At Donut, we believe in providing you with smart ways to work your money harder. Grow is our highest yield plan, earning you up to 10% APY.
In 2021, we’ve seen the DeFi sector grow astronomically. Billions of dollars are transacted every quarter, and new technologies are creating more opportunities to earn every day.
Our team has been hard at work building a new way to earn interest that’s as simple as everything we do at Donut. Enter Grow. Our highest yield offering yet. It works a little differently than Save or Build, so it’s worth taking a closer look.
What is Grow? ⚡️
Grow is a yield-optimized DeFi lending opportunity powered by Yearn.
Yearn uses a unique algorithm to optimize your yields across several DeFi protocols (including Compound, Aave and dydx) so you can earn the most interest. It is a trusted service in the DeFi space, where over $2 billion in assets are safely earning at any given time.
The interest rates on Grow range from 6-10% APY, depending on the dynamics in digital asset markets.
Will the interest rate drop below 6%? 👀
No. Donut's new floor mechanism means that you will never get below 6% APY with Grow. We spent a lot of time thinking about how we could provide our customers with the highest earning opportunities with DeFi and provide stability -- our new protected base rates for all our plans do exactly that.
How do I use it? 👋
We released our Grow Plan on May 24th, 2021, so you can use it if you have our latest app version. However, there are a couple of things you will need to do to unlock this plan.
First, you'll need to maintain a Donut account balance of $5,000 or more to access this strategy.
You'll also have to complete a brief learning module in the app before investing. It only takes a minute, but it ensures that everyone understands the Grow plan, how it works and its unique risks.
Then you're all set to invest!
Why are the interest rates higher with Grow? 📈
It all comes down to the engine behind Grow: Yearn.
Yearn is like a robo-advisor for DeFi lending. Its technology automates the yield generation process by constantly rebalancing your allocation across various lending platforms. This ensures that you receive the highest possible APY on your funds.
Yearn allows you to invest your cryptocurrencies in the highest-yield opportunities within DeFi, while eliminating certain fees and technical complexities.
Donut lets you access Yearn directly from your bank account, making it super simple to earn interest rates upwards of 10% APY.
Is Grow higher risk? 🔐
With higher yield comes higher risk. We want to make sure all users understand the difference between our three plans.
Save mitigates risk by working directly with institutional lenders and prime brokers. Build combines this strategy with lending via Yearn. Meanwhile, Grow makes the most of DeFi lending opportunities by using Yearn to move your funds across many lending partners, which leaves your principal more exposed compared to Save or Build.
Technical failures or bugs are highly unlikely, but it’s important for all users to understand that the technology and platform risks are slightly higher with Grow.
If you’d like to learn more about the 3 types of risk in DeFi lending, check out our blog here.
Is my principal safe? 🛡
Donut and our lending partners use overcollateralization to protect your principal while it earns. All the lending platforms we use for Grow are highly collateralized.
When you earn with Grow, your principal is typically collateralized or "covered" at over 125%. This means that borrowers must put up $1.25 of digital assets for each $1.00 they borrow. High collateralization covers your principal in case a borrower defaults.
Coverage is not the same as insurance and funds on Grow, like all digital assets, are not FDIC insured.
How do I invest existing funds in Grow? 💰
Once you've unlocked Grow, you'll be able to select it from the Strategy screen to allocate your funds instantly.
As with all our plans, you can switch strategies (Save, Build or Grow) and add or withdraw funds at any time. There are no lock-ins.
Can I split my allocation between Save and Grow? ⚖️
Not yet, but this feature is coming soon. For now, you’ll have to choose a single strategy to grow your money with. As always, you can change strategy as often as you want.
So when can I start? ⚡️
Grow is available now. Remember to update your app!
We hope that this article has helped clarify Grow. If you have any further questions, don’t hesitate to reach out by e-mail or DM us in-app.
Real talk 🚨
Any saving and investment strategy puts your capital at risk.
The above information is intended for informational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.