The latest features of the Circle Business Account, originally introduced as an attractive alternative to traditional Fiat business accounts for internet-based companies, seem to point to another type of competitor: the decentralized financial ecosystem (DeFi).
Circle, the Goldman Sachs-backed payment company and issuer of USDC stablecoin, announced its Circle Business Account Service on March 10, 2020. The accounts offered a range of services that businesses can use to take advantage of USDC, including multiple APIs that connect to traditional payment routes, accept US dollar-denominated payments like USDC, a USDC wallet service, and access multiple E. -Commerce marketplaces.
Given the returns that stable coins like USDC can generate on DeFi protocols, Account holders would have been encouraged to move their stablecoin funds to another location. DeFirate says loan protocols like Aave and Fulcrum are currently yielding 3.4% and 11.6% respectively against the USDC.
But on November 5th, 2020, Circle announced new high-yield accounts that account holders could encourage to park their funds in CeFi. In a Thursday tweet, Circle display a waiting list for new business accounts that deserve interest. According to their website, terms and prices vary between open accounts of 8.5% APY to 12 month accounts of 10.75% APY.
In addition, the returns occur daily and are paid weekly instead of monthly or even annually, as is often the case with traditional business accounts. This will bring the accounts closer to the line of many DeFi loan protocols that offer real-time rates.. The end result is a product that appears to combine the attractive returns and provision of interest from DeFi with the branded guarantees of centralized funding.
Circle’s offering is just the latest in a broader trend of the CeFi / DeFi convergence. In August, OKEx and Bitrue announced loan platforms that would combine the functions of DeFi and CeFi.
Raoul Milhado, CEO of Elitium, said so in a recent statement for Cointelegraph The assumption of DeFi functions (and vice versa) by CeFi would ultimately be an advantage for the end user::
Centralized and decentralized applications can be combined to create new types of economies and encourage more people to use DeFi […] By combining DeFi and CeFi, we can make the transition from a centralized to a decentralized world easier and ultimately win the centuries-old battle between DeFi and CeFi. “
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