In this Cake Defi review, we will talk about this custodial platform that offers secure lending and deposit storage services to cryptocurrency users. It is more like your typical BlockFi or Celsius platform in which you can get fiat loans in USD or stable coins in exchange for your cryptocurrencies like Bitcoin, Ethereum, etc.
The primary features of Cake Defi our Lending, Liquidity Mining, and Staking.
All of them will generate yields for you.
The Lending feature is the most popular on Cake, and this is where you can lend your cryptocurrency assets to, the platform and earn interest. For Bitcoin, you can earn up to 5% APY and 6.5% APY for stable coins such as USDC and USDT.
The Liquidity Mining feature allows you to earn interest by providing liquidity on the platform. This is done by locking up your cryptocurrency assets and providing liquidity to other users.
The concept is the same in the decentralized finance environment in which you can earn high interest, but the value is not constant.
The Staking feature is a unique one, and this is where we can earn interest by participating in the master node pools. The interest that you may get here is up to 29.2% in real-time without the complexity of running nodes yourself.
History of Cake DEFI
The platform was founded in 2019 by a company that is based in Singapore, and its founders are a team of experienced finance professionals like Dr. Julian Hosp the CEO of Cake Defi, and U-zyn Chua.
Julian Hosp M. D. is a serial entrepreneur, doctor, blockchain expert, and best-selling author. He is currently the founder of Defichain and CEO of I-unlimited. And a former co-founder and president of TenX.
Julian and Chua founded TenX and raised a token sale in 2017 for almost $80M. However, this project did not last due to the market condition of the 2018 bear market. And some other problems arise during the project.
They try to revive it, by rebranding TenX to Mimo. But the project totally shut down in 2021.
The other project of Julian Hosp and U-Zyn Chua is the Defichain, which is still up and running today, and the Cake Defi platform
DeFIchain DFI token
Many of the services of Cake Defi are built around Defichain (DFI)token.
DeFiChain is decentralized finance built for bitcoin. It is a platform that allows users to store, lend, wrap tokens, and trade cryptocurrency. Users can store their digital assets off-chain in a decentralized manner.
However, it uses a proof of stake consensus mechanism. It went live in August 2020.
DFI coin is the native token of Defichain, it is being used for fees for paying transitions, smart contracts, and other Defi activities such as loan collaterals, staking nodes, community funds proposals,s and liquidity pools.
Currently DFI token is available to many crypto centralized exchanges like Bittrex, Kucoin, Hotbit, Bitrue, etc.
Lending is one of the primary features of cake Defi, we may compare it to other lending centralized protocols such as Blockfi and Celsius. There are 4 options for users to deposit (BTC, ETH, USDT, or USDT).
It is mentioned on the website, that we can get guaranteed Base APY including bonuses.
For BTC and Ethereum the expected APY is up to 5% and for USDC and USDT, the expected APY is up to 6.5%. So this is how it works, the lending runs for 4 weeks. It normally starts and ends on Friday.
We can put any amount of tokens, after we enter the desired amount, it will be locked for 4 weeks.
They’ve been doing this in batches. After 4 weeks period. We will have an option to auto-compound our investment into the next batch. Or we can opt to withdraw our entire capital if we want to.
Like any other Defi platform, It has a staking feature as well. Where we can stake and earn rewards, staking is the process where users lock up tokens in order to gain rewards, and it is one of the most common ways to earn interest in the crypto community.
If you are not familiar with staking no worries, because I have an article here that can explain it further here.
Anyway, in cake Defi what they have here is bake master nodes, currently, they are offering two master nodes such as DFI that will give us up to 31.7% APY and Dash for 5.7% APY.
Aside from staking, most of the established crypto projects today have a liquidity pool. It is the process of providing liquidity to the platform by creating a liquidity token that is used for trading because in decentralized exchange there is no order book.
So in order for the platform to provide liquidity for the users, they will need to create a pool of tokens, when someone buys or sell, it is readily available.
Anyone can participate and provide liquidity, and by doing so, liquidity providers will earn rewards. So this feature is also available in Cake Defi and we can earn passive income here, by just adding our tokens to their pool. Earnings will depend on the APR of the token pair.
The Cake freezer
This is one of the unique features of Cake Defi. Because users can put their DFI tokens for 5-10 years, meaning the token will be locked for that time period.
However, there is also an option for users to freeze their DFI token for only a month and still earn a decent amount of yields. The earnings will vary depending on how long would you freeze your DFI tokens.
And the good thing is they have a calculator on their website, we can estimate our potential incomes before we freeze our DFI tokens.
Now, if we decided to freeze our DFI for 10 years, which I think few people will do unless they are super bullish with DFI.
We will get daily cash flow from our locked-up tokens with an 85% rebate on staking fees.
Cake Defi has a unique feature that we should pay attention to as well. Although it is a centralized project, we can still earn a decent amount of passive income here.
The DFI tokens are currently listed in several exchanges, so it is pretty easy for us to buy some tokens. There are several interest-bearing platforms already on the market, however, Cake Defi can offer 80% APY, because the rewards that we can get here are in the form of DFI tokens.
This means it is not stable, and the value of the token may change from time to time. So we should consider that as well, and another risk factor is their freezer feature. It will help the value of the DFI token to appreciate, however, 10 years in crypto is a very long time. And not many people would willing to take that risk.
I hope this article can be helpful to those who want to earn passive income while they hold their DFI tokens.
If you are interested in Cake Defi you can sign up here, and if you have any questions or thoughts, please leave your comments below and
I will reply as soon as possible.
Thanks for reading!