Crypto DAI yields as much as investments in stock exchange
Crypto DAI yields as much as investments in stock exchange
Defi

Crypto DAI yields as much as investments in stock exchange

By Marco Cavicchioli - 29 Jan 2020

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The average annual return on investments on the stock exchange is in line with the interest rate earned with the crypto DAI. 

If anything, DAI even outperforms the stock market in some cases. Taking the S&P 500 index as an example, since its inception, it has recorded an average annual return of 10%, which drops to 7% when adjusted for inflation. 

As far as the general stock market is concerned, the renowned investor Warren Buffett is known to claim that the average annual return is around 6% or 7%, net of inflation. 

Crypto DAI’s savings rate is now at 7.75%

Sure, this is a rate before inflation, but it does not involve any particular risk and remains relatively constant over time. 

By contrast, investments in equities not only involve a much higher degree of risk but also fluctuate considerably from year to year. 

For example, the S&P 500 index closed 2019 with +28.88% but had closed 2018 with a loss of -6.24%. 

This means that on average an investment in DAI yields more or less as much as those on the stock exchange, but with much lower risks and less volatility. 

It is also relatively simple since there are dApps that allow converting ETH into DAI to then lend the DAI tokens and collect the interest. 

The system is in some ways similar to depositing fiat currency into a bank account, but the interest income is much higher. 

However, the rate is not fixed but varies over time, and it is not certain that it will remain at 7.75% in the future. 

All this takes place in a decentralized way on the Ethereum blockchain: in short, it is a remarkable innovation compared to the traditional financial scenario. 

Marco Cavicchioli
Marco Cavicchioli

Class 1975, Marco teaches web-technologies and is an online writer specializing in cryptocurrencies. He founded ilBitcoin.news, and his YouTube channel has more than 25 thousand subscribers.

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