Review: Linus High Yield DeFi Platform

DeFi is quickly becoming one of the most impactful use cases that public blockchain networks are offering. Atomic transactions, smart contracts, and automation are driving costs down, democratizing finance, and surfacing very alluring yields on deposits.

With products like BlockFi and Compound, it takes a bit of technical know-how to participate in the space. For most in the cryptocurrency space, maintaining a wallet and working with exchanges is quite easy – but there’s a gap in participation for those that are not technically savvy.

If you want a no-fuss onramp to cryptocurrency DeFi gains, check out Linus!

What is Linus DeFi?

Linus is a simple Financial Service Provider (FSP) that accepts USD transfers and returns a high interest rate on that account. No settings, no bells, no whistles.

Behind the scenes, Linus takes the USD, exchanges it for USDC, and loads it onto Compound Finance to take advantage of their DeFi lending pool’s APY. 

In short, they handle the “techiness” on behalf of their depositors. Linus democratizes DeFi for those who don’t or can’t use DeFi themselves.

Linus has just launched out of private beta and is open for new account creation. Here’s the overview of what they have to offer.

Pros

No fees

Linus currently has no fees, at all.

They profit directly from the APY differential between their rates and Compound. 

Extremely easy

Linus only allows two actions: deposit and withdraw. You don’t need to understand cryptocurrency to take advantage of its power.

Better rates

Linus’ APY puts savings accounts and other investment products to shame. Their current (variable) APY is a monster 3.5% – topping both the 2.3% inflation rate and Marcus’s 2.05% 12mo CD.

No term limits

No need to lock up your capital in CD to get this rate – or suffer a penalty for early withdrawal. Deposit or withdraw at any time.

Instant accrual

Due to the instantaneous nature of DeFi, Linus accounts accrue interest every second – you don’t need to wait 30 days (or years) to get your interest.

USDC stability

Compared to Dai, USDC is an audited 1:1 backed stablecoin. This allows for a large liquid safety net for withdrawal needs.

Cons

No insurance

High risk, high reward. Linus does not offer insurance on their products at this time. If the underlying assets are lost, there is no recourse (as is the case when using any DeFi products). 

However, they are pursuing adding insurance policies through on-chain insurers (like Nexus and Onyx) and off-chain as well.

Variable APY

DeFi rates will go down over time. Though common investment products suffer the same variable APY, products like CDs do offer stability in the face of flux.

Unlike some competitors who adjust APY live, Linus only does this monthly.

Lower APY

USDC interest rates are typically lower than other cryptocurrencies.

Dharma, a similar product, leverages the same technique using Dai and offers nearly a 7% APY at present (skyrocketing to upwards of 20% during Black Thursday chaos, but then falling to 3% in the aftermath). 

Comparatively, putting GUSD directly on Compound gets you 8.6% (without the easy account, though).

USD only

At present, there are no options to deposit any other Fiat or crypto currencies. This tracks with their positioning towards the non-crypto userbase, but it does leave something to be desired for those like me (especially when Dharma allows for Dai deposits).

Compound only

Though they are actively pursuing diversification, Linus currently leverages Compound Finance singularly. This leaves a single point of failure open for DeFi protocol abuse – if Compound fails, Linus fails.

On top of that, by only using a single platform, Linus’s APY is essentially tracked to Compound. As they diversify, we’ll see this rate become a bit more stable.

No transparency

Compared to Compound’s public transactions and USDC’s audit trail, Linus does not offer any audits or transparency reports (similar to any bank and how they use your money).

Though on-chain transaction monitoring is in consideration, you must be able to reconcile that investment businesses set up without transparency could model ponzi schemes. 


Ultimately, I’m a fan of Linus. I spent some time talking with their founder Matthew Nemer and believe they have strong, intelligent leadership to guide them through a highly competitive DeFi landscape.

Check out Linus for yourself! [referral link]

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