DeFi Yield: A New Asset Class

Decentralized Finance (DeFi) is changing how we all think about money and investing, offering opportunities that were unimaginable just a decade ago. At Lulo, we’re introducing DeFi Yield as a new asset class designed to complement traditional investment portfolios.

But why is this significant, and how does it compare to the established giants and legacy formats of the financial world? Let’s break it down.

First, WTF is an Asset Class?

An asset class is a category of investments that share similar traits and are governed by the same rules. Traditionally, there have been three primary asset classes:

• Equities (stocks)

• Fixed Income (bonds)

• Realt Estate (property; residential, private, commercial)

Today, this list has expanded to include commodities, futures, and some “blue-chip” cryptocurrencies such as Bitcoin, reflecting the evolving financial landscape.

The Dominance of Traditional Asset Classes

The sheer scale of traditional markets highlights their significance:

• Global Equity Market Size: $109 trillion

• Global Bond Market Size: $133 trillion

Participation in these markets is widespread but not universal:

• ~60% of adults hold stocks in the USA (approximately 200 million people), either directly or through mutual funds, IRAs, and 401(k) plans.

• ~35% of adults hold bonds in the USA (approximately 116 million people), primarily via managed or diversified retirement portfolios.

Returns on Traditional Investments

Both stocks and bonds have been cornerstones of wealth-building strategies for decades:

• Stocks: The S&P 500 index has delivered average annual returns of ~10.3%, but with significant volatility. Negative return years, such as 2018 and 2022, underscore the risks.

• Bonds: The bond market averages 4–5% annual returns, offering more stability but far less growth potential.

While these returns have served investors well, they are far from guaranteed and often come with significant limitations.

Why DeFi Yield Is a Game-Changer

DeFi Yield, as positioned by Lulo, offers an innovative alternative:

• Higher Returns: Historically, lending stablecoins in DeFi (DeFI Yield) have outperformed bonds and even rivaled stock market returns, depending on the market cycle.

• Consistency: Unlike equities, DeFi Yield eliminates exposure to price volatility by leveraging stablecoins (digital dollars) like $USDC, $PYUSD, $USDT, and $USDS.

By depositing into Lulo, you can benefit from the crypto ecosystem without directly holding volatile assets like Bitcoin or Ethereum. Instead of worrying about price swings, you earn steady, risk-adjusted returns using stablecoins.

For those hesitant to dive headfirst into the unpredictability of crypto markets, DeFi Yield provides a reliable bridge — allowing you to tap into crypto’s growth potential while maintaining stability.

Stablecoins are opening up a vast array of opportunities for non-native crypto users to join in on the growht of crypto — you can think of them as digital dollars. To learn more about stablecoins, the companies utilizing them like PayPal, and their possible use cases, check out this article.

How Lulo Grants Access to DeFi Yield

We’ve built Lulo to make accessing DeFi Yield simple, safe, and rewarding.

Rate-Maximized Yield:

• Lulo integrates with six major over-collateralized lending pools across four leading liquidity venues, all on the Solana blockchain.

• Deposits are rerouted hourly to ensure users always earn the highest possible yield.

Flexibility and Choice:

• Users can deposit stablecoins of their choice, including: $USDC, $PYUSD, $USDT, and $USDS.

• Lulo ensures the best returns for all supported stablecoins.

Accessibility for All Investors:

• Lulo is ideal for crypto newcomers looking for simplicity and DeFi veterans seeking optimization.

A Perfect Complement to Traditional Investments

DeFi Yield doesn’t aim to replace all your traditional asset classes, but to complement them. Here’s how it compares:

• Stocks: While equities offer high-growth potential, their volatility can be a deterrent. Earning DeFi Yield provides steady, yet variable and reliably higher, returns.

• Bonds: DeFi Yield easily outpaces the average bond return of 4–5%, providing an attractive option for those seeking consistent growth.

• High-Yield Savings Accounts: Stablecoin lending rates regularly exceed those offered by traditional savings accounts or fintech apps, while offering more transparency about how your money is working for you.

Adding DeFi Yield to your portfolio allows for greater diversification, hedging against market turbulence, and reducing dependency on traditional asset classes.

Why Choose Lulo?

At Lulo, we’re pioneering the future of wealth building by providing:

• Sustainability and Reliability: Our system ensures stable returns over time.

• Ease of Use: Whether you’re a crypto newcomer or a DeFi expert, Lulo simplifies the process.

• Risk Mitigation: By focusing on stablecoin yields, Lulo offers exposure to crypto’s potential without the risks of direct purchasing of volatile assets.

• Community Support: Have questions? Join our vibrant communities on Discord or Telegram to learn more.

As the financial landscape evolves, so do the opportunities for growth. With DeFi Yield, you can take control of your financial future while enjoying sustainable and competitive returns.

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