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Comparing HEX Staking Returns to Traditional Certificates of Deposit

June 9th, 2024 by Chrispyman

 

1.0 Introduction


Traditional Certificates of Deposit (CDs) have long been a popular choice for their stability and guaranteed returns. However, with the rise of cryptocurrencies, new opportunities such as HEX staking on PulseChain offer the potential for significantly higher returns. In this post, we will compare the returns from HEX staking to those of traditional CDs, providing insights into the potential benefits and risks of each type. Additionally, we'll demonstrate how HEX staking can still produce returns equal to or better than CDs, even if the HEX price drops, provided it doesn't fall below certain levels.


The global Certificate of Deposit (CD) market was valued at approximately USD 7.2 trillion in 2023 and is projected to reach USD 9.4 trillion by 2030, growing at a compound annual growth rate (CAGR) of 5.2% during the forecast period. This market includes various types of CDs, such as short-term, mid-term, and long-term, and caters to different applications including personal, enterprise, and government investments​ (Verified Market Reports)​.


Note: The HEX data presented is based on estimated HEX share rates and payouts for illustrative purposes. The assumption is that the user is starting with 1m HEX at the price of $0.006 per PulseX Dex.


1.0  Short-Term Commitment: HEX Staking vs. CDs

Short-term commitments typically range from 30 days to 1 year. Here’s how HEX staking compares to traditional CDs.


Traditional CDs:


·         APY: 0.5% to 1.5%

·         ROI: 0.5% to 1.5%


HEX Staking:


·         APY: 7.78% to 9.57%

·         ROI: 0.64% to 9.57%


With a stable HEX price floor of $0.006, short-term HEX staking offers significantly higher returns compared to traditional CDs. Even if the HEX price drops, it needs to remain above $0.00599 to match the lower end of CD returns (0.5% ROI).


 

2.0  Medium-Term Commitment: HEX Staking vs. CDs

Medium-term investments range from 1 to 3 years.


Traditional CDs:


·         APY: 1.0% to 2.0%

·         ROI: 3% to 6%


HEX Staking:


·         APY: 9.57% to 11.58%

·         ROI: 9.57% to 23.16%


For medium-term commitments, HEX staking continues to outperform CDs with APYs reaching up to 11.58% and an ROI of up to 23.16%. The HEX price needs to stay above $0.00564 to match a 3% ROI from CDs.


3.0  Long-Term Commitment: HEX Staking vs. CDs

Long-term commitments typically range from 3 to 5 years.


Traditional CDs:


·         APY: 2.0% to 3.0%

·         ROI: 6% to 15%


HEX Staking:


·         APY: 18.26% to 24.32%

·         ROI: 277.91% to 370.13%


In the long term, HEX staking provides returns far surpassing those of CDs, with ROIs reaching up to 370.13% and APYs up to 24.32%. To match a 6% ROI from CDs, the HEX price would need to stay above $0.00140.


 

4.0  Very Long-Term Commitment: HEX Staking vs. CDs

Very long-term commitments range from 5 to 15 years.


Traditional CDs:


·         APY: 3.0% to 4.0%

·         ROI: 15% to 40%


HEX Staking:


·         APY: 46.75%

·         ROI: 711.51%


For very long-term commitments, HEX staking offers extraordinary returns, with an APY of 46.75% and ROI of 711.51%, significantly higher than the 4.0% APY and 40% ROI offered by CDs. The HEX price needs to remain above $0.00085 to match a 15% ROI from CDs.


5.0  HEX Price Drop Scenarios: Matching CD ROIs


Even if the HEX price drops, it can still produce returns equal to or better than traditional CDs provided the price does not drop below certain levels. Here’s a look at how much the HEX price would need to drop to match typical CD returns:

Commitment Type

Current ROI (HEX)

CD ROI Range

HEX Floor Price

Short-Term (One 30-Day Stake)

0.64%

0.5%

$0.00599

Medium-Term (One 1-Year Stake)

9.57%

3%

$0.00564

Fifteen Stakes (1-15 Years)

277.91%

6%

$0.00200

Long-Term (Five Stakes, 1, 5, 11, 13, 15 Yrs.)

355.12%

6%

$0.00140

Very Long-Term (One 5555 Stake)

711.51%

15%

$0.00085

6.0  Final Thoughts


While HEX staking presents an opportunity for higher returns compared to traditional CDs, it also involves higher risks due to the volatility of the cryptocurrency market. However, even if the HEX price drops, as long as it remains above certain levels, it can still produce returns equal to or better than CDs. CDs, on the other hand, offer stable and predictable returns, making them a safer but less lucrative commitment option.


Users should carefully consider their risk tolerance and goals when choosing between HEX staking and traditional CDs. The potential for higher returns with HEX staking is enticing, but it comes with its own set of challenges and risks. Understanding the minimum price levels at which HEX staking remains competitive with traditional CDs can help investors make more informed decisions. Stay informed and make smart choices!


Download the complete PDF with appendices here.

Comparing HEX Staking Returns to Traditional Certificates of Deposit 6-9-2024
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Crypto currency is inherently risky. This is not financial advice. Do your own research (DYOR). By understanding what you interact with in Crypto you can make more informed decisions in the evolving DeFi landscape.




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