How It Works
(In a bit more detail)
Crypto Wallets
What is
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 Stable Coins like USDC, USDT, Curve, and other Cryptos like ETH, and yes, even Bitcoin.
How does
it work?
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).
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When you want to do something with your digital currency - like move it or sell it - your Crypto Wallet gives you the authority to do that.
Why does Medici use
Crypto Wallets?
The Medici Project uses Crypto Wallets for two reasons:
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The first is that a Crypto Wallet ensures that you always maintain ownership and 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.
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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?
Asset Rating
(how we do it)
The Medici Project uses a AAA - D scale to rate all digital assets (a reliable method used by financial companies since the early 20th Century). 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.
AAA
Savings
Grade
Best Quality
AA
Savings
Grade
Good Quality
A
Savings
Grade
Good Quality
BB
Investing
Grade
Mid Quality
B
Investing
Grade
Mid Quality
C
Speculative
Grade
Low Quality
D
Cause for
Concern
Lowest Quality
The rating system is used to build your investment portfolio.
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We re-evaluate all our holdings throughout the year, so if the status of a particular Stable Coin changes, it will be removed from the portfolio and replaced with something better.
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Our job is to keep producing returns, and keep you safe from bad actors taking advantage of you.
How you (and we) make Money.
Step 1
Staking
Capital is directed from your Crypto Wallet and "Staked" to (i.e. invested into) 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.
Step 2
Lending
The Liquidity pool will 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.
Step 3
Yield
As the borrowing fees are generated, they are automatically routed by a "Smart Contract" (a computer-readable contract) back to the Stable Coin owner - which is you. We reinvest the yield to produce more returns for you.
Step 4
Fees
The Medici Project will take an advisory fee. This fee will change as the rates of return change, so it may be higher or lower at times, but it will never be more than 3% of your investments per year, and you will always be able to see what the fees are.
How do I know it's safe?!
Financial & technological security is very important.
Here's how we do it.
Risk Rating Assets
The Medici Project rates all Crypto Assets before deciding on which ones make the final cut. This process allows us to carefully remove any assets that might increase the risk of capital loss. Remember, we can never guarantee total protection from loss of capital, but we have built systems to minimize risk.
Decentralized Architecture
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 use a blend of traditional (centralized) and decentralized architecture to minimize the amount of data we hold; and of course, any data we do hold centrally is encrypted.