Cake DeFi – How to Make Money on Cakedefi.com

Last updated on 21st July 2021

cakedefi.com

Cake DeFi Experiences – What you need to know about the Crypto Platform

On this website you will learn everything you need to know about Cake DeFi. The goal is to give you an overview of the platform’s function and products and my Cake Defi experience. In principle, with the help of this guide you should be able to invest with Cake DeFi and understand what happens to your money or cryptocurrencies.

However, please note: you should feel reasonably confident in dealing with cryptocurrencies. Only invest if you can really understand what is happening on the platform.

By the way, I am also invested in Cake myself and therefore have “skin in the game”.

Please note my disclaimer. I do not give any investment advice and do not make any recommendations. I am or was invested on all P2P platforms we report on. All information is without guarantee. Past developments are no indicator for future developments! All links to the investment platforms are usually affiliate/advertising links, where you get advantages and I earn a small commission.

What is CakeDeFi?

Cake DeFi was founded in June 2019 in Singapore by Julian Hosp and U-Zyn Chua. The stated goal is to make decentralized financial services (DeFi) and cryptocurrencies available and usable for everyone. It also aims to generate cash flow. Julian Hosp, in particular, is a very well-known crypto-influencer in German-speaking countries and has been active in this field for many years.

Cake is based on the DeFi Chain blockchain, and the associated coin is the DFI. So the “base currency” in which rewards (your return) are paid out at Cake is almost always DFI.

Somewhat unusually, the DeFi Chain is a fork from the BitCoin blockchain and thus not based on Ethereum like many other (new) blockchains. By the way, the Cake platform is an independent project. However, Julian Hosp and U-Zyn Chua, and thus Cake, are heavily involved in the organization of the DeFi Chain.

It is also important to note that DeFi Chain is a proof of stake blockchain. Unlike Bitcoin, for example, new coins are not put into circulation by mining, but distributed to the operators of so-called masternodes. Details about the DeFi Chain can be found here.

Investor Signup

Since Cake DeFi is a regulated platform, there is a guided signup process like on most other crypto platforms. The signup process is very quick and straightforward. In most cases, you can start investing after a few hours, or 1-2 days at most, after submitting the required documents.

You need to have a valid ID and upload recent selfies of yourself. The whole procedure is for KYC (Know Your Customer) requirements and money laundering prevention. Just follow the process until it is completed. Then you can start right away.

By the way, before you sign up, always pay attention to bonus promotions of the platforms to give you advantages and increase your return on investment. You can find a constantly updated list of all bonuses in my P2P platform comparison.

Payment Transactions on Cake DeFi

In order for you to invest on Cake DeFi, you first need to deposit cryptocurrency(s) into your wallet, of course. For this, you have three options:

  • Buying cryptocurrency by fiat money (e.g. Euros).
  • Exchange/swap of coins
  • Transfer via blockchain into the wallet

Buying Cryptocurrencies with fiat Money

Buying cryptocurrencies by fiat money on Cake is currently possible for BTC, DFI and ETH. Depositing the money is possible via Visa credit card, SEPA bank transfer, iDEAL payment service and Sofort. Visa and Sofort have processing fees.

This option is certainly relatively convenient and easy, especially to get started or if you want to do it “quickly”. However, Cake does not specialize in cryptocurrency trading and therefore does not necessarily have the best prices or charge a certain premium for it.

If you plan to invest a larger sum (several hundred euros) in Cake, it is certainly worth buying the cryptocurrencies from a larger crypto exchange like Binance or Kraken and then sending them to your wallet via blockchain. Very popular and easy for something like this is of course the BISON app (15 EUR starting credit) of the Stuttgart Stock Exchange.

To buy, proceed as follows: click on your profile in the upper right corner, then on credits. All cryptocurrencies that you can buy with fiat money have a “Buy” button.

If you click on buy, you will have several options to pay by fiat money. Choose the combination you need.

Exchange/Swap of Coins

Another way to deposit cryptocurrencies is the so-called swap. Here you exchange one cryptocurrency to receive another. This function is a classic approach in DeFi projects. In the end, you use the liquidity pools that are made available by the liquidity mining on Cake.

Switch via your profile in the upper right corner and the option Balance to the balance overview. All coins that offer the option “Swap” in their row can be obtained by swapping other coins (green frame).

Clicking Swap opens the dialog for swapping cryptocurrencies. On the left side you enter how many coins you want to buy. On the right side, the corresponding countervalue will be calculated automatically. You can also do it the other way around. On both pages you can change the currencies by clicking on the down arrow.

Also note that you can put the purchased coins directly into the staking in this dialog (slider on the green arrow). If you accidentally put the coins into the staking and didn’t mean to, it’s no problem. You can remove coins from the staking at any time.

Once the process is completed by clicking “Next” and “Buy”, you have successfully exchanged one cryptocurrency for another.

Similar to buying cryptocurrencies directly from Cake, this option may not be the cheapest. Therefore, it is better to check the exchange rates before exchanging a larger portion of your cryptocurrencies.

Transfer via Blockchain to Wallet

The last way to deposit cryptocurrencies into your Cake account is probably the one you will use most often. Of course, it is also possible to deposit cryptocurrencies via blockchain at Cake and then invest in the products.

Depending on which currency you want to deposit, you will use different blockchains. A special feature at Cake is that you can use the “native blockchain” for each currency, e.g. the Bitcoin or Ethereum blockchain, or the DeFi Chain. I won’t go into too much detail here, but make sure to always use the correct destination address. For example, if you send native Bitcoin to the DeFi Chain BTC address, your coins may be lost. If you are unsure, test the deposit with a very small amount first and check if everything works as it should.

When depositing via the ETH network, due to the high gas fee, an ETH address must be requested via support, which costs an additional one-time $70.

In the balance overview, which you already know, select the option “Deposit” for the currency you want to deposit.

In the following dialog your wallet address will be displayed via QR code. You can also find the address below the QR code and copy it. You use this address as the destination address to transfer your cryptocurrency from another platform to Cake.

The transfer can take a few hours, depending on the blockchain’s workload and the behavior of the donating platform. In rare cases, deposits or withdrawals may even be manually verified at Cake. Here, it can take up to 72 hours until your deposit is completed.

Where to buy DFI

The options to buy DFI are currently still limited. The big exchanges like Kraken or Binance are not yet connected to the DeFi Chain network. However, the DeFi Chain team is working on connecting more and bigger Exchanges.

The two biggest and most popular exchanges you can use to buy are Bittrex and Kucoin. I myself use Bittrex. There you can also deposit euros and buy DFI. Note, however, that when trading euros to DFI, the liquidity is lower. This ensures that prices can be slightly worse than when buying with BTC or USDT, for example.

On the DeFi Chain website you can find the currently connected exchanges.

How to make Payouts from CakeDeFi

Paying out your returns from Cake is a bit more complicated than depositing. You don’t have the option to convert your coins to fiat money with Cake. In most cases, a crypto exchange is required. You can send your coins back to a crypto exchange similar to the process when depositing via blockchain. There you should then be able to exchange them for fiat money or other cryptocurrencies. When sending DFI, you must of course again use one of the Exchanges that currently support DFI.

For the payout, go to the balance overview and select “Payout”.

In the corresponding dialog, enter the destination address of the wallet you want to send to. If you are unsure, I recommend that you first test the withdrawal with a very small amount and check whether everything works as desired.

How CakeDeFi works

On Cake you have the following options or products to invest in.

Crypto Lending for BTC, ETH and USDT

cakedefi lending

Crypto Lending allows you to lend your cryptocurrencies to other people for a certain interest rate. Cake will take care of everything else for you in this case. All you have to do is transfer your coins to Cake and “deposit” them into Lending.

If there are no cryptocurrencies to lend in the wallet yet, follow the description for depositing or buying above. If there are, you can start right away. There is one small peculiarity from my previous Cake Defi experience with lending: lending always takes place in batches. This means that the cryptocurrencies are collected for a certain period of time and only then lent. As long as the accumulation is still running, the deposit can still be adjusted.

On the Cake website, under Products, select Lending and then the appropriate batch that matches the coin you want to lend.

Depending on the cryptocurrency you want to lend, the interest rates are different. Some cryptocurrencies also have a tiered interest rate depending on the future price of the currency. Here’s an example from Bitcoin.

After clicking on “join” the dialog will open where you can enter how much of your cryptocurrency you want to lend. Choose the amount of cryptocurrency you want to lend and you are ready to go.

In the next dialog, notice the selection option for the automatic reinvestment setting. You have the option after the batch expires

  • 1. not to reinvest automatically at all,
  • 2. reinvest only the initial investment amount automatically or
  • 3. automatically reinvest your initial investment plus accrued interest at the end of the batch.

In the last step you will get a summary of your settings and conditions. Check the box to accept the terms and click “Join” one last time. You have completed the rental process. As soon as the start date is reached, you are ready to go.

Until the final start of the batch you have the possibility to change your settings. Select the appropriate batch for configuration.

Staking for DFI and DASH

cakedefi staking

Another interesting way to invest in Cake and generate returns in the form of cash flow is the so-called Staking. Here you can participate in a masternode pool with your cryptocurrencies for which staking is offered. As a reward for providing your coins in the Masternode pool, you get paid a proportion of the Staking Rewards. After deducting a processing fee, which Cake will retain directly, your rewards will be paid out to you as interest twice a day.

On the Cake website, under Products, select “Staking” and the corresponding cryptocurrency you want to stake. Click on Stake.

In the following dialog you choose how many staking shares you want to buy. The basic calculation is: 1 DFI equals 1 share of the pool. So if you want to deposit 100 DFI you enter 100 at “I buy” and 100 DFI will be calculated automatically on the right side.

What is interesting from my Cake Defi experience now is the following: you can also buy DFI staking shares with other supported cryptocurrencies. To do so, select the currency you want to use in the dropdown menu on the right. Add to the left how many shares you want to buy and it will automatically calculate how much it will cost you.

Note the following: with this process, the selected cryptocurrency is automatically exchanged into e.g. DFI and is thus “spent”. If you don’t want that, you should get the staking currency in another way. Clicking on Stake completes the process and you have successfully completed your staking.

Another very important feature of Cake DeFi is also hidden on the Staking page. It is the automatic reinvestment of your Staking Rewards. Only if you enable the “Automatic Compound Interest” feature, you will be able to achieve the stated interest rates.

The indicated interest rates are the so-called APY (Annual Percentage Yield), i.e. the interest including the compound interest. In principle, there is no reason not to use the automatic reinvestment, otherwise the interest earned will just sit around “uselessly” in your wallet. If you want to withdraw coins from the staking, this is possible at any time, unless you use the freezer. But more about that later.

To set the compound interest function you have to look for the function “Automatic compound interest” on the Staking page in the upper area (green frame) and click on the down arrow on the right (green arrow). There you can switch the compound interest function on and off at any time.

You can remove your coins from the staking at any time if you want. Of course, you will then receive fewer rewards. Adding additional coins is also possible at any time.

Freezer for DFI

cakedefi funds freezer

With the help of the Freezer you can literally freeze your DFI for a certain period of time. The advantage of this is that depending on the duration of your freezer, you can save fees and thereby boost your interest and cash flow.

As mentioned, Cake retains a small portion of your Coins Rewards from staking as a “service fee” for processing and providing the Masternodes. The longer the term of your freezer, the more fees you save. The downside is that you have frozen your DFI for a certain period of time and cannot withdraw or exchange it under any circumstances.

Another important thing to know is that even if you put DFI in the freezer, the APY for staking is dynamic and not fixed. The Freezer only affects the Staking fees, as described above.

On the Freezer page there is also a nice tool where you can experiment with different DFI amounts and time periods. You can try out the different parameters without any obligation to see what the bottom line would be for you (green frame).

At the bottom of the tool is a button “Stake DFI”. This is for the “normal” staking described above. Further to the right you will find the button “Freeze now” (green arrow). Attention: in the following dialog the settings for the freezer are taken over, which you have set in the tool above. Therefore check your settings again before you click on “Freeze”.

Further down on the freezer page you will find an overview of your already active freezers. You can have several freezers with different amounts and durations in parallel. You can also set whether the respective freezer is automatically reactivated at the end of the term. It is therefore worthwhile to adjust this if necessary.

Liquidity Mining

Now we come to the last, exciting product that you can use at Cake. This is the so-called Liquidity Mining (LM). If you don’t know what Liquidity Mining is, you can find an explanation in the Crypto Lending Tutorial (download).

Cake currently offers LM for the following crypto pairs:

  • BTC-DFI
  • ETH-DFI
  • UST-DFI
  • LTC-DFI
  • BCH-DFI
  • DOGE-DFI
  • More pairs will probably be added in the future.

Of course, before you can join the LM, you need enough cryptos in your wallet according to your wishes. In LM, the value of both currencies you put into the pool must always be equal.

Cake has recently adjusted the interface on LM, making it a “one click investment” by default with “Simple Mode”. This means that when you add your currency to the LM, half of it will automatically be exchanged for DFI. So if you have 100 USDT in your wallet and add it to the LM, 50 USDT will be exchanged into DFI to balance your pair.

This has Advantages and Disadvantages:

Advantages: you don’t have to worry about buying DFI in matching value.
Disadvantages: half of your initial currency is sold and the price at which you buy DFI at Cake is probably not the cheapest.

Selecting “Products” and “Liquidity Mining” will take you to the LM page. Search there for the pair you want to join. Then click on “Add Liquidity.”

Personally, I am not a fan of Simple Mode. On the Add Liquidity page you can deactivate the Simple Mode with a switch on the bottom left and get the “classic” dialog.

Once you have selected your LM pair, opened the dialog and disabled Simple Mode, the next step is to select how much of your cryptocurrencies you want to put into the LM pool. Clicking on “Max” will select everything available.

Again, to reiterate, the pair in the LM must always be exactly balanced in value. So if you select a certain amount on one side, the countervalue on the other side will be calculated automatically. Thus, the currency you have less in your wallet is also the limiting factor in your deposit.

The DEX market price stability bar shows how balanced the LM pool currently is. A higher percentage is better for you.

Clicking on “Add” will show you all the details again, which you need to confirm to finish.

How exactly does it work with the taxes on Cake DeFi?

As far as I know, there is no conclusive and universal legislation on the tax treatment. However, many tax experts argue that crypto lending/staking/LM of your coins extends their holding period to ten years before you could sell them tax-free in Germany. Without these techniques, the holding period in Germany is only one year, after which sales and price gains are currently tax-free.

The interest you earn is taxable immediately and in any case. There are also tax allowances for this. If in doubt, consult a tax advisor or other expert.

A first point of contact can also be the crypto tax group on Telegram. This information document is also available there.

Cake DeFi Risk

From my previous Cake DeFi experiences, here are a few points I can share with you that might be relevant.

How does Cake DeFi make money?

From my Cake Defi experience so far, the company’s business model is essentially based on two pillars:

  • Aggregation of cryptocurrencies.
  • Staking fees and liquidity mining.

In aggregation, Cake aggregates the cryptocurrencies that its customers lend into larger blocks and brokers them on for a set term. You can find details about this in the crypto tutorial (download).

As you’ve already read, Cake keeps a small service fee from your rewards from staking and liquidity mining. These represent the second part of Cake’s revenue.

What happens if Cake DeFi slips into Insolvency?

If Cake DeFi gets into serious trouble, that could mean trouble for you, too. Cake is a centralized platform, and thus a weak point like any other company or platform. By using Cake’s products, you give up control of your cryptocurrencies. Depending on what happens specifically, in the very worst case scenario, your coins are lost.

Does Cake operate profitably?

Cake DeFi is a fairly young company. However, according to its own information, it is already working very profitably.

How secure is Cake DeFi?

There is no absolute certainty. However, due to Julian Hosp’s name recognition, the (for crypto) good transparency and presence on social media channels, the company headquarters in Singapore and the quite large community in DACH, I consider Cake DeFi to be much more reputable and secure than many other crypto or P2P platforms.

My CakeDefi on-site Experience

Since cryptocurrencies tend not to be the focus of my blog, I obviously haven’t visited Cake yet. However, since Singapore is the hub of Asia, I could definitely imagine a visit there someday and would be easy to do. I am actually in relatively lively exchange with the team, as I have already talked about P2P loans at various events organized by Julian.

Advantages and Disadvantages based on my Cake DeFi Experiences

Before we get to a final conclusion of the platform, here is a summary of the pros and cons of my Cake DeFi experience.

Disadvantages ➖

  • Basis Coin DFI is only at the beginning
  • Limited options when depositing with fiat
  • Limited offering in lending
  • Platform risk (as with all crypto platforms).
  • Simplicity of the platform somewhat belies the risks (impermanent loss, DFI tokens)

Advantages ➕

  • Easy to get started even for beginners
  • Very high returns on staking and LM
  • High compound interest effect with with under multiple daily credits
  • Strong traction with Julian Hosp (growth)

Rating My Cake Defi Experience

With Lending, Staking and Liquidity Mining, the important basic products are available that many crypto investors want. Overall, from my Cake Defi experience, I can say that we have a very intuitive and easy-to-use platform here. The website  interface is very good, the company headquarters in Singapore is a good signal to investors (keyword regulation) and they are very concerned about transparency at Cake. There is an active Telegram community and a broad German-speaking investor base since one of the founders is Austrian. There is a lot of marketing going on, so one can hope that the company and DFI will continue to grow in value.

This also brings us to the more critical points: the biggest draw and face of Cake DeFi is and remains Julian Hosp. The link between Cake and the DeFi Chain Foundation is still quite close, even if work is being done to break it. The “DeFi” in the company name is misleading, as nothing about Cake is “DeFi” except the name “DeFi Chain”.

DeFi Chain, on the other hand, is a very young blockchain with an interesting approach as a Bitcoin-based blockchain. However, after the advance praise, DeFi Chain has to prove what it is made of first.

In conclusion, I would like to sum it up like this: Investors who have confidence in Julian Hosp and his team and want to invest early in a coin and a blockchain that is still pretty much at the beginning, can invest a (small) part of their crypto budget with a clear conscience. Caution is advised for all those who have no experience in crypto. The ease of use puts almost anyone in a position to invest. All those who are only eyeing the current high returns on staking and liquidity mining should also proceed with caution.

Is there a CakeDeFi Forum to exchange Information?

There are various places where you can exchange ideas with other investors and gain Cake Defi experience:

Reddit
Bitcointalk
Trustpilot

Does Cake DeFi have a Bonus or Referral Program?

Yes, there is. You can sign up to Cake DeFi through my link and receive $40 in DFI as a gift. It only says $20 on the home page, but you get a total of $40. If you are registered, you can also refer friends and acquaintances. To do this, you can find your personal referral link under the Referral section on the Cake website. On the page there is also a detailed description of how the referral program works.


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