DeFi

How we use digital assets

July 30, 2021
Dean Batcheldor

The last 10 years have seen huge shifts in finance. Digital assets have outperformed nearly all other asset classes^. Even traditional financial institutions started integrating them, which means they’re officially mainstream.

The transition hasn’t been exactly smooth though. Digital assets were first ignored, then written off as a fad. Nowadays, most financial experts recognise their place in an investment portfolio. Depending on your age, lifestyle and risk tolerance, standard recommendations range from 1 to 20% of your portfolio.*

A new ecosystem

There is a wide variety of digital assets available with different designs and purposes. The original value proposition was the ability to send money to anyone in the world at anytime with no middleman.

Fast forward more than a decade and a full ecosystem of financial innovation has developed around digital assets, aptly named Decentralised Finance (DeFi). Traditional financial services such as saving accounts, investing and insurance now have DeFi equivalents – alongside new applications of the technology.

One of the most important elements of DeFi is stablecoins. These are a type of digital asset tracking fiat (govt. issued currency such as USD) or commodities (such as gold). Stablecoins enable access to DeFi products while providing stability from volatile digital asset markets.

It’s also key to understand smart contracts. These are programs that run on the blockchain with customisable rules and conditions to define operations. They enable developers to create permissionless, autonomous, scalable and decentralised apps.

More on how we use these below..

The future of money

tiiik utilises principal-protected stablecoin savings products.

Essentially these are apps enabling users from all over the world to lend and borrow from one another.

Here’s an example:

1 – Borrower provides $100 of digital assets as security
2 – Automated smart contract enables borrower to loan $50
3 – Borrower repays the loan at the agreed interest rate
4 – Interest generated paid in real-time to the lender

Funds are protected by over-collateralisation ($100 security, $50 loan).

Importantly tiiik only provides liquidity to the lending side of these products.

Bring the walls down

A big barrier for people to access these products is the technical knowledge required. This is where tiiik aims to help. Simply download the app, deposit AUD and watch your money grow in real-time.

We believe over the next decade people will begin to see DeFi products as an alternative for those who want something a little more rewarding for their money.

If you’re ready to see tiiik for yourself – join our waitlist below.

^as at August 2021, BTC vs MSCI World Index over a 10 year period. Important to consider the volatility and risk associated with digital assets
*not financial advice, your personal circumstances need to be considered