Things to Consider before signing up with Cake DeFi, and why now might be a good time to do so


Prefacing this article, please be reminded of the fact that I am not a financial advisor and this is for educational and entertainment purposes only. As always, please do your own research and find what investments are best for you. 

What is Cake DeFi?

Cake DeFi is primarily a masternoding service that's been around since 2019, which in the cryptospace, is pretty impressive. You can tell how old school a place is if they're still running Dash nodes, which is one of the things that Cake Defi offers. I however, didn't get tuned into what Cake DeFi was until I last November when my Brave browser kept hitting me with Cake DeFi ads. Their primary bread and butter however are running DFI nodes. Now if you're unfamiliar with DFI, it's a blockchain that was essentially "built to support financial services, such as borrowing, lending, investing, saving, and everything else that a commercial bank can do. The difference between DeFiChain and a banking network is that DeFiChain is decentralised."  Now I am by no means a developer so I can't speak to the technical details, but from what I gather, this is NOT one of those node projects where you basically burn your tokens when you mint a node and then receive crazy returns in some ponzi-nomics scheme. DFI has practical applications and utility which gives it inherent value. In addition, similar to bitcoin, DFI has a capped supply of coins (approximately 1.2 billion) meaning that if the project survives long enough, it will/should have deflationary pressure. And also like bitcoin, this also means that as time goes on, the same computational input will generate less and less DFI. 

Ok, so why sign up now? 

I'm going to go into details about their current Easter promotion that just started today (April 11th) because money is probably what people care about the most, but then I'm going to go a bit into the unique nuts and bolts that I discovered about Cake Defi as I was doing my own research about it. 

Money first. So the regular bonus right now for signing up through a referral link (mine is https://cakedefi.com/?ref=416959) is $30 as long as you make a deposit of $50 , but right now there's an additional $10 dollar bonus, making a grand total of $40 with their Easter Egg Hunt promo. Now the $10 extra may not be a lot, but you get extra payouts if you can get friends and family involved. For instance, if you're able to get two people to signup, that's a bonus of $50 worth of DFI. And that's only one of the first tiers, for depending how many people you get to signup, the bonus goes up to $750:

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Now if you're skeptical about people schilling referral bonuses, you might be thinking how this might be sustainable for a protocol to manage giving these kind of payouts. Well the answer is simple, it's through masternodes. 

 

DFI Masternodes

Now if I was to run my own DeFI masternode, it would cost approximately 20,000 DFI. At time of writing this, the market value for DFI is $4.20 a token, and that's on the low side with the market tanking:

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That means the cost to run my own DFI node would be around $84,000--a sum that poor saps such as myself can't afford. And not only do I not have that kind of money to put up, I certainly do not have the technical knowhow to actually run my own node. (However if you're savvy enough, instructions are spelled out here: https://defichain.com/learn/run-a-masternode/

You can actually check to see how profitable DFI masternodes are with a handy-dandy calculator, but essentially DFI nodes right now generate a pretty decent return, according to stakingrewards.com, around 57.74% APR, or with compounding around 78% APY. Alternatively if you were to stake with Cake Defi, you could stake it for 37.1%, and then get a bonus for sticking it in their "freezer," where you can stake it up to 10 years (what is that, like a century in the crypto-timeline?) for approximately 87.91% APY. By comparing these rates on Cake Defi versus running your own DFI node, its easy to tell that the return difference is exactly how Cake Defi makes it's profits.

The noding process also explains why they invented the "freezer" concept in the first place--to incentivize people staking longer so that Cake DeFi knows and can map how many nodes they can spin up. If people are withdrawing huge sums of DFI in and out of the protocol, then it would be a lot of wasted effort to spin up and down nodes for whenever people go in and out. Therefore the "freezer" concept makes sense because essentially you're agreeing to lock-up your DFI for whatever period of time. 

 

Value in Transparency

And in the same vein as their nodes, one of the things that I greatly appreciate about Cake Defi is their transparency. Pretty much their entire operation is up for display, including how many nodes they're running, what their nodes are paying out, and also how much DFI or Dash they have at stake.  For each one of their nodes (7992 at the time of writing this article) you can get the address, status (active or not) and last reward payout information for each specific node. Anyone can go check this themselves by clicking on any node icon as seen here: 

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And now roughly 8,000 nodes may not seem like a big number, but you can see on DFI's website that Cake DeFI has essentially bought out the market:

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You can see by all the red space that Cake DeFI essentially has almost all of the masternodes running for the DeFi chain.  When I was reading into this, it greatly reminded me of Yield Nodes, because similar to Cake DeFi, the Yield Nodes team runs and operates the majority of some of their node projects too, thereby essentially cornering/controlling the market. And similar to Yield Nodes, there's also a lock-up period (similar to Cake's Freezer) for your initial principle so that they can map out better how much collateral they have to spin up new nodes. (If you want to read more about Yield Nodes, you can check out my article here.)

 

Learn & Earn

Like other places such as on Coinbase, Cake DeFi also has a "Learn to Earn" section where currently you can learn and earn $5 worth of DFI or $5 worth of BTC-DFI liquidity tokens. Not a whole lot, but hey, I'm not one to turn down free money. At some point in the future they will also be offering $5 dollars worth of ETH-DFI liquidity pool tokens as well. 

 

TLDR

So as long as the DFI blockchain is sustainable and profitable, so with Cake DeFi. Essentially Cake DeFI (with all their cutesy and witty names like baking or freezing instead of staking) profits by taking your DeFi, running master nodes, and then taking a cut of the profits for having run the node.  As far as node projects go, I would say that Cake is on probably the lower spectrum of risk, as the masternodes Cake runs help support the DeFi blockchain and have actual utility and transactional value. The more nodes Cake is able to run the more profitable they are, which is one of the reasons why they periodically run pretty good signup promotions and get people (like me) to agree to lockup their money for extended periods of time. 

 

Conclusion

So all in all, I'm happy that I got started with Cake DeFi because I do continue to see the value in what the DeFI blockchain is trying to create. Like i mentioned before, the regular signup bonus is $30 dollars,  but until April 25th signup is increased to $40 dollars, and then if you are able to onboard family and friends, that's an extra $20 dollars per person. And full disclosure, I've been thinking about writing about Cake for awhile, but this extra incentive pushed me over the edge to write about it now. 

If you're interested in what Cake DeFI has to offer, please consider supporting me and using my referral link: https://cakedefi.com/?ref=416959

 

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Messin' With Cryptos
Messin' With Cryptos

I've made a ton of mistakes along the way in the world of Defi and cryptocurrency. Hopefully by taking some of the lessons learned and cues i've went through, you'll be a bit more success


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