Crypto has faced an existential crisis in recent months.
An industry created in response to one of the worst credit crunches in history almost imploded for the self-same reason.
Lenders and borrowers, including Celsius, Voyager, and Three Arrows Capital had entered into a risky game of cat and mouse finance, building highly leveraged positions in search of supersized yields.
The strategies worked when prices were up-only. But their positions collapsed as all risk assets hit correction territory earlier this year, with decentralised lending protocols like MakerDao and Aave closing in on liquidating collateralized loans.
Suddenly, clients of these platforms could no longer withdraw their assets. For many, life savings vanished overnight, and crypto looked no better than the overexposed financial institutions of 2008.
But news stories have emerged that show the problem is not with crypto itself. The issue results from avoidable human failings.
Look to China and Canada for pertinent examples.
Life savings locked in China
On Sunday, 11th July, peaceful protesters in rural China gathered outside a handful of banks with a simple request.
They wanted their life savings back. The problem was that four local banks were facing a deepening cash crisis, leading them to freeze millions of dollars of client deposits and putting hundreds of thousands of livelihoods at risk.
Instead of listening to the protesters’ concerns, authorities violently dispersed the gathering. And they went so far as to tamper with the nation’s Covid health-code system to stop more depositors from joining the protest.
Those who did make it, including the elderly and young children, were eventually hurled onto buses and detained in makeshift centres, ranging from hotels to schools, even factories. The irony is that while the focus is on crypto’s collapse, the issues run deeper.
Institutions worldwide have mismanaged funds, causing everyday depositors to suffer. In China, authorities suggest a criminal gang may have taken over the rural banks, leveraging shareholdings to coerce executives.
The suspects may have even stolen deposits using fictitious loans, something that couldn’t happen on the blockchain.
Outage halts Canadian financial services
Even where deposits appear safe, they’re not always accessible.
Just over a week ago, a second major network outage in fifteen months brought much of Canada to its knees.
Everything from automated machines to cashless payment systems stopped working, leaving depositors unable to access their funds. And with the internet and phone services down, even 911 calls failed to go through.
Interac, the leading email money transfer service, suffered an outage. The Bank of Montreal struggled to process transactions. And Royal Bank of Canada said its ATM and online banking services went down.
The outage resulted in retail stores only accepting cash, turning away customers with credit and debit cards. The episode illustrates how fragile a centralised system can be.
Particularly one so reliant on a single network to operate.
Decentralised finance stands strong
Despite all the market turmoil, decentralised finance hasn’t faltered.
The likes of MakerDao and Aave have continued to function as expected, while lending and borrowing services have remained fluid.
Collateralised stablecoins like Dai, USDT, and USDC have preserved their peg. Crypto has, in fact, worked perfectly — proving the problem is not with crypto. All the issues we read about only came to be because of mismanagement.
Chinese depositors might have lost their life savings because authorities allowed gangs to seize control of their banks. Canadians struggled to access their money because a service provider failed to keep its network online.
Voyager, Babble Finance, Celsius, and Three Arrows Capital collapsed because the people at the top got greedy, chasing unsustainable yields with overly risky investment strategies, ultimately leading to their downfall.
Yet through all this, our DeFi protocols have remained strong. And our decentralised ecosystem has survived.
Proving that if people behave appropriately, crypto is still the solution we need.
Seek safety with Elitium
This year has been a turning point for Elitium.
We’ve seen competitors collapse in days as their strategies proved unsustainable. All the while, we’ve kept our 8% APY on our US Dollar savings plans.
Even industry stalwart Binance is struggling to generate a yield for clients, whereas Elitium’s baseline rates have barely moved since our platform launched. And we certainly haven’t lost any client funds, largely because we refuse to touch high-risk assets like UST.
That’s why, with Elitium — your money is safe. And that only becomes truer by the day as we double down on compliance by onboarding more regulatory partners. Which, in turn, will enable us to launch our crypto card offering in the coming months.
On top of this, we have several significant partnership and technology announcements in the pipeline, which will only consolidate our position.
We’re as well placed as we’ve ever been.
Business as usual
There’s a degree of panic wherever you look.
Bitcoin’s price has collapsed. The Euro is down 25% against the US Dollar. And nearly every financial platform is facing headwinds.
The macro-environment has forced less responsible players in both crypto and mainstream finance to halt withdrawals (while the least responsible platforms face imminent collapse) — and yet, while the prevailing conditions have pushed prices way down.
For Elitium, it remains business as usual.
- You can still deposit and withdraw on demand
- You can still stake cryptocurrency and earn DeFi yields
- You can still operate a masternode for up to 28% APY
And that final point presents a compelling opportunity.
In place of holding Euros, you could exchange them for EUM and invest in a masternode. Given that the masternode offers such an attractive APY, all paid in EUM and with a solid EUM-USDT pair, you could insulate yourself from the Euro’s decline.
The lesson here is that if you work with people who harness the strengths of crypto instead of trying to game an entire ecosystem.
You have no cause for concern.
