Danielius (co-founder of BitDegree) discusses with Salim Daoues (head of engagement at YouHodler), who tells more about YouHodler and how to keep users' funds safe.
You can listen to the interview on Twitter.
The Story of YouHodler
Dan: Could you let us know a bit more about YouHolder?
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What is Yield Farming in Crypto? (Animated Explanation)
Salim: YouHodler is a FinTech platform based in Switzerland. We are building the next Web3 banking.
We believe that crypto is here to become an evolution of finance. If it does not replace it, it is the next financial movement in this world.
We will be building bridges between traditional finances and Web3 finance. We have a platform, where you can find all the building blocks of this project. We have wallets, a conversion exchange between fiat and different cryptocurrencies, and a loyalty program, which we will dive into a little bit later when we start talking about yield.
The idea here is to build a one-stop shop for all your crypto needs, and we have been in the market since 2018. YouHodler is here to stay and to be one of the top platforms in the future.
YouHodler's Safety Features
Dan: You know that probably the most important question is safety. So how do you manage the two worlds of traditional finance and Web3? How how does it work? And can we be safe with YouHodler?
Salim: Yeah, exactly. So I started by saying that YouHodler is a Swiss platform, and that also puts more responsibility on our side to be up to that label. Everything that is Swiss is based on precision, security, etc. We invest quite a lot in the security of our users’ assets.
For now, we have custodial wallets, which are protected by a Ledger Vault.
We invest a lot in human resources to make sure that systems are secure and hacker-proof. And most of all, the management is really doing tight risk management. The founders of the company and the board come from traditional finance, so they have vast experience in making secure financial environments, and we are applying that.
Probably everyone here is acquainted with the crypto winter, which we have been in the previous months. All of these events happened there, like the collapse of FTX, and different other platforms going down. This happened not necessarily because of technical securities. It was more because of the risk management. We learn from these experiences.
The fact that we are still active and growing in the market shows that managing risks effectively leads to a sustainable business. This is crucial. It might also be a good topic to discuss further, especially in relation to yields.
We don't use customer funds for any external purposes. When you deposit your funds, they remain in your account. No one takes them out of the platform or uses them in other protocols, like staking elsewhere. When you deposit, you can be completely confident that your funds are secure and not managed by a third party.
Returns on YouHodler
Dan: In simple terms, Ledger Enterprise holds users' funds in custodial wallets. This means your cryptocurrency always stays in that wallet. However, the platform gains extra liquidity from these customer deposits. So, even though you don't access the customers' cryptocurrency directly, you can still offer them the returns they're looking for.
Salim: Let's get straight to the point and cover some basics about yield generation. Many of you might be familiar with terms like staking, which involves locking your cryptocurrencies in a wallet or platform. An example of this is Ethereum's staking, which is part of its Proof-of-Stake mechanism. By supporting the network operations, you earn rewards or yield.
Another way to generate yield is through lending and borrowing. You can lend your funds and earn a portion of the rewards when the borrower pays back interest. In the realm of decentralized finance (DeFi) and centralized exchanges, there's also the method of providing liquidity to pools. By doing so, you receive a share of the transaction fees, as seen on platforms like Uniswap and other decentralized exchanges.
However, at YouHodler, we don't utilize any of these methods. Why? Because each of these strategies carries its own set of risks. For instance, staking and liquidity provision expose users' assets to potential losses. Even with thorough research, unforeseen circumstances can lead to losses.
Our approach at YouHodler is different. We operate on a real yield model, which is essentially a profit-sharing structure. As a platform with over 100 employees, we have various revenue-generating products. These include our exchange with its associated fees, and our lending service, where we earn interest. We use the revenue from these sources to pay our customers. Essentially, the yield we offer comes directly from our earnings. Furthermore, we view this yield offering as part of our loyalty program.
One of the key advantages of YouHodler is its stability. Unlike many other platforms, we don't rely on outside investment or the sale of tokens to fund our operations. This means users don't need to purchase any tokens to earn yield. Additionally, we don't require users to lock their funds to receive yield. We've consistently provided competitive rates to our customers for the past five years.
Our focus remains on optimizing our platform for our users. Over the past five years, we've received positive feedback, with users praising our weekly payout system and the flexibility to withdraw funds whenever they wish.
