Introducing Flex: your new deposit account that earns compound interest in real-time
We’re changing the way we handle your deposits.
Today, we’re upgrading your USD and USD-stablecoin deposit account through a new API integration with Compound Finance.
Called Flex, your new deposit account will earn you 5% (as of 7 Jan 2020, the Flex rate is 4%) APY on your current balance (starting September 10th 2019, rates subject to change). You will still be able to withdraw anytime.
From now on, you’ll earn interest from the moment you deposit, before you’ve even made an investment order. You’ll earn interest on the amount in your balance, which will be paid out (and compounded!) in real-time, so — every second.
And although deposits are no longer FDIC-insured, they’re protected by collateral put up by Compound’s users — similar to how our platform works.
With Flex, there’s no downtime. No wasted earnings. And with anytime withdrawals, you can stay flexible.
What is Compound Finance?
Compound Finance is a blockchain protocol that uses smart contracts and cryptocurrency collateral to unlock new financial applications. It works like a liquidity pool — we lend your deposits to the pool in return for interest, while others borrow from the pool in return for putting up collateral. In other words, Compound is similar to Constant. To find out more about Compound, visit their website.
Can I still withdraw anytime?
Yes, you can withdraw at any time. The Compound protocol is designed for maximum flexibility, so whenever you withdraw or invest, your funds are simply pulled back from the protocol. This is automatically executed through the Compound API, so there’s no lag time.
How is interest calculated?
Interest is paid out every second, and will reflect in your balance. Interest rates will vary according to supply and demand in Compound’s lending market, but for now are fixed at 5% (as of 7 Jan 2020, the Flex rate is 4%) APY.
What about unmatched funds?
Money tied up in an investment order will not earn the Flex interest rate. This applies only to funds currently in your balance, which you can access from your accounts page. Flex is an upgrade to your balance.
Does this affect collateral balances?
No. This change only affects your USD or USD-stablecoin balance.
Why is there no FDIC insurance?
While held with our trust partner, Prime Trust, your deposits are FDIC-insured. However, we expect deposits will spend most of their time earning interest in the Compound protocol, so we can no longer guarantee FDIC-insurance at all times.
Are my deposits at risk?
Lending through Compound is similar to Constant. Compound’s borrowers can only borrow a certain amount of the collateral they stake, determined by the value of the collateral as well as its liquidity in the market.
Since Compound is a liquidity pool, rather than being peer-to-peer, you can withdraw anytime. To ensure this, Compound uses an algorithmic interest rate that incentivizes borrowers to repay early when most of the liquidity pool has been borrowed. As of today, the liquidity pool is worth almost $162m.
Compound also regularly audits their smart contracts and code, with auditors like OpenZeppelin and Trail of Bits giving their tech a clean bill of health. They also post bug bounties to catch vulnerabilities before they become an issue. You can read more about Compound here.
Can I opt out?
For existing customers with existing balances, you’ll be able to opt out within the next 15 days. Simply send us an email at firstname.lastname@example.org and we’ll sort that out for you. This means your existing balance and future balance will not be interest earning.
Constant is a P2P lending platform, and this new change will simply mean your money is put to work faster, earning interest from day one. Flex will be the default account for everyone going forward.
Questions? Comments? Feel free to reach out anytime, we’re always here to help.
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