Bear Market Stablecoin Farming

Bitcoin hit a new ATH (All-Time High) on November 10th 2021. Since that period, Bitcoin has been in a steady decline, and the cryptocurrency asset class as a whole has entered a bear market. This bear market is not limited to crypto; the current state of global macroeconomics is bleak. Inflation is soaring, driven by supply chain disruptions during the COVID-19 Pandemic, energy costs are artificially inflated due to Russian aggression in Ukraine, and the FED is in a desperate scramble to bring the CPI (Consumer Price Index) down by raising interest rates and removing liquidity from the system. Not to be forgotten was the colossal stimulus package where trillions of dollars were printed and freely distributed. Basic laws of supply and demand dictate that increasing total supply naturally devalues a currency.

Bitcoin dominance is the measure of Bitcoin’s market capitalization ratio compared to the rest of the cryptocurrency market. Bitcoin dominance is growing whilst Bitcoin trends downwards. This means that altcoins are bleeding heavily; Bitcoin dominance stands at 42% at the time of writing; however, the actual figure is likely higher. The proliferation of stablecoins within the crypto ecosystem has changed investors’ strategies during a bear market. In prior cycles generally, investors sold off riskier assets (altcoins) and bought Bitcoin; now, investors trade their riskier assets for stablecoins and wait for an opportunity to reenter the market.

The current market conditions are forecast to be protracted, and this bear market is expected to continue well into 2023.

Earning with MoneySwitch During a Bear Market

MoneySwitch is an L-a-a-S (Liquidity As A Service) platform which offers uncollateralized loans to CPPs (cross-border payment providers), with the expected value of cross-border payment flows in 2022 to total $156 trillion.

The capital requirement to operate within the cross-border payments industry is vast due to a reliance on outdated legacy systems: Pre-Funding, the SWIFT Network, and the Correspondent Banking Model. International value transfers are slow- typically taking between 2–7 days to clear- and expensive. MoneySwitch offers uncollateralized liquidity to CPPs with pre-determined interest rates so that they can make settlements faster and the entire industry can become more capital efficient, going from the pre-funded model to an on-demand model.

MoneySwitch leverages DeFi (decentralised finance) and stablecoins which represent a superior payment rail to direct liquidity globally to where it is needed when it is needed.

To offer uncollateralized loans, MoneySwitch needs liquidity, and that is how investors can earn on the platform.

Lending

The Moneyswitch platform will feature liquidity pools for FRAX and USDC. Investors simply connect their wallets, deposit their chosen assets, and accrue interest. The interest rate is supply-driven and will vary depending on pool utilization; the more utilized a pool is, the higher the interest rate.

The yield comes in the form of interest payments from CPPs. MoneySwitch liquidity pools are centrally driven by adding value to the cross-border payment industry and facilitating faster global settlements. Adding value to the global economy is something we firmly believe in at MoneySwitch, and this is how we generate yield for our investors.

Interest will be paid out in the deposited stablecoins and MST (MoneySwitch Tokens). MoneySwitch’s platform has built algorithms that allow users to single-stake stablecoins and automatically earn both the deposited stablecoin and MST tokens without creating LP (liquidity providing) tokens. The experience for the user is to deposit, relax, and accrue interest.

Credit Default Protection Pool

Investors have the opportunity to create an LP (liquidity providing) token by pairing FRAX & MST and depositing it into the Credit Default Protection Pool. This pool is a hedge against the unlikely event of a default. In the event a CPP does default on a loan payment, these LP tokens will be liquidated and allocated to the required pool. Investors are incentivised to take on this risk due to the reward, with 10% of all interest accrued on the platform going to investors who participate in the Credit Default Protection Pool.

Conclusion

Rampant rehypothecation and leverage have become the norm within crypto, all in a dash for protocols or exchanges to attract users with attractive yield rates. These highly leveraged positions are being washed away in the current bear market, which benefits the overall health of the crypto markets.

Our proposition at MoneySwitch is simple. We provide value by improving the cross-border payment industry allowing international settlements to be made faster. With remittance flows expected to total $156 trillion in 2022 and forecasted for year-on-year growth. This is a market segment where the potential for DeFi is enormous.

We pride ourselves at MoneySwitch on offering up-front pre-agreed loan terms with licensed cross-border payment providers and delivering the interest payments to our users. Our platform offers high levels of risk mitigation and, more importantly, is simple and secure. We utilize the tools of the modern technological era- DeFi- to provide value to an outdated industry and the investors who make this possible an opportunity to use their crypto assets to generate yield.

MoneySwitch wants to give investors a safe place to deposit their assets and generate yield throughout this turbulent period. To simplify the process, we have designed our central liquidity pools to be single stake. Deposit your stable assets today, sit back, and earn throughout the bear market.

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