At Donut, our goal is to provide the easiest and safest earning experience in DeFi and web3. True to that mission, we’ve just upgraded Save’s protected base APY to 5% and made it our safest plan, yet.
On Save, we convert your USD to digital dollars (USDC stablecoins) and put those dollars to work in lending markets seeking to provide you a protected base APY of 5%. These funds are lent to a diversified pool of trusted institutional borrowers and protected by overcollateralization.
To power this lending service, we partner directly and indirectly with regulated US custodians Wyre, Genesis, and Abra, as well as US fintech Synapse. These prime brokers and institutions help protect against the risk of partner failure and introduce an added layer of safety through diversification. In evaluating partners for Save, we performed due diligence to ensure balance sheet strength for added security.
New to Save is the stablecoin USDC as the underlying asset. USDC is fully backed by dollar reserves making it one of the most secure stablecoins out there. This is part of a series of changes to minimize risk even more at Donut, and a necessary step to take.
We’re excited by USDC’s stability, track record, and transparency. Since its inception in 2018, USDC’s issuer Circle has conducted regular audits, publishes monthly attestations and weekly reserves breakdowns, and is fully regulated by the NY Department of Financial Services. Circle’s last two audits, for 2020 and 2021, have been published as part of Circle’s SEC filings as they prepare to become a listed public company on the New York Stock Exchange.
Protecting your balance
Your funds are always protected by overcollateralization. This is typically over 125% of your principal. If the value of the collateral falls, borrowers are margin called and required to top up or repay part of their loan. If not, they are liquidated. This protects your principal and interest earned in case of borrower default or when crypto prices crash.
In addition, your funds continue to be securely lent to prime brokers and lenders via our wallet partner, Fireblocks, which stores over $400 billion in digital assets.
Donut also uses bank-grade encryption, PIN numbers, and two-factor authentication to protect accounts, and is a FinCEN registered organization.
Why are we upgrading Save?
We continue to strengthen our risk management system, and as one of the strongest stablecoins, USDC gives us a lot of confidence. An increase in borrower demand also allows us to increase APY’s for you, our loyal users who have put their trust in us (we may need to amend the rates going forward, but we’ll try not to do this often). We also wanted to make digital markets more accessible, and having a zero-dollar minimum for everyone accomplishes that!
If the price of Bitcoin or Ethereum crashes, will this impact my funds on Save?
Falling prices impact the value of the collateral on loans. Typical collateralization is between 125-150%. As prices fall, borrowers are asked to top up their collateral when the ratio nears 110%. If a borrower does not top up collateral, our lending partners liquidate their holdings to ensure no principal is lost. Throughout various market sell-offs (e.g. March 2020, June 2022), our overcollateralization mechanisms have performed as expected with no principal loss on our Save plan.
Can I still withdraw when I want?
Yup, you can withdraw and deposit, what you want, when you want. We recently increased these limits too, check here for the latest info!
How can I maximize my earnings or APY on Save?
You can maximize earnings on Donut by adding a Recurring Investment or by activating round-ups through Collect. You can also earn +5% APY every time you refer a friend.
Was DAI risky and why did you change?
No, we plan to use DAI on our upgraded Build and Grow plans. USDC is preferred by our lending partners to ensure safety in the Save offering.
I’m already a Save member, what happens to me?
All current Save plan members just need to update their app to start earning that extra APY!
I’m on Build, what happens to me?
Build members can upgrade to Save today or wait and be automatically migrated to Save on July 15th.
Will Build and Grow ever come back?
We will initially make Build available for accredited investors. We plan to roll this out during 2022 and will hopefully have some exciting updates following the initial usage.
Will my Recovery Boost remain active?
It sure will.
What’s Donut X and the mention of accredited investors?
We want to provide you with the best opportunities to earn in the simplest and most secure way. Donut X and accreditation will allow our users to access plans with more APY. Coming soon!
Sounds awesome. When can I start?
Our new Save plan is live. Current Save plan members have been automatically upgraded, and Build plan members can upgrade today in your app or wait until July 15th when we will migrate you. If you’re new to Donut, click here to create your account and start earning.
The Donut team is continually striving to make DeFi lending even more simple, accessible, and secure for you, so we’re excited about this next step. If you have any further questions, don’t hesitate to reach out by e-mail or DM us in-app.
Getting started with Donut
Donuts with friends
Increase your APY +5% for 5 days every time a friend you refer makes their first deposit on Donut. Head to the Boosts section of your app to start introducing friends to the future of finance.
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.