Australian fintech firm Block Earner has officially gone live, offering ordinary investors a 7% fixed-rate investment product using decentralized financing technology (DeFi).
Block Earner has already caught the attention of big names in the crypto industry, closing a $6.4 million seed funding round last December. It was led by Framework Ventures and joined by Coinbase Ventures, DeFi Alliance, LongHash Ventures, as well as crypto veteran Kain Warwick, the founder of Synthetix, an Australia-based crypto derivatives exchange.
Jordan Momtazi, the co-founder of Block Earner, said in an interview with Coin-Crypto that the current economic climate in Australia makes products that offer returns on savings attractive, especially when it is practically impossible to achieve comparable returns using methods that are offered by traditional financial institutions.
According to an questionnaire conducted by Block Earner and Sydney-based market researcher Pure Profile, 86% of Australians have noticed the recent effects of inflation and 22% are concerned about how they will make ends meet given the rising price of goods and services.
Momtazi compares the yield benchmark difference between traditional finance and DeFi:
“The best return Australians can get from a traditional savings account ranges from 0.1-0.3% – compare that to a 7% product like Block Earner, it’s easy to see where people will end up.”
Momtazi continued to say that the whole point of Block Earner is to ensure that ordinary Australians have access to new technology without doing “heavy work” so that they can grow their savings over time.
Block Earner works by converting Australian dollars into a US dollar stablecoin called USD Coin (USDC). Block Earner lends that USDC to two primary DeFi protocols, called Aave and Compound, which give investors a return.
It is also worth noting that Block Earner is the first fintech company to allow mainstream integration into Aave and Compound.
While Momtazi promises investors will receive a fixed return of 7% through July this year, he added that Block Earner’s variable-rate product could potentially reward investors with returns of up to 18% per annum.
The burgeoning and largely unregulated realm of DeFi is not without risks, and companies like Block Earner remain exposed to the problems that occasionally arise in DeFi, such as malfunctioning smart contracts, the lack of demand for loan products and the liquidity pools (Aave and Compound ) suffer from some form of attack.
Related: Aave Launches V3 Liquidity Pool After Unanimous Board Decision
Momtazi stressed that Block Earner is a “conservative” company, stressing that the company “chose stablecoins like USDC because of its security and legitimacy”.
We believe being conservative is part of the long-term project. We believe that security and trust are a fundamental part of a long-term strategy, and we simply do not opt for double digital returns from other less regulated areas.”
Momtazi tempered the fears of crypto skeptics and continued to argue that Block Earner’s continued performance will gradually prove DeFi’s legitimacy over time.
“New things are always seen as scary, and that’s natural – we will prove the legitimacy of DeFi technology with continued performance,”
Although Block Earner is registered with Australian financial intelligence agency AUSTRAC and protects investors’ money with Fireblocks, one of the world’s largest digital custodians, the company was not required to apply for an ASIC license.
Speaking on the issue of possible regulation of DeFi products by the Australian government, Momtazi was completely optimistic and stated that regulation is a positive measure for the crypto industry, and Block Earner is ready to fit into whatever regulatory action Australian lawmakers see fit. .
“Legislation legitimizes this space in a much better way… and so far things regarding regulation have been very positive; enforcing standards around asset safekeeping and maintaining bare minimum levels of control – bringing all of that is only positive.”