CredEarn – What is it and why use it?

UPDATED 11/05/2020:

CredEarn is a service that pays interest to digital asset and crypto owners who lend to CRED

Up to 10% APY is available to users of the following CredEarn partner platforms:

Uphold
Bitcoin.com
Bitbuy
CoinStats
TrustToken
HuobiWallet
EdgeWallet
BitpieWallet
Crypto Briefing
CryptoSlate


Users can pledge popular cryptos like Bitcoin, XRP (ripple) and Ethereum. Fiat currencies such as USD, GBP and EUR. Even precious metals can be committed. CredEarn has been running since February 2019 and we started our first program on March 1st 2019.

How do we earn?

Currently there are THREE ways to earn interest:
All options have the ability to auto-renew for a further 3 months. Interest is paid in USD, stablecoins or LBA.

Option 1) The original CredEarn programs had a 6 month lockup, with “simple” interest payments at 3 months and maturity. Now this schedule only applies to programs started before January 15th 2020.

Option 2) On January 15th 2020, NEW programs were cut down to 3 month lockups with “simple” interest payments every month until maturity.

Say we commit 4000 XRP worth $1000 on January 1st at 10% annual interest:
We’ll get $8.33 on February 1st and $8.33 on March 1st. Then on April 1st we’ll get $8.33 plus our 4000 XRP. That’s $25 or 2.5% in 3 months (10% over a year).

Option 3) On April 1st 2020 a Daily Compound Interest option launched, which allows users to earn interest on the principal and interest already earned. This means higher returns vs “simple” interest. They have a 6 month lockup and the interest earned is paid on maturity.

Say this time we commit 4000 XRP worth $1000 in a daily compound interest program at 10% annual interest on January 1st:

On July 1st we’ll get $51.26 plus our 4000 XRP. vs just $50.00 if it were “simple” interest. That extra $1.26 might not seem significant over the short term but over a long period of time this leads to a dramatic difference.

These options are brilliant for owners with a long term view of holding digital assets. If the price of the asset rises during the program we also benefit from capital appreciation. If the price falls, we still own the asset and we’ve earned interest for the period based on the higher, original price. There is of course the question of the safety of our assets and we’ll come onto that later…

What Digital Assets are included?

Asset Symbol Premium*Base
Bitcoin BTC 8%4%
Ripple XRP 4%3%
Ethereum ETH 5%3%
Litecoin LTC 10%6%
US Dollar USD 8%5%
Euro EUR 8%5%
British Pound Sterling GBP 6%4%
Bitcoin Cash BCH 10%6%
Basic Attention Token BAT 6%3%
Tron TRX 6%3%
Lend Borrow Asset LBA 10%3%
OmiseGo OMG 3%2%
Cardano ADA 3%2%
Cosmos ATOM 3%2%
Decred DCR 3%2%
Digibyte DGB 3%2%
Dogecoin DOGE 3%2%
EOS EOS 3%2%
IOTA IOTA 3%2%
Chainlink LINK 3%2%
Nano NANO 3%2%
NEM XEM 3%2%
Neo NEO 3%2%
Zilliqa ZIL 3%2%
0X ZRX 3%2%
Stellar XLM 3%2%
Universal Protocol Token UPT 3%2%
Universal Bitcoin UPBTC 8%4%
Universal Dollar UPUSD 10%7%
Universal Euro UPEUR 8%5%
Gold XAU8%3%
TetherUSDT8%6%
TrueUSDTUSD8%6%
USD CoinUSDC8%6%
DAIDAI8%6%

*Premium rates require pledging the utility token: LBA. See what it is here.

When do CredEarn programs start and what is the minimum pledge?

There is no minimum pledge. Programs start on the 1st & 15th of each month. That means at the very latest, assets must be pledged the day before. We can run as many programs as we like simultaneously. Here you can see screenshots from a CredEarn dashboard:

How does CredEarn make money for CRED and is it safe?

CRED uses your pledged assets to lend to and transact with a variety of customers, including retail borrowers and money managers with well-established track records.  Cred does not lend to short-sellers.

Taken from CRED’s website

Essentially, they make money off the spread between: being paid by people that borrow from them and paying people that lend to them.

During a term you can’t access your assets, which might make some people feel uncomfortable and rightly question how Cred keeps them safe.

How CRED mitigates risk

  1. Only collateralized or guaranteed lending
    • For the former, they lend stable coin or fiat against collateral (ETH, BTC or XRP) typically at 50% LTV at origination and up to 80% LTV.
    • For guaranteed lending they require corporate and other guarantees sufficient to ensure coverage of principal loan amounts.
    • They do not lend to short sellers.  Although they can’t guarantee this, they design their terms to manage against short-selling. For example, longer duration, higher collateral requirements. 
  2. Various layers of risk management and specifically as relates to collateral, notably:
    • They perform daily risk management assessments and have real-time market monitoring 24/7 through OTC relationships in US, EU and Asia, and these relationships have some pledge of liquidity from their balance sheet if required to execute trades
    • A robust collateral ratio—as stated above
    • Reserve accounts are in place to support trading activities
    • All crypto positions are hedged and swaps are used where possible, always with high collateral requirements and against solid counterparties. Mindful there is no perfect solution that protects against all market risk
    • As a data point, in the last severe crypto market correction in Nov. 2018 they did not experience a single borrower default and were able to make all redemption/interest commitments.
  3. Regulatory:
    • Cred take a conservative approach to compliance with all local lending laws in jurisdictions where they operate.  They have a compliance team and periodic outside audits.  Their service providers include top legal, consulting, servicing and other.
  4. Insurance:
    • Funds enrolled in programs are swept daily. However, during the time that they are with CRED they have a comprehensive insurance policy with Lockton that includes protection against any hacking, E&O, and regulatory coverage.
    • Funds are swept to one of their custodians who have their own individual insurance policies. BitGo, Bittrex, Xapo, Ledger, Uphold

In special cases you can contact support for early withdrawal but there may be a penalty.

Is CredEarn FDIC insured?

No. CredEarn allows you to extend a loan to Cred LLC. The purpose of the loan is to allow you to earn an enhanced yield on your crypto assets, such as Bitcoin. Cred LLC is not a bank and CredEarn services are not insured by the FDIC.

Taken from CRED’s website

Bringing it all together

Hopefully this post was helpful to show you the benefits of a platform like CredEarn, however you must understand that you are taking on more risk than in traditional finance. We urge you to do some more research and have a look at the alternatives too, see Celsius Network.

You can find a list of what we consider to be the strongest platforms in this space on our Homepage.

If you decide to go ahead please start small and have a mid to long term goal. With that said you can check back here for further updates down the road.

What should you do now?

Follow us on Twitter @Credearn and feel free to get in touch if you have questions or suggestions.

Check out our CredEarn Interest Calculator below:

To learn more about CredEarn please look at CRED’s FAQ Page.


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Last updated March 01, 2019

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