A savings account remains the go-to investment for most people who want to preserve their wealth in the medium to long term. The reasoning seems sound at face value.

Your savings are secure and, based on analyses of the best South African savings accounts, you can expect to earn an average 4.88% return.    

Looking just beyond the banks’ sales pitches, though, reveals that the picture isn’t so rosy. 

Inflation is currently at 5.9%. If you’re investing in an account that isn’t beating inflation, then you’re losing money.

That’s not even taking into consideration that over the past 10 years, the South African Rand has depreciated at roughly 4.3% a year against the US Dollar.

The direct result is that the average South African’s wealth, measured by international standards, has depreciated by 4.3% every year for the past 10 years. 

In practical terms, if you’ve held your savings in a South African savings account for 10 years, it has lost around 46% of its international purchasing power. Considering that we haven’t even factored in inflation in this calculation yet, it becomes starkly evident that the long-trusted savings account may no longer be a viable way to preserve wealth. 

The Revix Savings Vault makes it possible to save in a US Dollar-denominated account, without having to jump through any hoops, while delivering a 12% return. How is this possible? Let’s take a look.    

DeFi has rewritten the rules of the savings account

To most people, the word cryptocurrency still just means Bitcoin, but the crypto landscape has expanded exponentially to become about much more than just Bitcoin. Decentralised Finance, or DeFi, is an entire ecosystem of financial services that operates without any central authority and is available to everyone.

This new generation of savings accounts has largely been enabled by a specific type of cryptocurrency, called a stablecoin. Understanding stablecoins is key to understanding savings vaults. 

What is a stablecoin?

Stablecoins are different from traditional cryptocurrencies because they’re backed by an asset, such as the U.S. dollar or gold. In other words, they’re simply tokenised versions of the U.S. dollar, gold, or other reserve assets. This helps keep their prices stable, so they’re not subject to the same level of volatility as other cryptocurrencies.

Stablecoins are designed to be a middle ground between traditional cryptocurrencies and fiat currencies like the U.S. dollar. While they’re still a type of cryptocurrency and can be used as a form of payment, they don’t experience the rollercoaster of ups and downs.

A USDC-based savings vault makes it possible to effectively convert your savings to US Dollars while earning a 12% return on your stablecoins.

In this way, you’re avoiding the depreciation that you would suffer as a result of holding rands (+4.3% gain) while also earning an additional 12% on these assets.

Assuming you got 12% on the balance of your Savings Vault, this two-fold gain would translate into a +16.3% net return on your South African rands. Compare this to the actual return on your average traditional savings account, and the difference is astounding. 

How to start saving and earning 12% in USDC

Cape Town-based Crypto Investment platform Revix, saw the value of bringing a USDC Savings Vault to South African investors early on. For over a year, Revix’s flexible US Dollar-denominated savings account has offered an interest rate well above market.  

Now, the long-trusted Revix USDC Savings Vault has been upgraded to offer investors an even higher annual return. This enables you to effortlessly earn interest using your USDC holdings just like a high yield US dollar savings account. The only difference being that you’ll earn a far higher return than any dollar savings account can offer.

Starting 6 May, Revix’s Savings Vault will provide you with a 12% APY on your USDC. A minimum investment of 100 USDC is required to qualify, and there is a minimum lockup period of 30 days in order not to attract fees. T&Cs apply.