFi, depending on which pair you select, you get rewarded from 20% to upwards of 60% every 12 hours.
Get $10 worth of DFI by signing up here!
That’s a very attractive yield and a lot better than traditional investing options.
However, one thing to note though is that investing in cryptocurrencies have their own risks. And they are riskier than traditional investment options.
So be warned. I only invested a small amount because I’m okay with losing this.
Staking
This is another way for users to earn from Proof of Stake.
I don’t know much about the technicalities of it, but it’s the same as mining crypto, where it validates the transactions within the blockchain.
By “staking” your crypto in the network, you’re making the network secure and efficient. And by doing so, you get rewarded with the same token.
Currently, in Cake DeFi, you can stake two tokens which is DeFi and Dash, with APYs of 75% and 5.4%, respectively.
When you stake, you are locking in your tokens so you can’t use them while they’re staking. But you can un-stake you tokens back so it is available for you.
Lending
Another product that Cake DeFi offers is their lending services. You lend your crypto to other users for a fixed interest rate and they can use that crypto for other things.
Cake DeFi lends four cryptocurrnecies as of the moment: BTC, ETH, USDC and USDT.
They do it by batch which usually lasts for a month. And at the end, you receive interest on the crypto you lent out. Interest rates vary on which crypto you lend out, from 6%-7%.
Freezer
With Freezer, it’s similar to staking because you get rewarded through staking fees. But with the Freezer, you lock up your crypto for a set amount of time before you get rewarded.
Unlike Staking, you can’t un-freeze your assets until the lock-up period expires.
You can choose which asset you want to freeze, set your length of tenure from 1 month to 120 months, and you will be rewarded by various APYs.
Risks with Cake DeFi
With all types of investment, there are risks involved. And with cryptocurrencies, that risk might even be higher than your traditional investments like your stock portfolio or rental properties. So expect that there are risks with Cake DeFi too.
Liquidity Mining
According to Cake DeFi’s support page, in Liquidity Mining, there are possible risks involved.
- Smart Contract Risk – where a bug in the code of the Smart Contract can be exploited, and that could potentially damage the profitability for all users or the project.
- Project Risk – all projects have risks involved. They can be hacked, unverified transactions happening, etc. But apparently for Cake DeFi, it is open source so everyone can check and verify their code.
- Impermanent Loss – I believe this is, as far as I know, the most-talked about risk in liquidity mining. According to the support page,
“The risk is that the pool shifts in such a way and the prices of BTC and DFI, for example, also develop in such a way that if you were to withdraw your liquidity from the pool now, you would make a loss. Because of the arbitrage already mentioned, however, this always balances out in the long term and this risk is only a temporary, short-term one.”
Cake DeFi Support Page on Impermanent Loss
Staking
I’m not sure if there are any risks on staking with Cake DeFi, but one thing that I can think of is with the failure of the project itself.
If Cake DeFi fails and gets shut down, then your staked assets are gone and can’t be sold anymore back to BTC, where it has some form of global value.
If you know more about Cake DeFi and the risks involved with it, especially their staking product, let me know. I would love to learn from you!
Lending
According to a video by CEO Dr. Julian Hosp, their Lending services are fully guaranteed and risk-free. It is insured by their partners, Signum Capital, Sparrow & Genesis.
But just because the CEO tells you they got partners and that it’s insured, it doesn’t mean that it’s always true. Besides, no risk from lending is too good to be true.
This bugged the hell out of me, so I did some extra research and found a Reddit post with the same concern about Cake DeFi’s Lending service.
A response in the post explained the process of lending.
Hey, in a Telegram Chat, a CAKE employee explained the process. CAKE works with the largest digital asset lenders in the cryptospace such as Signum Capital, Sparrow & Genesis as partner. These partners lend your funds to Exchanges or provide liquidity already for funds. If I understand it correctly, the Exchanges in turn pay fees for borrowed liquidity. For leverage trading liquidity up to 20-30% per year 😳 CAKE also says all Funds that are in Lending are 100% insured by their partners.
By Reddit user Kassius84BSS
I personally don’t know if there are certificates for that or anything that shows the funds or assets are legally insured. You’ll have to do your own research for that and let me know if you find it.
Freezer
The biggest risks I read about this product are the lock-up periods and possible project failure.
Like with Staking, if a project fails, you can’t get your assets back. With the lock-up period that your assets are in, that makes it even harder for you to liquidate your assets into other tokens.
My Experience & Results So Far
I started Cake DeFi back in the first week of August, and I can’t complain with what I’m getting from them. While I don’t get a consistent reward amounts from them, I get rewarded every day.
I haven’t tried all of their products yet. I’m currently doing liquidity mining, staking and freezer, so I’m gonna try out lending this month or the next, and we’ll see how that goes in a future update article.
But as of this writing, I have a portfolio value of $332.33 in allocated assets and $49.13 of frozen assets. I gained at least $30 from the price appreciation of BTC and the rewards I get from their platform, which I reinvest back.
The frozen assets are from the sign up bonus I received when I deposited more than $20 to the platform. And it is frozen for 180 days.
If you use my referral link here, both of us will receive $10 worth of DFI, which will be locked in and staked in the platform.
These are small gains which are totally okay with me since I don’t expect much from the amount I’ve invested in this platform.
If you’re curious, they also have a mobile app. If you like that feature, there you go.
But so far, I’m happy with how my crypto assets are working for me in Cake DeFi. I plan not to add to this for now and just see how this progresses.