Australian startup to give fixed-rate direct access to DeFi to the general public

Block Earner has raised $6.4 million in seed funding and is ready to offer Australian investors stable returns from Aave and Compound.

Block Earner, an Australian fintech business, has launched, giving regular investors a 7% fixed rate investment product through the use of decentralised financing (DeFi) technology.

Block Earner has already garnered interest from prominent figures in the cryptocurrency business, having closed a $6.4 million initial fundraising round last December. Framework Ventures led the round, which was also attended by Coinbase Ventures, DeFi Alliance, LongHash Ventures, and crypto veteran Kain Warwick, founder of Synthetix, an Australian-based crypto derivatives market.

Jordan Momtazi, co-founder of Block Earner, told that Australia’s present economic condition makes products that offer returns on deposits attractive, all the more so since it is almost impossible to get comparable rates using traditional financial institutions’ techniques.

According to a survey done by Block Earner and Sydney-based market researcher Pure Profile, 86% of Australians have observed the recent effects of inflation, and 22% are anxious about how they will make ends meet in light of the rising cost of products and services.

Comparing the return benchmarks for traditional finance and DeFi, Momtazi stated:

“The best returns available to Australians from typical savings accounts vary between 0.1 and 0.3 percent – when compared to a 7% product like Block Earner, it’s simple to see where consumers will end up.”

Momtazi stated, “The entire objective of Block Earner is to ensure that regular Australians have access to cutting-edge technology without having to do any “heavy lifting” in order to grow their savings over time.”

Block Earner operates by converting Australian cash to a stablecoin denominated in US dollars called USD Coin (USDC). Block Earner invests that USDC in two key DeFi protocols, Aave and Compound, providing a yield to investors.

Additionally, Block Earner is the first financial startup to provide widespread connectivity with Aave and Compound.

While Momtazi guarantees investors a set 7% return until July of this year, he stressed that Block Earner’s variable interest rate product may reward investors with up to 18% annual profits.

The nascent and largely unregulated world of DeFi is not without risks, and companies like Block Earner remain vulnerable to the issues that occasionally arise in DeFi, such as malfunctioning smart contracts, a lack of demand for lending products, and attacks on the liquidity pools (Aave and Compound).

Momtazi emphasised Block Earner’s “conservative” nature, noting that the company “choose stablecoins like USDC for their security and legality.”

We believe that conservatism is necessary for the long term success of the enterprise. We feel that safety and trust are critical components of a long-term plan, and we are thus not seeking double digital returns in less regulated sectors.”

To allay crypto doubters’ anxieties, Momtazi stated that the continuous performance of Block Earner will gradually demonstrate DeFi’s credibility over time.

“New things are inherently frightening, which is understandable — we will demonstrate the legitimacy of DeFi technology by continuing performance,”

While Block Earner is registered with the Australian financial intelligence agency AUSTRAC and secures investors’ cash with Fireblocks, one of the largest digital custodians in the world, the company did not need to seek for an ASIC licence.

When asked about the possibility of the Australian government regulating DeFi products, Momtazi was completely optimistic, stating that regulation is a positive measure for the crypto industry and that Block Earner is prepared to comply with whatever regulatory measures Australian legislators deem appropriate.

“Legislation legitimises this industry much more effectively […] and the regulatory environment has been really supportive thus far; establishing standards around asset custody and maintaining bare minimum levels of audits — to put that all together is only a great thing.”

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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