Founded by a team of crypto enthusiasts who recognized a “significant opportunity to create delight with banking,” Vauld is already proving to be a quite promising venture. For starters, like many others in the community, the Singapore-based crypto bank intends to elevate crypto to the status of a separate asset class – negating the need for government acceptance and nationwide adoption for cryptocurrencies to disrupt the banking system.
It’s exactly the sort of push the crypto sector needs. And Vauld seems fairly determined to give it all that, and more. It’s also an exchange that offers services to ensure that technologies based on blockchain are usable in the present day.
The result? A holistic banking system for crypto and fiat currencies where they can be safely parked, traded, and much more. Plus, validation from several reputed names in the sector via a funding round of USD 2 million led by Pantera Capital, Coinbase Ventures, and more! In an age where Bitcoin continues to post fresh highs and rages on a relentless bull run, Vauld is uniquely positioned to bring in much needed adoption to the market, and the investors recognize this.
Identifying the Need
But how did the founding team come to identify the need for such a system in the crypto space?
2008’s financial crisis had some interesting developments. Some banks failed, while the ‘Too Big to Fail’ were bailed out. Quite contrary to what many of us imagined, it seemed that not only could banks fail, but banks and governments could also change policies. Consider events like the demonetization of currency notes in India, or hyperinflation in Venezuela, or similar situations in Zimbabwe and Argentina – these were some unexpected attacks on our understanding of how our banking systems and economies worked. And these were questions that challenged the Vauld team.
Now, retail banking is fundamentally about the three pillars of:
- Storage of money,
- Payments, and
- System of credit.
In this context, the Vauld team believed that money wasn’t doing what it should on the value-creation front. CEO Darshan Bathija points out – in 2016, “housing prices were at a peak, and the cost of capital was factoring into a third of the cost of housing”. This led to the cost of financing being inflated by more than 50%.
Moreover, even traditional fintech brands did not seem to be innovating enough. This left many significant upside opportunities in banking.
As many observed the flaws in the banking system, Bitcoin appeared to be a revolutionary concept. However, it too had two major drawbacks: a bottleneck of 7 transactions per second and the need for acceptance as a legitimate currency.
This is where Vauld came in.
It’s this gap between “promise and actual implementation”, discovered when the Vauld team was banking with Bitcoin, that drove their inception. Vauld’s belief is that the uncertainties in the system, the problem of low value-creation, and Bitcoin’s drawbacks could all be simultaneously addressed with the right implementation of peer-to-peer tech.
Vauld: The What
This brings us to the next aspect – what does Vauld really offer its users? Let’s have a look at the major services on offer:
- Store of value – By store of value, we don’t mean Bitcoin. We mean every Vauld user will be able to store their assets in a safe place with an exemplary assurance of security.
- Easy Spending – Honestly quite lacking in most of the crypto world, Vauld offers a convenient way of spending money that is backed by a strong overdraft system.
- Capital Growth – Of course, it’s only a bank when users are able to earn interest or borrow money at any time, without the need to liquidate their crypto holdings. Vauld does exactly that.
- Exchange – Cryptocurrencies can be easily exchanged for other tokens and FIAT currencies.
In other words – with Vauld, users can lend and borrow, buy and sell, and swap cryptocurrencies. BTC, ETH, USDT, BUSD, PAX, and XRP are some of the major tokens that users can swap on the platform.
Vauld’s automatic yield generation on dollars (stable coins) is 11% and on bitcoins is 7%. It is expected that a holistic system such as Vauld would lead to ultimate value-creation out of the existing crypto that users own.
Vauld: The How
Vauld’s seeking to change a number of things in the industry, such as:
- Banking the Market – An industry goal, this. Bringing the internet’s 4.5 billion+ users to the crypto market, and having them bank on the blockchain is ambitious, to say the least. Vauld happens to be aiming higher, seeking users with over $25,000 to kickstart their crypto banking journey.
- Automatic yield and not just trade functionality – After all, what sets Vauld apart from other crypto players in India currently is its automatic yield generation aspect. It isn’t merely a crypto wallet or a singular exchange. It’s a culmination of all that makes the crypto world exciting – decentralized lending, borrowing, trading, and more.
- Large-scale trust – Asking people to deposit their capital is not an easy task and requires building trust. It’s why Vauld has ensured licensing associations with leading players, along with security tie-ups. For example, BitGo is the custodian of Vauld’s funds. They are also currently working with licensing in the UK, the US, and Singapore.
While Vauld is competing with some major crypto giants globally, such as crypto.com, Celcius, BlockFi, and Nexo, it is currently the only crypto lending platform in India that also offers automatic yield generation. Of course, it also packs in weekly payouts, compounded interest, and the ability to withdraw at any time. Interest rates are on the higher end of the market, making Vauld a fairly compelling offering. “We most definitely have a unique proposition in India,” says Darshan.
But perhaps the most attractive USP – is that Vauld charges by far the lowest trading fees of any exchange in the market, certainly in India. At 0.05%, trades charges approach the closest they can be to being free.
With the kind of services and efficiency on offer, Vauld is ideal for money and wealth managers, investors, and very active large-volume traders. In other words, Vauld’s primary audience is high net worth individuals who, Darshan says, “want to earn yield but would rather not incur capital gains liability as well”.
Vauld: The Road Ahead
If 2017 was the year of ICOs, 2020 has been the year of DeFi. Cryptocurrency trading and crypto-backed loans, in particular, have been met with tremendous interest.
And of course, based on the total market cap, the cryptocurrency industry went from being a million-dollar industry to a multi-billion-dollar industry in a matter of years. However, with no regulatory bodies governing cryptocurrency, the masses can genuinely find it challenging to identify the right players, and growth can often be haphazard. Value creation isn’t happening on the scale that enthusiasts would like, and there is a need for a better system of credit.
Being the only exchange in the Indian market with its hybrid banking concept, Vauld has a promising journey ahead. Vauld’s referral program is certainly helping its journey – the platform offers 40% of the trading fees and 5% of all interest paid or earned, to all users who refer friends using their custom links. The program so far has been a runaway success!
With its partnership with BitGo for custody, Vauld will also be able to garner trust amongst users and possibly attract more people towards crypto investing. The potential in the crypto space for this model is as immense as the multi-dimensional challenges posed by it. But Vauld looks fairly set on acing its journey.
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