What Is the Rari Capital? Rari Capital is a DeFi platform with a growing suite of investment products for a wide array of different user profiles. Let's explore more in this article.
What is The Rari Capital?
Users can deposit their crypto assets on the Rari Capital platform, which automatically rebalances them into stable investment options with the highest yields. These changes take advantage of the "lego effect" of DeFi protocols and offer yields for a risk-averse mechanism that has never been observed before. Rari started with lending platforms and then added rebalancing between stablecoins and protocols. As a result, they can increase yields, which, when annualized, result in noticeably larger yields.
In a Nutshell, Here's How It Works
You start earning interest (currently around 18% APY at the time of writing this) when you deposit assets into the Rari Fund. You do this by minting Rari Fund Tokens (RFT) equivalent to your deposit. Rari Fund creates yield via a combination of protocol rewards including COMP, strategic stablecoin rebalancing, and lending protocols. The stablecoins that Rari Fund now holds plus any dividend produced are what make up the value of RFT. After that, when you attempt to withdraw your holdings, these RFT tokens are burned.
Rari Capital charges a 20% performance fee on the interest generated by Rari Fund. As stated on their homepage:
“The more money you make, the more money we make. We want you to win and our algorithms make sure that you do.”
This model seems to work well for Rari since it gives the Rari Capital team a clear incentive to manage the fund in a secure and efficient way.
What is Rari Governance Token (RGT)?
In addition to serving as Rari Capital's governance token, the Rari governance token (RGT) also serves as the main currency via which users can earn returns on their contributions to the liquidity pool. RGT is used, more particularly, for:
Governance: RGT token holders can participate in voting through on-chain governance.
Liquidity mining: Users can contribute to the liquidity pools on DEXs to earn liquidity mining rewards and a share of the DEX transaction fees.
What is The Rari Capital? What is Rari Governance Token (RGT)? -- Hopefully, this article can help you to understand it better.
