The Sydney-based startup, Tiiik, wants to make decentralized finance or DeFi lending protocols accessible to investors. Its newly launched crypto-savings product is for sophisticated investors and offers big yields for supplying stablecoins to crypto borrowers. The company has already applied for a wholesale Australian financial services license and hopes to enter the market next year. Tiiik has successfully completed a seed funding round raising $5.2 million despite being a new startup. The seed funding round observed many high profile local fintech leaders and global crypto venture capitalists.
Tiiik represents the new type of financial services player in the market using blockchain technology to create banking products with computer code. Investors can earn a 10% annual yield that accrues daily, and it hopes to earn an even higher yield by supplying customer funds into crypto lending protocols. The high returns in Tiiik will be made possible by staking stablecoins, which will, in turn, be borrowed and paid interest on. The lenders receive part of their income from the collateral pledged by borrowers for assuring security to the network. In the initial stages, Tiiik plans on supplying only TerraUSD (UST) to the Terra blockchain.
The regulators worldwide are quite harsh against the concept of crypto-backed loans and crypto staking. Recently, crypto lender BlockFi had to pay $100 million to SEC as penalties against providing unauthorized securities to customers. However, Tiiik wants to work by Australian regulations. Its license application to the Australian Securities and Investments Commission needs to be passed before it onboarded more than 30,000 retail investors on the waitlist. Users will directly transfer Australian dollars into its high-yielding product as Tiiik plans on directly connecting with bank accounts. For future developments, the developers also plan on adding spending and payments functionality.
Tiiik plans to invest initial user funds in Anchor, a decentralized savings and lending protocol on the Terra blockchain. It plans to use yield farming, a strategy where crypto assets are put to work to generate the highest possible return and diversify to other protocols. The Anchor protocol offers a stable annual yield of 19.5%, which is way higher than Aave or Compound, paying under 10%. Furthermore, the Anchor protocol requires borrowers to pledge a yield-generating token as a security against their borrowings. This helps the Anchor protocol pay such high yields, as it pays rewards from interest charged and rewards earned from the collaterals.
Currently, BlockFi and CoinLoan are among the safest crypto lending platforms in the market. Every platform has a unique approach towards generating yield, regulations, and securing user assets. It is always wise to go through platform reviews and comparisons before investing on them.