From your perspective, all you need to do is:

1. Open an Account

2. Verify your Identity

3. Deposit

And just like that, you're earning a higher yield (up to 64x the national average!) on your cash than you could with any traditional bank.

... But if you're curious like me, you likely want to understand a bit more of what goes on under the covers ...

There are three layers: the Linus application layer, the smart contract layer, and the Ethereum blockchain layer.

Linus

Linus enables depositors to access decentralized, digital asset credit markets, without the need to ever touch digital assets. Linus takes care of that on your behalf. The only currency depositors touch is US Dollars.

Linus uses digital assets called stablecoins to transfer value, which is a fancy term for a digitized version of the US Dollar.

The specific stablecoin Linus uses is called USD Coin (USDC), which is issued by two major digital asset exchanges: Coinbase and Circle. USDC stablecoins maintain a $1.00 peg, enabled by a 1:1 ratio of US Dollars held in a trust account. 

How does this stablecoin peg work, exactly?

Let's say I have a hat that I'm selling for $1.00, and you want it. You give me the dollar and I give you the hat. Now when I exchange the hat for $1.00 with you, I also tell you that if you ever don't want the hat anymore, you can bring it back to me and I'll give you back your $1.00. I can do this because I have a hat printing machine, and don't need spend the $1.00 on materials to make the hat. I just put the dollar in a bank account and let it sit there.

Now substitute 'hat' for USDC, and that's effectively how the 1:1 peg works. Don’t just take our word for it - check out the audits yourself

Ok, Linus converts my dollars into stablecoins. Then what?

Linus converts your cash deposits into USDC, and then moves them into digital asset markets, dubbed 'liquidity pools', which are powered by smart contracts (more on this below). 

Smart Contract Layer

The smart contract layer is where the aforementioned liquidity pools live and operate.

What's a liquidity pool? 

A liquidity pool is a place where people can place their digital assets, to be used or interacted with by other people, in exchange for some return. A couple examples of these markets are lending/borrowing platforms and asset exchanges. Liquidity pools typically have rules programmed into them that dictate how assets can be used, and what fees are paid in exchange. Combined, liquidity pools contain assets worth hundreds of millions of US Dollars.

Demand for your dollar in these liquidity pools exceeds that of traditional financial markets, and so by relaying your deposits into them, Linus is able to generate return to provide your APY. The Linus APY returned depends on the supply and demand of digital assets into these markets, and Linus is built to leverage various liquidity pools.

Ethereum

Powering hundreds of thousands of transactions per day worth billions of US Dollars, Ethereum is the foundational layer upon which Linus and the smart contract-based liquidity pools operate. All Linus digital asset transactions into and out of the liquidity pools are secured using the shared, distributed ledger of Ethereum blockchain. 

Learn more about Ethereum at https://ethereum.org/.

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