How It Works
(In a bit more detail)
a Crypto Wallet?
A Crypto Wallet (not to be confused with a "Digital Wallet") is a type of electronic wallet that is decentralized and able to hold digital currencies like USDC, USDT, Curve, ETH, and yes, even Bitcoin.
Unlike a traditional wallet that holds cash and credit cards, a Crypto Wallet holds passkeys that enable you to access & control the digital currency that you own on the blockchain (Think of it like a very secure notebook where you keep the code to your safe).
When you want to do something with your digital currency - like move it or sell it - your digital wallet gives you the authority to do that.
Why does Medici use
The Medici Project uses crypto wallets for two reasons:
The first is that a Crypto Wallet ensures that you always maintain ownership & control over your money. Even if The Medici Project were to suffer a fiery bankruptcy, you would not be affected, because you would still own your digital wallet, and thus the underlying funds.
The second reason is that we understand the future of money is digital, so we firmly believe setting our users up with a Crypto Wallet from Day 1 is the move. Why create tomorrow's products with yesterday's technology?
(how we do it)
The Medici Project uses a AAA - D scale to rate all Digital assets. We focus on Quantitative financial metrics, and more qualitative aspects, such as the quality of the Team behind the asset, or the code that underlays it.
The Rating system is used to build the underlying portfolios that your money is invested into.
Similar to how a traditional bank will lend your money out to borrowers they deem worthy, The Medici Project creates a return for our users by investing your capital with Crypto Protocols that we deem worthy.
We re-evaluate all our holdings throughout the year, so if the status of a particular asset changes, it will be dropped out of the portfolio and replaced with something better.
That way, we can keep your money producing returns, and keep you safe from poorly-designed assets, surprising price changes, and bad actors looking to take advantage of you.
How you (and we) make Money.
Capital is directed from your Crypto Wallet and "Staked" to (i.e. given to) a specific Liquidity Pool. A Liquidity pool is just Crypto-Speak for an exchange where people can borrow & lend crypto currency, except it all happens algorithmically: No humans = Lower fees.
The Liquidity pool will start to lend out your capital to willing borrowers. The borrowers receive your capital and in return, they pay you fees (much like interest on a loan, or similar to buying a bond). You won't see this bit, it's all happening lightning fast behind the scenes.
As the borrowing fees are generated, they are automatically routed by a "Smart Contract" (a computer-readable contract) back to the token holder - which is you. The Yield generated then ends up back in your Crypto Wallet, and is converted to the base currency The Medici Project uses - USDC.
As Yield is being returned to your wallet, The Medici Project will take a nominal amount as an advisory fee. This fee will change as the rates of return change, so it may be higher or lower at times, but you will always be able to see what the fees are at any given time. We believe in 100% transparency.
How do I know it's Safe?!
Financial & technological security is very important.
Here's how we do it.
Risk Rating Assets
As discussed above, The Medici Project rates all Crypto Assets before deciding on which ones make the final cut in our portfolio. This process allows us to carefully remove any assets that might increase the risk of capital loss. Of course, we can never guarantee total protection from loss of capital, but we can promise to do our best.
Because account insurance doesn't exist in the Web3 Space, we decided to create our own version. At The Medici Project, all accounts are insured to a certain degree based on the risk tolerance of the underlying assets. To put it simply, we take out insurance on your account based on how much risk we think there is.
In a traditional centralized architecture, if you experience one point of failure (i.e. someone hacks you), you are basically done for; they can access everything. So, we decided to use a revolutionary decentralized architecture. That means that your data is stored in a decentralized manner and can only be accessed by your specific key.