After 7 months of sitting on the fence, I decided to go into the Cake DeFi rabbit hole, but not without doing some research and risk analysis.

This review is the product of that research and my hope is that it would help you too, in making an informed decision and understanding the risks of investing with Cake DeFi.

My focus was mainly on the Cake DeFi business model that helps it generate the high APYs and APRs it advertises. And to see how realistic and sustainable it is.

Before we dive into the details of this review, let’s take a quick look at the Pros and Cons of Cake DeFi.

Cake DeFi Pros and Cons

Pros

  • They have their own blockchain which tells me they came to build and stay.
  • The platform is backed by a duly registered company and founded by known and verifiable people.
  • Promotes transparency and tries to live up to the standard.
  • Offers attractive APYs and multiple earning opportunities.
  • Sustainable business model. A closer look shows that their returns and bonuses are justifiable and sustainable.
  • Cake DeFi maintains an emergency insurance fund called “the Secret Cookie Stash (SCS)” to protect users funds against any potential future losses arising from hacks, exploits, etc.

Cons

  • Their marketing systems can begin to sound and resemble what’s used by Ponzi schemes and HYIPs.
  • The founder is known to have been previously involved in some controversial projects.
  • To earn the high APYs they advertised, you have to invest in their coin and participate in lockup.
  • Cake DeFi is not available in all jurisdictions. You will need to check if the platform supports your country.
  • The base lending APY on Cake DeFi is below the industry standard.
  • Unlike similar platforms, you cannot borrow on Cake on Cake DeFi.
  • Supports a very limited number of coins.

What is Cake DeFi

Cake DeFi is a centralized (custodial) cryptocurrency platform that enables users to deposit their crypto and earn high APY returns through lending, liquidity mining, staking, and other investment opportunities.

The platform pays between 5% to 100% APY, depending on the investment program (staking, lending, liquidity mining, etc)  you’re participating in, and the cryptocurrency that you deposited.

Cake DeFi is owned by Cake Pte Ltd, a Singapore-based company with registration number 201918368M.

The company claims to be a member of the Singapore Fintech Association (SFA) and the Association of Cryptocurrency and Blockchain Enterprises and Start-ups Singapore (ACCESS).

A simple search on the SFA website proves that fact to be true (+1).

Cake DeFi team

Cake DeFi was co-founded by Julian Hosp (CEO) and U-Zyn Chua (CTO) in early 2019.

Julian is a professional medical doctor, accomplished writer, serial entrepreneur and internationally recognised blockchain and cryptocurrency expert.

He previously co-founded Lyonness and TenX (previously OneBit), both of which have been the major contributor to the negativity surrounding his name.

However, he’s not been indicted for any criminal offence. This means most of the allegations are just propagandas or unprovable facts.

Prior to co-founding Cake DeFi, U-Zyn was a blockchain engineer and principal consultant at Zynesis.

Zynesis is a blockchain consultancy firm that specialises in designing decentralized systems and applications.

Furthermore, he was a technical advisor at NextID and a blockchain architect at Sparrow Exchange.

How does Cake DeFi work?

Before you can do anything on Cake DeFi, you need to first Signup, complete KYC verification, and deposit any amount you’re comfortable with.

When you make the first deposit of $50 or more, you will be given a $50 welcome bonus immediately in the DFI coin.

This welcome bonus would be locked for 6 months, during which time it will also be generating interest for you.

You can withdraw the bonus after the 6 month period expires or leave it there to continue earning interest for you.

I suppose that they don’t want people to just signup, claim the welcome bonus and run with the money, that’s why they lock it for 6 months.

Interestingly, the locked bonus is earning you interest, which I think is fair game.

Make sure to use this referral link or code 306386 when signing up. Otherwise, you will only get $20 instead of a $50 welcome bonus.

Once you have signed up and made a deposit, you can start using and earning with any or all of the 3 Cake DeFi investment products:

  1. Liquidity mining
  2. Staking
  3. Lending

1. Liquidity mining on Cake DeFi

Cake DeFi enables users to deposit supported cryptocurrency pairs into its shared liquidity mining pools to earn high APR rewards (up to 92%).

These rewards are gotten from the transaction fees generated from both the trading activities in those pools on the DeFi Chain DEX and the DFI block rewards.

1.1 How does liquidity mining work on Cake DeFi?

As of today, August 9, 2021, there are 7 liquidity mining pools on Cake DeFi for you to mine from.

These include BTC, ETH, USDT, LTC, BCH, DOGE, and USDC, all paired with DFI.

To start mining, you need to deposit an equal amount of both coins.

For example, if you want to invest with $1,000 ETH you need to split the money into $500 ETH and $500 DEFI.

Don’t worry if what you have is $1000 ETH. Cake DeFi will automatically swap half of your ETH to DFI before both are added into the ETH-DFI liquidity pool.

Your rewards will begin dropping into your account 12 to 24 hours after you provided liquidity.

1.2 My thoughts on Cake DeFi liquidity mining

The only shortcoming I see with the Cake DeFi liquidity mining program is that it only supports DFI pools.

That means that you are automatically investing in DFI (whether you like it not) if you choose to provide liquidity on Cake DeFi.

It would be cool to have other pools that do not involve DFI which I suppose would come as the DeFi Chain DEX grows.

However, when I asked in their Telegram group whether they plan to support non-DFI pools in the future, the admin said “no news on that…”

This tells me other pools are never coming or at best will come ad a very distant future.

Furthermore, most of that high APR in the pools is coming from DFI block rewards rather than from trading activities in those pools on DeFi Chain DEX.

So it’s easy to have a false idea of how well the DeFi Chain is growing.

The APYs are being propped up with DFI to give an illusion of prosperity.

2. Staking on Cake DeFi

Cake DeFi supports the staking of DFI and DASH coins to earn high APY rewards (up to 104.4%) in real-time.

When you stake your coins with Cake DeFi you’re issued staking shares, which is more like a receipt of your deposit into the staking pool.

There’s a maximum amount of shares each pool can accommodate.

Once the number of shares is exhausted, further deposits are not possible, except existing users withdraw their deposits.

Staking on Cake DeFi

Staking on Cake DeFi

Staking rewards are paid out every 12 hours which you can choose to withdraw if you want.

You can also set the system to automatically reinvest your rewards to compound your earnings and grow your portfolio faster.

2.1 My opinion on Cake DeFi staking

Their staking business model looks legit to me.

They’re paying 5.4% APY for staking DASH coin while they earn 7.01% for operating a Dash Masternode.

And the over 100% APY on their native coin looks perfectly normal to me. These are indisputably modest and sustainable returns as far as I know.

I truly have nothing to complain about here. Except that, maybe they should try and include more Masternode coins to give users more options and opportunities.

3. Lending on Cake DeFi

Cake DeFi enables you to put your crypto to work by lending it for guaranteed APY starting from 3.5% to 8%.

As of today, the platform supports lending of 4 different coins, BTC, ETH, USDC, and USDT.

Lending on Cake DeFi is organised in batches.

Every week (Fridays), a new batch is started, with each batch lasting for 28 days or 4 weeks.

Within these 4 weeks, your funds would be locked (you cannot withdraw) in order to generate the expected APY.

After the 4 weeks, you have 3 options:

  • Choose to automatically roll over (auto-compound) your original capital and all accrued interests into the next batch and continue earning.
  • Withdraw only your earned interests and reinvest the original capital.
  • Withdraw both your original capital and the earned interests and stop earning.

Each lending batch is capped at a certain number of coins.

Once this limit is hit, no more funds would be accepted, and you will have to wait until the net batch is open to deposit.

However, if you have deep pockets and wants to invest more than the entire size of a particular batch, you can contact the team to discuss terms.

Unlike other CeFi platforms, Cake DeFi does not charge you any service or platforms fees for lending.

Rather it says that its revenue comes in form of commissions directly from its partners.

3.1 My opinion on Cake DeFi lending

When I asked what Cake DeFi does with the coins it receives from lenders, I was told they lend them to their institutional partners such as Sparrow, Genesis, and Signum Capital.

So whatever goes behind those doors, I and you can never tell.

And there’s no statute that dictates exactly how the company should use the funds it received.

As such we can only trust what they tell us.

This is very different from other centralized lending platforms that receive funds from lenders and issue them to borrowers. And paying or charging interests accordingly.

The need to trust is increased with lending on Cake DeFi.

Other Cake DeFi features

Aside from its 3 basic products discussed above, Cake DeFi has 3 other features to help you earn even more DFI and enjoy some special benefits.

These features are, the:

  1. Freezer
  2. Confectionary
  3. Referral

1. Cake DeFi freezer

The Cake DeFi Freezer enables you to lock up (stake) your DFI coins from 1 month up to 10 years to earn even more.

The longer you choose to stake, the higher the APY you get and the bigger the rebate on staking fee (up to 85%) you enjoy.

Take note that Cke DeFi takes 15% of your rewards from the freezer.

However, they give discounts on that 15% fee starting from 15% for a 1-month lockup to 85% for 120 months (10 years) lockup.

Thus the longer you lock up your DFI in the Freezer, the less the platform takes from your rewards as a service fee.

Rewards from the Freezer are credited into your wallet every 12 hours.

And you can choose to withdraw them, reinvest them into the regular DFI staking pool earlier discussed, or use them for liquidity mining.

No! You cannot reinvest rewards from the Freezer back into the Freezer.

2. Cake DeFi Confectionary

The Cake DeFi Confectionary program confers tiered VIP and Elite VIP status on users based on the BTC value of all the assets they hold on the platform.

The Confectionary is divided into two categories

  1. VIP
  2. Elite VIP

Both with 4 tiers each and members of each tier, enjoy unique benefits such as:

  • Special VIP interface
  • VIP tokens
  • Exclusive VIP Telegram group
  • Monthly insider market analysis
  • 1 free withdrawal every 3 months
  • Dedicated account manager
  • Dedicated email support
  • Private call/meeting with the CEO

The benefits you enjoy depends on which confectionery category and tier you belong to.

The VIP Confectionary has four tiers:

  1. Tier One: SWEET TOOTH EDITION (requires at least 0.1 BTC holdings.
  2. Tier Two: ASSISTANT EDITION (requires 0.5 BTC holdings)
  3. Tier Three: APPRENTICE EDITION (1 BTC holdings)
  4. Tier four: JOURNEYMAN EDITION (5 BTC holdings).

Similarly, the Elite VIP has 4 tiers:

  1. Tier One: ARTISAN EDITION (10 BTC holdings).
  2. Tier Two: PATISSIER EDITION (50 BTC holdings)
  3. Tier Three: CONFECTIONER EDITION (100 BTC holdings)
  4. Tier four: MASTER BAKER EDITION (500 BTC holdings).

Click here for details of the benefits accruing to each tier.

2.1 My thoughts on the Confectionary program

The Cake DeFi Confectionary program is very similar to the membership systems pyramid and Ponzi schemes use to lock in their members.

No! I am not saying that is what it is. It’s just similar and they could be using it only because it works as a marketing tool.

Furthermore, the more exposed you are to DFI on the platform the higher your chances of getting into the VIP program due to their multiplier system

For example, assets in the lending program have a 1x multiplier. Assets in the Freezer (DFI) has a 2x multiplier. And assets in the liquidity mining and staking pools have a 1.5x multiplier.

This means that your real assets would be multiplied by the multiplier value to boost your chances of getting into the VIP program and moving up the tiers.

The highest multipliers come from those that expose you more to DFI.

Again there’s generally nothing too wrong with encouraging people to get exposed to DFI more.

But it’s a much riskier asset than the more established coins like BTC and ETH.

And it further increases how much trust you’re putting on the Cake DeFi team.

As long as they live up to expectations, you’ll most likely be better off with the risk.

3. Cake DeFi referral program

Cake DeFi has a referral program that rewards you with between 0.25% to 1% of the total amount your referrals have invested on the platform.

The percentage you enjoy depends on how many qualified referrals you have.

A qualified referral is one who has completed KYC and invested at least $50 on the platform.

Fo 1 – 2 qualified referrals, you get 0.25% of their total investment on the platform.

For 3 – 5, you get 0.5%. For 6 – 9, you get 0.75% and for 10 referrals and above, you get 1%.

The referral bonus is calculated and paid in DFI every Monday as your number of referrals and their total investment change.

The amazing thing is that you earn this 0.25 to 1% referral bonus every year as long as your referrals remain invested in the platform.

Pure passive and residual income opportunity.

Cake DeFi withdrawals

The Cake DeFi withdrawal policy states that withdrawals can take up to 72 hours to process.

According to the team, they are required by law to review and flag all suspicious activity which adds to the withdrawal processing time.

However, in reality, existing users testify that withdrawals are usually processed within 24 hours in most cases.

Regardless, 72 hours is the highest withdrawal time threshold I have seen among similar platforms such as Nexo, Celsius, etc.

Most other platforms have 24 hours and 48 hours withdrawal time tops.

Conclusion

Cake DeFi provides users with a platform where they can put their crypto to work and earn rewards.

Its liquidity mining and staking programs have some of the highest APYs and APRs in the market.

However, the base APY for their lending program is quite low compared to what competitors offer.

Overall, I find the platform to be worth exploring. But only with an amount that I feel is convenient and comfortable for me.

What’s been your experience with Cake DeFi? Share with us in the comments section below.