The crypto bear market kicked off in full swing when Bitcoin plummeted to $21,000 due to inflation, interest rate hikes by the FED as well as the precarious macroeconomic conditions.
Needless to say, this is a challenging time for many people. While there’s no telling how long this crypto winter will last, our team at Trofi are looking to innovate and bring new ways of earning yield and income during these trying times.
By bringing expertise from Traditional Finance, Trofi is bringing structured products to the cryptocurrency landscape.
Let’s learn and understand what is
Earn+ (
https://trofi.group/earn-plus), and how it can generate yield in these market conditions.
What is Earn+?Earn+ is a non-principal protected structured investment strategy that allows you to earn an enhanced yield compared to the regular Earn rate (I.E just holding the asset and earning interest).
It consists of a component of selling an option which effectively monetizes the market’s volatility. When a market is volatile, options premium will be higher, therefore selling options during a volatile market (such as the crypto market) will receive higher premiums. Users who employ the Earn+ strategy will receive these premiums resulting in higher annualized returns than just by depositing for interest (which is still higher than what your bank will give you).
In Traditional Finance, this strategy is known as Dual Currency Deposit, and is usually considered a low-risk product offered to institutions. Trofi is now bringing this to all users for the cryptocurrency market.
We offer two types of Earn+ strategies :
1) Buy-Low Earn+
2) Sell-High Earn+
What is Buy-Low Earn+ ?Buy-Low Earn+ allows any investor to invest in stablecoins for a defined length of time or tenor. This is suitable for users currently holding stablecoins, who have buying power and do not mind potentially buying crypto assets at a discount to the current market price.
Buy-Low Earn+ is an investment strategy that allows you to earn higher yields than the regular earn rate. To do this, you must first set a price level (Buy Level) you feel comfortable with at the beginning of your investment term. Your investment funds will be locked during this period, and you can only access them at the end of the period (at maturity).
At Maturity, you will receive one of two things:
You receive interest plus investment amount in stablecoins if the market price finishes above Buy Level or;
You receive interest plus the equivalent of the crypto asset converted at the price level that you desire to hold the crypto, if the market price finishes below Buy Level.
Either way, you will receive a high annual percentage rate (APR) depending on your chosen buy level and tenor. If the market price finishes above your buy level, then you would have profited from the trade, and kept your investment in USDC. If the market price finishes lower than the buy level, it is still not a bad trade for you because you don’t mind buying the crypto asset regardless of the lower price, and the buy level was set lower than the market price at the time of subscription.
For example, as of writing, with a 8-day Buy-Low Earn+ (linked to ETH), coupled with a strike equal to the market price, users can earn up to 198% APR.
In Traditional Finance, hedge funds or savvy traders often use this strategy to monetize the market’s volatility. They can often earn both high APR and buy assets at a deep discount.
How it Works
Let’s take a look at the below example:
The tenor and APR are fixed for every subscription amount once you subscribe to the trade. At maturity, you receive back your subscription amount plus interest (either the original amount, USDC, or ETH in this example, which you do not mind buying.)
Payout FormulaNo conversion to ETH happens if the ETH market price is higher than or equal to the Buy Level. You receive back your initial invested amount in USDC plus 200% APR.
On the other hand, if the ETH market price is lower than the Buy Level, your initial USDC plus 200% APR will be converted to ETH at the Buy Level, and you will receive your payout in ETH.
Using Earn+ for your Investment StrategyNo one can reliably time the bottom of any market cycle, and it seems like the crypto bear market will last for quite some time. Despite all this crypto continues to innovate, with Ethereum’s move to to Proof of Stake (The Merge), the race for L2 scaling solutions with Optimistic and Zero-Knowledge roll-ups, and Bitcoin climbing back to good support levels, there is ample opportunity for every investor.
As long as you’re willing to hold on until then, your best bet should be to accumulate at a discount to the market price. One of the most important investment strategies is always to diversify your risk in various asset classes and time scale as well. You can split your intended investing amount on Earn+ into different tokens, strikes, and maturity dates.
For example, let’s say you want to invest $10,000 USDC on Earn+. You can split it between the tokens offered on the platform, e.g., ETH, SOL, AVAX, BNB, etc. You can buy 2,500 USDC in each token. You can further split between different Buy Levels and maturity dates within each token. This way, you can minimize risks such as buying too much in one asset, buying too expensive, missing out on buying, .etc.
Trofi allows you to easily do that, because there’s no minimum for each Earn+ trade, and you can easily enter into a Earn+ trade in a few clicks on the mobile app. There is no trading fee for using Earn+.
Trading Earn+ is as easy as a few clicks. The Trofi App provides a three-step guided interface.
Step 1. Select your Investment Asset and Alternate Asset.
Step 2. Choose your Strike, Maturity, and Subscription Amount.
Step 3. Confirm! As easy as that.
The Perfect Time to Use Earn+ is NowAs the saying goes, the best time to invest was yesterday, and the second best time is now.
There is no doubt that crypto market prices will rebound and rise again for the next bull run, and Trofi is building for it. Earn+ allows you to advantage of this accumulation phase by innovative yield-generating investment strategies like Earn+.
We will be looking at Sell-High Earn+ in our next article. Stay tuned for more content from the Trofi Team !
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