At Donut, we’re always trying to make earning with DeFi as simple and secure as possible. With our latest update to Grow, reaching your money goals just got even easier.

DeFi is gaining momentum and establishing itself as an alternative financial system. Last year, the value of assets locked into DeFi grew to $200 billion and many believe that 2022 could be the year the ecosystem passes $1 trillion.

What's been driving this trend? Firstly, blockchain met pop culture as NFTs took off and celebrities such as Paris Hilton and Snoop Dogg embraced crypto. Secondly, there has been a meteoric rise of newer ecosystems such as Solana and Terra. These alternatives to Ethereum provide even more ways to earn in the DeFi space.

We’ve been tracking these developments and have found a way to, well, grow our Grow plan. You can earn a guaranteed 8%+ APY with our new Grow plan, making it the simplest and safest way to earn high interest with DeFi out there.

A side by side comparison of our plans.

So, what's new with Grow? 🌱

There are two main changes.

More APY: The protected base APY is rising from 6% to 8%, so you will now earn more with this plan.

Greater diversification: Your funds will now be split across AnchorYearn & Donut Fixed. This provides more earning opportunities beyond Ethereum, and more security.

These changes only impact the Grow plan. Build and Save will not change.

Why are we introducing Anchor? 🪐

We want your money to work as hard as possible, whilst maintaining security.

Anchor is a lending and borrowing protocol built on top of a new blockchain called Terra, which provides an alternative to Yearn, which is built on Ethereum. Splitting your funds between these two blockchains reduces risk.

In addition, Anchor pays high yields on lending due to higher borrowing rates on Terra, and a mechanism that allows collateral to earn staking rewards. This means that Anchor not only earns money through interest charged on loans, but on the collateral that borrowers put up in order to get the loans in the first place. Anchor reposts this collateral on different blockchains such as Polkadot, Cosmos & Ethereum, and has over $5 billion in assets earning today.

How are funds split? ⚖️

Your funds will be diversified based on a target ratio of 33% per lending partner.

If demand for borrowing falls with one lender, Donut will automatically rebalance the distribution to maintain your APY, never going above 40% per partner. This reduces exposure, and balances risk.

What are the risks? 🛡

Digital assets in the DeFi space are not FDIC insured, and therefore not zero-risk. However, at Donut, we try to keep risk to a minimum.

Grow is powered by Anchor, Yearn, and our direct lending relationships. Our carefully selected partners mitigate risk through best-in-class security, regular audits and loan loss reserves. They currently safely manage over $10 billion in assets. There is a small risk of failure, but we mitigate this by distributing your funds across multiple partners.

Your funds are further protected through overcollateralization, typically 125% of your principal. This protects you in case a borrower defaults.

We use Ethereum and Terra’s infrastructure, which could potentially fail. This type of failure is very unlikely.

Is Anchor riskier? 😬

Anchor's lending mechanism has more exposure than Yearn and Donut Fixed. This is due to the collateral borrowers put up being reposted to earn additional yield.

Anchor has historically paid yields in the region of 20% APY. The extra APY comes from the reposted collateral returns, and Anchor’s internal reserve.

Given our understanding of their system, lending rates are likely to move closer to 12-15% APY in 2022. Yet, Anchor still offers tremendous earning opportunities and is an important next step to risk diversification.

Will I lose all my money? 👀

As the age-old saying goes: Don't put all your eggs in one basket. That's all risk diversification is. With the new update to Grow, we're balancing risk by splitting funds across multiple lending partners.

For Grow users, this means your funds will be split across multiple parties with a target ratio of 33% rather than a single party (e.g. Yearn).

It's worth remembering that whether you earn with Save, Build or Grow, DeFi can be part of a diversified investment strategy that also includes stocks, ETFs, bonds and other digital assets. How you choose and allocate your investments is up to you. We're here to help you discover new ways to save smarter, work your money harder and grow your wealth.

Can the APY drop below 8%?​​ 🖐

No. 8% is the protected base APY for Grow.

How can I earn up to 10% APY?​​ 🌻

Your interest rates can increase depending on lending rates on Anchor & Yearn.

You can also actively increase your APY by taking part in our Boost campaigns and inviting friends to Donut in-app!

What are the fees? 🐝

We never charge you any fees on top of what is displayed in-app. So when we say 8%+ APY, you will always get 8% APY or more.

Are there any minimums? 🏦

You need to have at least $5,000 in your Donut account to use Grow.

How do I get started? ✨

If you're already on Grow, you can switch over in the app to start earning the higher interest rate of 8% now, or be automatically transferred over in 30 days.

How to Switch to Grow Plan

If you're on Build or Grow, you can follow three easy steps:

  1. Tap 'Optimize' on the Home Screen

  2. Select 'Grow'

  3. Swipe the switch bar at the bottom, et voila!

You can switch back and forth whenever you like, subject to the minimum.

When can I start? 💃

Grow will be available to all users on February, 8th.

The Donut team is always designing ways to make your money work harder, so you can sit back and earn more with DeFi lending.

Our expert squad is currently looking at other lending protocols to add more diversification to the mix, as well as insurance, to make DeFi lending even safer.

Watch this space for more updates coming soon!

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.