DAI Rewards, Coinbase pays interest to its customers
DAI Rewards, Coinbase pays interest to its customers
Defi

DAI Rewards, Coinbase pays interest to its customers

By Alfredo de Candia - 30 Jul 2020

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Yesterday, the Coinbase exchange surprised everyone by announcing the DAI Rewards program that will allow its users to earn interest in Maker’s stablecoin, DAI.

This is a new initiative that will be part of the Earn program, which allows crypto users to earn money by learning and watching short videos related to different blockchains.

With this new program, users can now also earn interest by simply holding this stablecoin on their account.

DAI Rewards is an initiative targeting users in selected countries only. The program is not available to citizens of Hawaii, England, Spain, Holland, France and Australia.

How does Coinbase DAI Rewards work?

To earn interest everyone must have their account verified, which means they must have done the KYC (Know Your Customer) procedure and have at least $1 in DAI in their account.

The interest is distributed after 5 days from the deposit of DAI and later the threshold will be lowered to only one day.

It is interesting to note that participation in this initiative can be deactivated from the account settings, either through the web interface or the mobile application, despite there being no actual reasons not to participate.

As far as the interest rate is concerned, the APY (Annual Percentage Yield) is 2%, which is high compared to traditional systems but low compared to other DeFi programs.

For example, the Compound protocol now offers over 7%, while Aave offers up to 23%.

And this is the reason why many people are criticizing the choice of the parameter, considering it too low, especially given the mandatory KYC procedure.

Lastly, it is worth mentioning that this incentive, as explained by Coinbase itself, may vary over time and therefore the rate may rise or fall.

This doesn’t apply to those who hold the DAI stablecoin on the Coinbase Pro platform, so in order to obtain interest it is essential to use Coinbase and not its Pro version.

DeFi on Coinbase

In any case, it is possible to see how another part of decentralized finance (DeFi) has landed on centralized platforms, despite the fact that the real potential of the sector is greatly limited.

It raises the question of what is the point of using centralized exchanges for these operations, but it is also true that for an inexperienced user it is certainly an advantage to have an easy to use platform.

 

Alfredo de Candia
Alfredo de Candia

Android developer for over 8 years with a dozen of developed apps, Alfredo at age 21 has climbed Mount Fuji following the saying: "He who climbs Mount Fuji once in his life is a wise man, who climbs him twice is a Crazy". Among his app we find a Japanese database, a spam and virus database, the most complete database on Anime and Manga series birthdays and a shitcoin database. Sunday Miner, Alfredo has a passion for crypto and is a fan of EOS.

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