August 22, 2022
Putting our money where our mouth is
Since launching earlier this year, Conduit’s Corporate Treasury product has been growing the balance sheets of our customers in Latin America. It’s been rewarding to give companies in the nations hit hardest by inflation a way to access DeFi and protect the value of their treasury.
Now, we’re expanding our product to the US, offering American companies 8 - 10% yield on their idle cash at a time when inflation is rising at historic rates.
And we’re including ourselves among our customers. We’re drinking our own champagne by depositing a portion of our treasury into our product, so we can beat inflation with the same high returns as our customers.
The Cash On Your Balance Sheet Is Losing Value
Inflation continues to surge in the US, reaching 8.5% in March 2022 – the highest rate in over 40 years. Consumers facing higher costs are looking for solutions to keep their purchasing power strong.
But it’s not just consumers who are facing the effects of inflation – companies are feeling the pain as well. As inflation increases, companies are losing value on the cash reserves on their balance sheets.
This is creating a headache for CFOs, who find themselves asking questions like:
- How should rising inflation be factored into operating expenses?
- How is financial forecasting affected when idle cash is eroding in value?
- How can I hedge inflation while keeping my treasury accessible?
Traditional ways of hedging inflation through financial instruments have higher risk profiles, or require sacrificing liquidity due to long lockup periods. These aren’t acceptable solutions for CFOs, whose primary goal is to “protect the treasury” and stay liquid.
Some companies are adding Bitcoin to their treasury as a long play, which is exciting and forward-thinking. However, this adds volatility to the balance sheet, and doesn’t provide a market-neutral solution to grow the treasury through yield. Plus, if a company is long on their Bitcoin holdings, they would not want to sell them for liquidity as needed.
To hedge inflation and reverse the squeeze on the value of their treasury, a secure, low-risk solution that maintains liquidity is needed.
Conduit Has A Solution
Conduit’s Corporate Treasury product puts balance sheets to work by connecting to secure, flexible sources of yield.
Our platform allows companies to earn yields of 8 to 10% APY, without long lockup periods. These high returns vastly outperform traditional savings accounts, providing a hedge against your cash-on-hand eroding away due to inflation.
How does it work? Our Corporate Treasury account leverages Decentralized Finance (DeFi) to earn yield through crypto lending of USD-backed stablecoins. Crypto lending is similar to lending in traditional finance, but built on the foundation of blockchain technology, to automate the process and cut out middlemen like banks. This increased efficiency allows added value to be passed on to you.
We’re Not Just Talking The Talk
Conduit isn’t immune to the problems we’re solving for our customers. The idle cash on our own balance sheet is seeing its value reduced over time by inflation. And, just like our own customers, keeping it in a traditional savings account offers minuscule returns.
The solution? Drink our own champagne. Eat our own dog food. Become our own client.
We deposited 30% of our own treasury into our product to enjoy the same returns our customers do.
This has allowed us to earn 10% APY on a portion of our own treasury, beating rising inflation. Plus, just like our customers, our deposits aren’t subject to long lockups – keeping our funds ready to withdraw as needed as we scale.
We have to say… we’re a happy customer.
Experimenting With New Yield Sources Without Exposing Clients To Risk
We’ve even carved out a portion of our own funds for experimentation. This has given us a unique opportunity to curate new sources of yield, without exposing our clients to undue risk. We try every protocol with our own money first.
Our goal is to be a conduit for our customers to the new, varied sources of earnings powered by DeFi. That means taking on the complexity of regulation, technical knowledge and risk mitigation to make the process as invisible as possible for users.
Our risk management process includes a robust assessment framework for integrating with new protocols. As part of that framework, we’ve designated a portion of our own funds deposited into the Corporate Treasury product as experimental. These funds are allocated to protocols and other DeFi earning opportunities outside of our production strategy, as a test.
This means that when we are looking into new opportunities, we are risking our funds, not those of our clients.
Come Earn Along With Us
We’ve enjoyed watching our own treasury grow through crypto-backed earnings, and we’re very happy to be bringing the opportunity to the US.
Are you interested in putting your balance sheet to work? Contact our sales team now!