Shalini Nagarajan

Macauley Peterson

Apple just released a new high-yield deposit account in partnership with Goldman Sachs, and users are already excited that it promises a better rate than most banks. But what about crypto and DeFi?



The feature enables Apple Card users to grow their Daily Cash rewards — the cashback rewards for using the card — by placing them in a savings account that offers an annual percentage yield (APY) of 4.15%.



Apple&#8217;s rate is more than 10x the national average, <a href="https://www.apple.com/newsroom/2023/04/apple-cards-new-high-yield-savings-account-is-now-available-offering-a-4-point-15-percent-apy/" target="_blank" rel="noreferrer noopener">Apple said</a>, citing data from the Federal Deposit Insurance Corporation. Users can set up their savings accounts with no minimum deposits and no minimum balance requirements.



For comparison, Coinbase offers <a href="https://www.coinbase.com/learn/tips-and-tutorials/how-to-earn-crypto-rewards#:~:text=Via%20the%20main%20Coinbase%20app,com%2Fstaking%20to%20learn%20more." target="_blank" rel="noreferrer noopener">up to 6%</a> APY on staking certain assets including ETH, Tezos or Cosmos. Bybit also offers <a href="https://www.bybit.com/en-US/earn/home/" target="_blank" rel="noreferrer noopener">up to 6%</a> APY on staked ETH.&nbsp;



But those are volatile crypto assets for which some of the yield can be a result of token inflation. It’s not an apple to Apple comparison.



Limiting a search for crypto yields to stablecoins, we can find Crypto.com offering <a href="https://crypto.com/product-news/crypto-earn-updates-available-tokens" target="_blank" rel="noreferrer noopener">4.5%</a> on USDC, DAI and USDT, with a 3-month lockup, but only if customers additionally stake a balance of the exchange’s CRO token.



<a href="https://blockworks.co/category/defi">DeFi</a> has the advantage of global permissionless access, but basic savings yields are generally lower than those from Apple’s product, although the latter is currently available to only US-based users.



Borrowing and lending protocols Aave and Compound have variable supply rates currently around 2%, according to <a href="https://defiprime.com/defi-rates" target="_blank" rel="noreferrer noopener">defiprime</a>, while relative newcomer <a href="https://www.notional.finance/lend" target="_blank" rel="noreferrer noopener">Notional Finance</a>, offers fixed rate lending of DAI and USDC at between 5.9% and 6% with a 3-month term.



Apple’s offering is more flexible and benefits from FDIC insurance, while DeFi alternatives are uninsured by default. To protect against certain smart contract risks, via insurance protocol <a href="https://app.nexusmutual.io/cover" target="_blank" rel="noreferrer noopener">Nexus Mutual</a>, will set you back about 1.5-2% annually for Compound and Aave. And there is currently no capacity available to insure Notional Finance positions.



Aside from its global reach, with no need to jump through any hoops to open an account, DeFi has one other feature users may appreciate: deposits can simultaneously be used as collateral to borrow.



For instance, a USDC deposit on Compound can be used to borrow ETH which can then be staked elsewhere to earn a return. That can make the yields available more competitive, but also introduces complexity, such as the need to monitor collateral ratios to ensure there’s no risk of liquidation and to take on additional smart contract risk.



<h2 class="wp-block-heading">Apples to others comparison</h2>



Rick McCracken, a Cardano stake pool operator, said on <a href="https://twitter.com/RichardMcCrackn/status/1648052395245436928" target="_blank" rel="noreferrer noopener">Twitter</a> that it was hard to pass up on Apple’s 4.15% APY as he was already using Apple cashback.



“Now I have to see if I am earning better returns on my crypto rewards on the Coinbase card or if this [Apple] deal is better,” he said.



Apple Card users don’t have to rely only on their cashback rewards as a base to grow their returns. They can also add money to this savings account directly from an existing bank account, meaning you can transfer a chunk of funds if you wish to do so.



“Our goal is to build tools that help users lead healthier financial lives, and building Savings into Apple Card in Wallet enables them to spend, send, and save Daily Cash directly and seamlessly — all from one place,” Jennifer Bailey, vice president of Apple Pay and Apple Wallet, said in a statement.



Apple’s announcement follows customers deciding to move their funds from smaller lenders to banking giants after the failures of Signature Bank and Silicon Valley Bank.



Although Apple’s product doesn’t provide the highest available APY, it is useful for those who already have Daily Cash from their use of Apple Card. Still, Apple warned that the APY may change at any time.



For those new to crypto, finding yields competitive to Apple’s savings product, without taking degen-like risks, is a challenge — especially in a macro environment where <a href="https://ycharts.com/indicators/3_month_t_bill" target="_blank" rel="noreferrer noopener">3-month Treasury bonds</a> are at 5%. But the DeFi landscape is evolving fast, and consumer-focused offerings with low fees and features like built-in insurance are sure to follow.



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Aave

How Does Apple Card’s New Savings Account Compare to Crypto?

Bessie Liu

Decentralized financial services giant MakerDAO is hiking the savings yield for its stablecoin DAI from 0.01% to 1% after the latest governance vote.



All DAI holders are able to deposit their stabletokens into a Dai Savings Rate contract for a 1% annual yield — equivalent to an APY percentage.&nbsp;



An increased savings rate will enable DAI to be more competitive than retail TradFi offerings.



Sam MacPherson, a protocol engineer at MakerDAO, tweeted, “In my view Maker should take strong action to halt the capital outflows from DeFi.”



The overall value of all assets locked across DeFi protocols is down 75% this year, shrinking from $166.7 billion to $42.41 billion, with MakerDAO making up about 16% of that total.



“This is ultimately good for the DeFi ecosystem as we will be able to keep the economic energy within DeFi,” he added.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">The <a href="https://twitter.com/MakerDAO?ref_src=twsrc%5Etfw">@MakerDAO</a> OMC is presenting options to MKR holders to raise the Dai Savings Rate (DSR). In my view Maker should take strong action to halt the capital outflows from DeFi. Banks are offering 4%+ in risk-free yield &#8211; we should do the same.<a href="https://t.co/pqmFigf1QM">https://t.co/pqmFigf1QM</a> <a href="https://t.co/7bF49nrflI">pic.twitter.com/7bF49nrflI</a>&mdash; Sam MacPherson (@hexonaut) <a href="https://twitter.com/hexonaut/status/1595865802783211521?ref_src=twsrc%5Etfw">November 24, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



MakerDAO’s DAI savings interest rate is now higher than a handful of traditional US banks including Wells Fargo, which has a standard interest rate of <a href="https://www.wellsfargo.com/savings-cds/rates/" target="_blank" rel="noreferrer noopener">0.15%</a> for its ​​Way2Save savings accounts and 0.25% for money market accounts.



TD Bank’s Simple Savings rate sits at <a href="https://www.td.com/us/en/personal-banking/savings-accounts" target="_blank" rel="noreferrer noopener">0.02%</a>, while Chase Savings’ annual interest rate sits at <a href="https://www.chase.com/personal/savings/savings-account/interest-rates" target="_blank" rel="noreferrer noopener">0.01%</a>.



MakerDAO’s new DAI rate is still lower than 1-Year US Treasury yields, which currently sit at <a href="https://www.bloomberg.com/markets/rates-bonds/government-bonds/us" target="_blank" rel="noreferrer noopener">4.64%</a>. CapitalOne also offers 3% APY on certain savings accounts.



In any case, appetite for crypto borrowing has <a href="https://blockworks.co/news/whats-wrong-with-centralized-crypto-lending" target="_blank" rel="noreferrer noopener">not been high</a> since the downfall of centralized finance lenders such as Celsius and BlockFi, leading to low DeFi yields across the board.



“The DSR is the base rate of DeFi — it sets the lower bound for yields. Due to Maker&#8217;s size, increasing the DSR is akin to a rising tide that lifts all boats,” MacPherson told Blockworks.



“Aave, Compound and other money markets will be able to incorporate this yield into their protocols and pay users more for lending their Dai. This will slow down / halt capital searching for better returns at a bank and leaving the DeFi ecosystem,” he said.



MakerDAO’s latest decision to hike savings rates will likely make DAI a more attractive asset for risk-averse investors — especially those keen to look outside Wall Street for their savings interest.



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MakerDAO Now Offering Savings Yields Higher Than Wall Street

Ben Strack

<div id="highlights-block_63581102ec7cb" class="highlights">
 <ul>
 <li>46% and 45% of Gen Z members and millenials, respectively, said they wish they could invest in crypto via their 401(k)s</li>
 <li>Outside of 401(k)s, 25% of respondents said they are investing in crypto as a method to save or invest in retirement</li>
 </ul>
 
</div>



The young, at least in the US, are leaning less on traditional 401(k)s to save for retirement — increasingly favoring fresh options such as crypto, per a new Charles Schwab study.&nbsp;



The <a href="https://content.schwab.com/web/retail/public/about-schwab/schwab_2022_401k_participant_survey_genz_millennials_deck.pdf" target="_blank" rel="noreferrer noopener">study</a> found that 37% of Gen Z workers and 54% of millennials say their first investing experience was through a 401(k)  — lower than 61% for both Gen X and baby boomers. 



Instead, the two younger segments are more likely to also invest in crypto, real estate, annuities and small businesses than their older counterparts. Roughly 22% of Gen Z workers first got involved in investing through mobile trading, the study found, while 11% first invested in crypto.



The online survey, conducted in April by Logica Research for Schwab Retirement Plan Services, comprised 1,000 US 401(k) plan participants.



Younger people are questioning traditional approaches to work and retirement as they have changed jobs and reconsidered priorities during the pandemic, <a href="https://cts.businesswire.com/ct/CT?id=smartlink&amp;url=https%3A%2F%2Fwww.aboutschwab.com%2Fcatherine-golladay&amp;esheet=52951362&amp;newsitemid=20221025005153&amp;lan=en-US&amp;anchor=Catherine+Golladay&amp;index=1&amp;md5=c13b89eb7e1cfea440e594bc3f97cafc" target="_blank" rel="noreferrer noopener">Catherine Golladay</a>, head of Schwab Workplace Financial Services, said in a statement.



“The 401(k), while still their primary retirement savings tool, is no longer viewed as their only path to retirement,” Golladay said. “They see an opportunity to reach their financial goals through diverse assets that are making them excited about investing and engaged in their financial futures.”



Thirty-two percent of respondents said they wished they could invest in crypto via their 401(k) — with 46% and 45% of Gen Z and millenials, respectively, reporting that preference.&nbsp;



<a href="https://cms.blockworks.co/fidelity-delves-deeper-into-crypto-by-allowing-bitcoin-in-401ks/" target="_blank" rel="noreferrer noopener">Fidelity Investments said in April</a> it was set to allow individuals to allocate a portion of their retirement savings to bitcoin through the company’s in-house 401(k) plans. A spokesperson told Blockworks last week that the company’s <a href="https://www.fidelityworkplace.com/s/digitalassets" target="_blank" rel="noreferrer noopener">Digital Assets Account</a> was on track to launch its first plan sponsor clients this fall.



A Charles Scwhab spokesperson declined to comment on whether they would seek to launch a similar offering.



Crypto payroll solutions company Bitwage partnered with 401(k) provider ForUsAll earlier this month to allow crypto into 401(k)s on a pre-tax or post-tax basis. Bitwage CEO Jonathan Chester told Blockworks he expects younger workers who generally underutilize the 401(k) may seek to get crypto exposure via retirement accounts for tax savings.&nbsp;



“[That could] bring more people within the millennial and Gen Z groups into the fold to maybe utilize these systems in unique ways,” Chester said. “It would be much harder to do that through a 401(k), because the employer has a fiduciary responsibility, so I would imagine that independent retirement accounts [IRAs] would lead the way.”



Outside of 401(k)s, 61% of those surveyed said they are using a savings account to save or invest for retirement, while 25% said they are investing in crypto. Millennials were most likely to invest in crypto — at 35% — while just 4% of baby boomers are doing so.&nbsp;



Thirty-nine percent reported saving in a health savings account (HSA), while 33% and 29%, respectively, said they are investing in an IRA or a brokerage account.&nbsp;



The study comes during a year in which Charles Schwab and other large financial services companies have become more involved in crypto.



<a href="https://cms.blockworks.co/first-charles-schwab-crypto-etf-set-to-launch-next-week/" target="_blank" rel="noreferrer noopener">Charles Schwab brought to market its first crypto-related ETF</a> in August following similar launches by competitors <a href="https://cms.blockworks.co/blackrock-lists-blockchain-etf-days-after-similar-fidelity-launch/" target="_blank" rel="noreferrer noopener">BlackRock</a> and <a href="https://cms.blockworks.co/fidelity-launches-metaverse-experience-in-tandem-with-new-etfs/" target="_blank" rel="noreferrer noopener">Fidelity</a>. 



Schwab was also among a group of companies, including Citadel Securities, Fidelity Digital Assets, Paradigm, Sequoia Capital and Virtu Financial, <a href="https://cms.blockworks.co/finance-giants-join-forces-to-launch-crypto-exchange/" target="_blank" rel="noreferrer noopener">to back crypto exchange EDX Markets</a> last month.



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401K

Nearly Half of Younger People Want Crypto Exposure in 401(k)s, Schwab Study Says

Brian Nibley

<div id="highlights-block_6189e03fe8b33" class="highlights">
 <ul>
 <li>Crypto holders now have a variety of options. Each option comes with its own pros and cons</li>
 <li>Vauld enables savvy crypto savers to preserve liquidity, and get customer support, with no hidden fees</li>
 </ul>
 
</div>



Crypto assets can serve as a form of long-term <a href="https://www.vauld.com/rates" target="_blank" rel="noreferrer noopener">savings</a>. But what about earning interest on those savings in the short-to-medium term?



Crypto holders now have a variety of options. Each option comes with its own pros and cons.



Using a crypto lending platform requires less technical knowledge than navigating the DeFi realm or independently staking PoS coins.



Here are three tips to earning interest in a way that maximizes returns while maintaining flexibility.



<h3 class="wp-block-heading">Preserving liquidity</h3>



Some crypto lending platforms have mandatory lockup periods. That means when someone wants to earn interest on their crypto, they have to lock it away for a set period of time, making them unable to move their assets or transact with them.



What happens if someone needs liquidity during a personal or market crisis? Locking up funds at the wrong time could lead to calamity.



<a href="https://www.vauld.com/" target="_blank" rel="noreferrer noopener">Vauld</a> has solved for this by making the lockup period optional. Users who want to earn a higher rate of interest can choose to lock up their tokens for a time, but doing so isn’t necessary.



Darshan Bathija, co-founder and CEO of Vauld, explained how making lockups optional rather than mandatory can be beneficial for users. He also noted that optional lockups can serve the interest of the user by providing higher returns:



“A lockup does provide some predictability. We have the option to lock your funds for a month and earn a higher yield.”



All of this provides a tremendous degree of flexibility for users. Not only can they choose whether or not to lock up funds, but they can even trade with the crypto they are currently earning interest on if it’s not locked up:



“If you willingly lock up your funds and temporarily forgo your ability to trade with your funds you will be rewarded with higher interest rates, similar to savings vs brokerage accounts,” Darshan Bathija added.



In short, Vauld users can lock up funds for a higher rate of return. But they also have the option to accept a lower rate in exchange for the convenience of being able to trade or move their assets.



<h3 class="wp-block-heading">Customer support on-demand</h3>



Users of centralized exchanges know the drill: you submit a support ticket for help with a problem, and then the waiting begins. Days, weeks, or even months can go by before getting a response.



Vauld, on the other hand, allows users to start a live chat with customer support in no time. Responses typically occur within 24 hours or even faster. 



According to Darshan Bathija, “In case you have difficulty with anything, we have a very solid customer support experience where you can start a chat with our team immediately, instead of waiting weeks, it takes about a minute for you to talk to our team.”



It’s rare for a platform to make this kind of commitment to customer service. During times of extreme market turbulence, customer support on other platforms can often be hard to reach at the most important time. With <a href="https://www.vauld.com/" target="_blank" rel="noreferrer noopener">Vauld</a> this is less likely to be the case. This should help users maximize interest by quickly clearing away any potential hurdles.



<h3 class="wp-block-heading">Avoid hidden fees</h3>



Many traders and investors fail to take into account the extent to which fees can eat into their profits. While exchange fees tend to be transparent, borrowing and lending platforms have the opportunity to insert hidden fees at every turn.



And it’s not only the platform that can introduce fees that lead to losses. If users earn interest on a token, but that token’s value falls by a greater percentage than the interest rate, a loss could still be realized.



Stablecoins can be a great choice for earning interest, as they avoid this dilemma. <a href="https://www.vauld.com/" target="_blank" rel="noreferrer noopener">Vauld</a> offers excellent <a href="https://www.vauld.com/" target="_blank" rel="noreferrer noopener">rates</a> on stablecoin deposits with no hidden fees. Lock-in rates for USDC and DAI are 12.68% APY. These rates are among the highest in the industry.



When seeking interest on crypto assets, remember these three things: preserve liquidity, go for great customer support, and avoid hidden fees. Use a platform that offers interest on funds that aren’t locked up, has fast support response times and no hidden fees.

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