Rather than relying on a borrowing and lending model, we’ve made algorithmic trading our foundational strategy since launching in 2019. This strategy has many advantages over borrowing and lending models, as seen below.
- High BTC and ETH earn rates: Crypto holders generally have a higher desire to lend their BTC and ETH to earn interest while with stablecoins, there is a higher desire to borrow rather than lend. This is why BTC and ETH earn rates are low in comparison to relatively high stablecoin interest rates. With algorithmic trading however, high earn rates for BTC and ETH are entirely possible.
- No transaction limits: Paying out earnings to users through a borrowing and lending system can be difficult when there is a lower demand for loans. There is no limit on payouts per user with an algorithmic trading structure because it is able to maximize the algorithmic strategy to generate profit regardless of the number of withdrawals or deposits.
- Low risk of bank runs: Borrowing and lending systems allow transactions without requiring a fixed term. In an algorithmic trading structure, assets are managed for a fixed term (lockup period) once the deposit is made. Since the assets are managed for a fixed term, overall financial stability can be maintained even when a high number of withdrawals are made when the fixed term ends.