A couple of important lines from their Terms and Conditions:
By utilising the Luno Savings Wallet, you expressly agree that any cryptocurrency deposited into your Savings Wallet may be placed with Genesis, for Genesis to lend to third parties, in order to generate a return.
Except where prohibited or limited by applicable law, you grant Luno the right, without further notice to you, to hold the cryptocurrency held in your Savings Wallet in Luno’s own name or in another name, and to lend, pledge, repledge, hypothecate, rehypothecate, or otherwise transfer or use any amount of such cryptocurrency, separately or together with other property, with all attendant rights of ownership, and for any period of time and without retaining in Luno’s possession and/or control a like amount of cryptocurrency, and to use or invest such cryptocurrency. You acknowledge that, with respect to assets used by Luno pursuant to this section: (1) you may not be able to exercise certain rights of ownership; and (2) Luno will earn a commission in connection with lending or otherwise using cryptocurrency in its business, to which you will have no entitlement.
By utilising the Savings Wallet you indemnify Luno, its operating entities or any other affiliates (including their respective directors, members, employees or agents), to the maximum extent permitted by law, against any loss, liability action, cost, claim, damages, proceedings or expense that you may suffer, directly or indirectly, in connection with the Savings Wallet, including (without limitation) the loss of cryptocurrency deposited into your Savings Account (whether in whole or in part), and you accordingly hereby waive any claim that you may have against Luno arising therefrom (including in respect of any claim for direct, indirect, consequential or pecuniary damages).
So they will take your deposits, hand them over to Genesis, Genesis will then hand them over to a bunch of unspecified third parties to trade or invest, and that should all trickle down to a target of 4% returns for you (with everyone along the way taking a cut for themselves with zero risk). That's an awful lot of intermediates and an awful lot of risk for the user for very minimal gains. If Luno go bankrupt, scam, are hacked, fail their repayments, etc., if Genesis go bankrupt, scam, are hacked, fail their repayments, etc., or the third parties go bankrupt, scam, are hacked, fail their repayments, etc., then it is your money that is gone. If the final recipients of the money make some poor trade or investments, then it is your money that is gone. And as above, if you lose everything, there is nothing you can do about it.
what happens if we all start parking our coins in these risk-free, no work money-making wallets?
Risk free? The risk is massive.