By Phil Blows, Co-founder and CEO of AQRU
Decentralised Finance (DeFi) is continuing to show phenomenal growth since the boom in 2018. It provides the chance to connect communities and people from all over the globe, who within the traditional world of finance could never have accessed these opportunities before. Thanks to the blockchain – which solves the problems with traditional finance systems, primarily removing intermediaries – it’s making finances more accessible and simply helping everything to work faster.
More importantly, a lot of the complexity involved with exchanging traditional currency to Cryptocurrency is taken away with DeFi. At AQRU with our long track record in traditional finance, and now DeFi, we are striving to expand this revolution and the opportunities it offers to the retail investor, harnessing innovations in this space over the last few years to give the best market rates from liquidity providers. For retail investors, alongside earning interest, we believe that customers should have a greater understanding of how their money is invested, what the fees are (if any) and how they can withdraw their money, therefore changing their mindset to becoming longer term Crypto holders.
Making DeFi work for the everyone
A big barrier to this long-term success is that most people don’t realise that Crypto is more than purely buying a digital currency, sticking it in a wallet hoping it goes up. If we rewind back to 2008 all you could do is invest in Bitcoin, and really there was no safe way to store your assets. Fast forward 14 years and we’ve got battle tested institutional infrastructure, allowing everyone to put their assets safely into wallets and invest with confidence. For all that it offers to transform people’s finances over centralised financial systems, and opportunities it opens up for retail investors, many are still being locked out of the full benefits of this ecosystem, due to the often technological complexities and the lack of transparent advice and education.
So the beauty of DeFi really lies in opening up and offering a smooth, simple and easily understood experience, taking away the complexity, whilst being clear and transparent about how you can invest and withdraw to improve your personal finances. At AQRU we have built a platform that acts as a filter, so that the time consuming and heavy work that comes from navigating exchanges and managing your wallets is removed, whilst simplifying the terminology and bringing the fees, risks and rewards into conversation throughout the process.
In traditional finance, when you send money abroad, you don’t need to know the SWIFT codes and how the banks are talking to each other, you just want the money to arrive there. With the platform we have created at AQRU, we’ve opened up DeFi in a similar way, so that you don’t need to become a sector specialist to take part, and all the technical processes are handled in the background, just like how traditional banking has evolved.
Best Performing Asset Class of the Last 10 Years
Many would-be investors feel that they’ve missed the boat, it’s too late, the time has passed if they are not already engaged, which is simply not the case. Let’s be clear, Crypto is the best performing asset class of the last ten years, but in spite of this many are holding assets on exchanges and platforms that don’t offer the full earning potential on their assets.
We are now seeing hedge funds and institutions coming into what was previously a hobbyist market. Studies we’ve undertaken at AQRU in interviews with hedge funds suggest we can expect around 7% of all hedge fund assets to be in Crypto within the next five years. So there is still vast potential for the retail investor in Crypto, but now is the time to challenge the idea that holding coins is the only way to generate returns.
What is often overlooked in conversations around Crypto is the role of Stablecoins and the opportunities they present. Stablecoins are one of the most attractive areas for investors who want to gain exposure to Crypto, whilst not being as exposed to the volatility that you see with Bitcoin and Ethereum. Stablecoins are simply a Crypto currency whose value is tied to real world assets, and the most common are US dollar pegged Cryptocurrencies, of which there’s currently $170 billion of them in circulation. They are in huge demand which is why they pay such high interest and underpin many of the transactions you see in decentralized finance. So for most people who want just a stable return, Stablecoins offer low volatility and lower risk as they are pegged to a real world asset.
We’ve been highly selective with the assets we’ve put onto our platform and will continue to be into the future. The pace of innovation, whilst incredible, means if you rewind only three years, 70% of the top 10 coins back then, aren’t there anymore. So as part of our focus on the longer term Crypto investors, we’re not introducing assets which in a few years time will have disappeared. With Bitcoin and Ethereum, whilst there is volatility, there’s very few people who invest in Crypto who don’t believe that they are reliable assets that will be there in five years time.
For the retail investor, DeFi has opened up more opportunities for innovators in the space to strip away, encouraging investors previously deterred to re-enter the conversation. Part of what we’re looking to do is help new investors become Crypto savvy whilst also challenging the short-termism that is often associated with Crypto. We want to challenge everyone to look at Crypto as a serious asset class and to give customers in Crypto a long term investment mindset.
What is being Crypto savvy then? Well, don’t become overexposed to the sector because it remains a high risk industry. Get some exposure but be smart, disciplined and ultimately take a diversified approach where Crypto investments make up no more than 5 to 10% of your overall portfolio.
With AQRU, we believe that we’ve simplified, and opened up a new way to invest in Crypto where customers can quickly and easily access some of the greatest returns that this world offers, whilst feeling at ease that they understand the risks, and can access the earnings safely and securely. We’re looking forward to seeing new investors enter the space and for retail investors earning high yields from Crypto to become normalised.
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