GenZ Savings Bond for a Stable Future
For decades Index-linked saving products are synonymous with safe and stable savings. Still, with the rise of inflation experienced by countries worldwide continuing to be exacerbated at a higher rate thanks to a widespread pandemic, wealth savings have become a core issue for many. Traditionally, saving based financial offerings have been targeted towards retirement or the elderly. In this increasingly advancing ecosystem, more and more people of all ages are beginning to understand the importance of savings. We live in extremely leveraged credit lifestyles, especially the young generation.
“Nations Savings systems are broken, there is nothing left for coming generations to hope for.”
Traditional financial savings products are broken, with negative or near-zero rates, overdue for inevitable remodeling and replacing with a system that will outpace the current rising inflation rates, guaranteeing its users’ savings potential.
Index-Linked Saving Needs a Bottom-Up Revamp
Most countries have index-based or treasury-linked savings offerings catering to their citizens, often tailored for specific demographics, creating a safe way for users to invest. However, bottlenecks with the legacy implementation's heavy reliance on existing banking rails, including bureaucratic red tape, targeted offerings for specific portions of the population, and potential lack of accessibility, make it harder to access some looking for safer ways to store and preserve their wealth. For the billions of people worldwide who do not even have a path to these legacy financial systems, this rings doubly true, as they have no way to protect against hyperinflation and create any resemblance of long term savings.
The impetus for a last resort positive yield available to everyone is greater than ever.
With the increase of internet access worldwide, the most potentially vulnerable populations for savings, the poor and the young must have a chance to start their savings journey early, efficiently, and transparently. As the internet becomes the primary banking mode, the service distribution is cheaper and more accessible. Saving services are becoming more widespread, but how can you create a service meant to reward users fully? This could be implemented on a blockchain-powered network with decentralized finance savings products, realigning the organization’s incentive structure so they do not need to charge users exorbitant fees to remain profitable. Using cryptocurrencies, especially US dollar-pegged stablecoins and other non-volatile assets, any everyday user with internet access will be able to capitalize on new savings possibilities. We have seen money markets like Compound protocol onboard thousands of users from all around the world just with software running on the blockchain.
Flip the ‘Granny Bonds’ Model For "Gen Z" with Smart Contracts.
If we look at how the UK Granny Bonds system used to work, we should begin to realize why a similar system accessible to everyone on the blockchain can provide a considerable benefit worldwide. Granny Bonds are a fixed rate savings bond for UK pensioners, officially known as 65+ Guaranteed Growth Bonds. These bonds, backed directly by the UK government, provide pensioners with the assurance that they will continue to access savings vehicles, allowing their savings to be affected by an increase in inflation even though they are no longer working.
A broken promise with no accountability for those who trusted it with their life savings.
With the widespread adoption of the DeFi ecosystem in recent months, it is evidently clear that the new generation has more trust in technology algorithms where code is law rather than existing inefficient systems. Now is the time for long-term sustainable savings options to become more relevant, specifically to younger generations like Gen Z and the disenfranchised. They can create a nest egg of savings to build a better and brighter future and take back control of their lives.
Instead of being backed by a government, such systems shall be supported by Index Savings products and revenue-generating offerings on the blockchain, keeping the annual percentage yield (APY) well above the yearly inflation rate. We have seen Index-based products getting introduced to crypto space in all shapes and forms, but mostly for yield aggregation and automated investment options for large buyers. Grayscale has pioneered a more centralized Index based product, offering cryptocurrencies alone generated huge adoption, accruing more than USD25 Billion+ in AUM in their Index trust fund, which is more than all DeFi combined value at the moment. The trust is based on existing traditional financial systems.
If we have to have a bond Index powering savings offering that can serve millions of users, then it must be algorithmic and completely automated through smart contracts, offering ultimate censorship resistance and accessibility for anyone from anywhere in the world.
Bringing more structured fixed-income products is vital for people of all ages to gain assured interest continuously. The whole ecosystem grows sustainably, addressing everyday users’ problems. This could be a significant tipping point for millennials and Gen Z, giving them the power to preserve their wealth safely for the long term. With the post coronavirus world highlighting exactly how much the younger generations are left out of the traditional financial systems, an opportunity is being created to empower those who used to be underserved and overlooked.
How would such an Algorithmic Index work, onboarding mainstream users onto DeFi and the crypto savings world?
At BlockSwap Network, we are working to accomplish this via a PoS bonded savings product that will ensure perpetual stable savings for everyday users direct from PoS chain native inflation. Stay tuned; we will be publishing more information on Saver Index and its inner-working in the coming days.
Website |+| Twitter |+| Join Discord
Disclaimer: The above content is published for informational purposes and should not be construed as an investment thesis.
