Goldman Sachs-backed payments company Circle Business Account appears to take aim at a different kind of competitor at the decentralized finance (DeFi) ecosystem.
It has been reported that the accounts featured a suite of services designed to help businesses leverage USDC, including APIs that could connect to traditional payment rails, accept dollar-denominated payments as USDC, a USDC wallet service, and access multiple e-commerce marketplaces.
However, given the yields stablecoins such as USDC can generate in DeFi protocols, account holders would have been incentivized to move their stablecoin funds elsewhere.
According to DeFirate, lending protocols such as Aave and Fulcrum currently yield 3.4% and 11.6% on USDC.
Will CeFi meet, or compete, with DeFi? Circle's new high-yield stablecoin accounts attempt to mirror features commonly seen across lending protocols https://t.co/ieGqbppbcU — Cointelegraph (@Cointelegraph) November 7, 2020
On November 5, 2020, Circle announced new high-yield accounts that may encourage account holders to keep their funds parked in CeFi.
In a Tweet, Circle announced a waitlist for new interest-bearing business accounts, as their website said that, terms and rates will range between the open-term 8.5% APY accounts, to the 12-month 10.75% APY accounts.
Circle is planning to introduce short and medium term high yield interest rate business accounts built entirely on #USDC. Starting at 8% APY, make sure to secure a spot on the waitlist today. https://t.co/rAjbWRTDrB Restrictions will apply. — Circle (@circlepay) November 5, 2020
The report said that the yields will be accrued daily and paid weekly, as opposed to on a monthly or even yearly basis often seen in traditional business accounts. This will bring the accounts closer in line with many DeFi lending protocols, which offer interest in real-time.
The end result is a product that appears to combine the attractive yields and delivery of DeFi interest with the brand-based guarantees of centralized finance. Circle’s offering is just the latest in a wider CeFi-meets-DeFi trend. In August, OKEx and Bitrue announced lending platforms that would blend DeFi and CeFi features.
Raoul Milhado, the CEO of Elitium, said that CeFi adopting DeFi features (and vice-versa) would ultimately be a boon for the end-user.
Thus, he added:
“Centralized and decentralized apps can be combined to create new types of economies and to encourage more people to use DeFi […] By combining DeFi and CeFi, we can make the transition from a centralized world to a decentralized world more smoothly and, ultimately, win the age-old battle between DeFi and CeFi.”