In December 2021, Earnity closed a $15 million round of Series A financing, led in part by Bitcoin mining firm BitNile. Dan Schatt and Domenic Carosa, two of Earnity’s executives, seek to provide users with an online marketplace where crypto users can gain, collect, research, and exchange tokens and portfolios of digital assets.
The number of decentralized finance (DeFi) users grows daily, with new opportunities emerging rapidly. However, while DeFi purchases offer many advantages, they also come with significant risks. Even billionaire buyers are not immune to risks when it comes to DeFi. For example, renowned sports team owner and media proprietor Mark Cuban fell prey to an alleged scam by seeing his purchase of a DeFi token crash to zero in just a single day.
Cuban experienced a rug pull scam, a significant risk that DeFi buyers must be wary of. DeFi rug pull is a scam wherein product or project developers abandon the endeavor and run away with buyers’ funds. Back in 2020, it was reported that rug pull scams comprised 99% of all crypto frauds.
Over the past couple of years, several other risks in DeFi purchases have risen. Another is the risk of impermanent loss, which refers to the money lost by a buyer who has placed funds or locked their assets in liquidity pools for DeFi lending. Given the volatile nature of crypto tokens, there is always the threat of impermanent loss.
Furthermore, there are also technological risks involved in DeFi purchases, especially since transactions are performed over blockchain technology. If there are issues with a developer’s code, unknown errors might affect DeFi products and protocols.
Earnity, under the leadership of Dan Schatt and Domenic Carosa, plans on helping manage DeFi risks by creating a social-first platform where users can be educated on the financial system through community interaction and insight sharing. Additionally, news and commentary on the latest in the industry will be available.