You may have seen that Binance offers something called "Dual Savings" in their earn tab but didn't know exactly how it worked. In this post I'll explain how it works.
With the dual savings program, it's not risk free. In fact, there's more risk to it than you might think (compared the other earn services Binance offers) which is why the rates they pay are quite good (40% as an example). Just as the saying goes, risk always goes hand in hand with rewards. The riskier something is, the more reward you get. The opposite holds true as well.
So the way the dual savings program works is, you get paid in either a stable coin (of your choice) or Bitcoin. Depending on the price of Bitcoin on the settlement day, that will determine which coin you get paid in. If the price of Bitcoin is higher than the "strike price" you get paid in stable coins at the agreed upon interest rate on a pro rated basis at the time you subscribe to it. However, if the price of Bitcoin is below the "strike price" you get paid in Bitcoin based on the terms at the time you subscribed to the dual savings program.
So in a nutshell, on the settlement date, if the price of Bitcoin is below the strike price you get paid in Bitcoin. If price is above strike price, get paid in stable coins.
Here's where the risk comes in. Let's say that the price of Bitcoin plummets dramatically under the strike price. Irrespective of the price of Bitcoin, you get paid a predefined amount of Bitcoin as per the agreement. This means that the dollar amount of that Bitcoin could turn out to be in fact worth less than the amount you put in to the subscription.
In some sense, the dual savings program is a mix of a futures contract and an interest bearing program.
If what I've written above makes no sense to you, here's a short 4 minute video where I explain it more in detail
Hopefully this post here has given you a better idea of exactly how Binance's Dual Savings program works.
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