How it works

Understanding
how Kudona works

Whether you're an individual or a business, we're here to help you generate higher interest on your money compared to the world of traditional savings.

With Kudona, you have the opportunity to grow your money by combining the benefits from digital assets and decentralised finance (DeFi) platforms.

But how does it really work? First, we need to understand the differences between Kudona and a traditional savings account.

1. Kudona vs. traditional savings account

Before we look at how Kudona helps you generate higher interest on your money, we need to compare the differences between our platform and a bank.

You should remember that we're not a bank. We offer a service that gives you easy, hassle-free access to the world of digital assets and decentralised finance.

That means we do things a bit differently.

A bank works as follows:

1. You deposit money into your bank account.

2. That money is loaned out in the form of mortgages, small business loans, credit cards, and more.

3. Whoever borrows money pays interest to the bank. On average, banks make 3-4% annually by loaning out your money.

4. This is then passed on to you in the form of interest. For the past few years, this interest has been consistently low. At present, the average interest rate in Europe on an overnight account (an account you can withdraw from any time) is 0.05%.

In contrast to a traditional savings account, we provide you with access to the world of  digital assets and decentralised finance platforms, which can generate far greater interest returns.

That may sounds confusing. So here's a breakdown of how we can help you generate greater interest returns on your money.

How can you generate interest through Kudona?

Step 01
Make a transfer through Kudona to our partner bank.
Step 02
This money is then converted to digital assets with the same value ("stablecoins").
Step 03
We place these stablecoins onto decentralised finance platforms (e.g. Aave, Compound).
Step 04
The decentralised finance platforms lend out these digital assets.
Step 05
In return, the borrower has to provide collateral to the platform.

*To guarantee repayment, the value of the collateral has to exceed the value of the borrowed amount at all times.

Step 06
The lender receives interest from these platforms on a daily basis.
Step 07
Kudona displays the value of your assets and the earned interest from these platforms in our app.
Step 01

Make a transfer through Kudona to our partner bank.

Step 02

This money is then converted to digital assets of the same value ("stablecoins").

Step 03

We place these stablecoins onto decentralised finance platforms (e.g. Aave, Compound).

Step 04

The decentralised finance platforms lend out these digital assets.

Step 05

In return, the borrower has to provide collateral to the platform.

*To guarantee repayment, the value of the collateral has to exceed the value of the borrowed amount.

Step 06

The lender receives interest from these platforms on a daily basis.

Step 07

Kudona displays the value of your assets and the earned interest from these platforms in our app.

To summarise, whereas a bank lends out money and passes on minimal interest rates to you, with Kudona you have access to digital assets and decentralised finance platforms that offer the potential of far greater returns.

All you do is make a transfer, and we take care of the rest.

2.  What Kudona has to offer

Now that you understand how Kudona operates, let's compare the benefits of Kudona to those of traditional finance products, specifically overnight accounts and one-year term deposit accounts.

Interest
rate
Interest
accumulation
Liquidity
Kudona
Up to 3.80%
Daily
1-2 banking days
Overnight
Deposit
~0.05%
Monthly / Quarterly
1-2 banking days
One-Year
Term Deposit
~0.25%
Monthly/Quarterly /
End of term
End of 1 year term
Interest rate
Up to 3.80%
Interest accumulation
Daily
Liquidity
1 - 2 banking days
Interest rate
~0.05%
Interest accumulation
Monthly / Quarterly
Liquidity
1-2 banking days
Interest rate
~0.25%
Interest accumulation
Monthly / Quarterly /
End of term
Liquidity
End of 1 year term

It's important to remember that Kudona is not a bank. We're a registered virtual currency exchange operator and digital wallet custodian. We provide the technologoy and service to give you easy access to third-party service providers and decentralised finance platforms.

This means, we can't give a guarantee that the digital assets will generate the expected return in the future.

3.  Putting security at the core

Security and mitigation of risk is at the heart of everything that we do, but with anything in the world of finance, your capital always faces an element of risk.

We make sure we're always fully transparent with you. Which is why we want to highlight that the only way to generate a near risk-free return is through a bank account that's covered by deposit insurance.

Given the worryingly low interest returns from banks, this would mean leaving your money in a place where it's most likely to be impacted by the weight of inflation.

Inflation represents a significant risk to the real value of your savings.

While no service can be totally risk-free, at Kudona we provide maximum security of your assets at all times.

Below are five main areas that are key to this.

Strong banking partner

At the front of this is working with a strong banking partner, that ensures all transfers and withdrawals are protected in the best possible way.

We've partnered with a bank that is located, licensed and supervised in Europe.

When you transfer money from your current account to the account at our partner bank, we aim to swap it into digital assets on the same day.

Therefore, the risk of our partner bank failing and becoming insolvent on the same day is very limited.

Additionally, we have conducted stringent due diligence checks to partner with a bank that has a solid financial basis.

Separation of assets

Kudona was created with a mission to bring interest rates back, and we've taken great measures to make sure that we have a sustainable business to allow us to carry that out.

We've assembled a team of highly-experienced professionals with decades of knowledge, have the full trust and commitment from our investors, and partnered with some of the largest financial companies in the world to help us succeed.

We understand that uncertain times mean you worry more about your money, and you may be concerned about what happens in the event that Kudona ceases to exist.

All digital assets are held in your name and are separate from company assets. This means, should Kudona cease to exist, you can simply request the transfer of the assets held in your name any time.

State-of-the-art technical security

Any digital product is exposed to technical risks, but we mitigate them in multiple ways:

  • Our development team has long-standing expertise working on safety-critical systems and has deployed military-grade security to all parts of our system.
  • We only work with leading technology partners that put security first and are trusted by the largest financial institutions in the world.
  • Our experienced risk management team has clearly-defined rules and regulations around the potential to move money and assets in our system, ensuring that no single point of failure exists.

4.  What does all of this mean?

We understand that there are always concerns when it comes to the protection of your money.

To summarise, here are the most important points to remember:

  • Kudona is not a bank. It's a technology service that provides you with easy access to digital assets and decentralised finance platforms that can generate higher interest rates. We provide a simple-to-use, secure app that covers the entire process for you, and takes measures to ensure maximum protection of your assets at all times.
  • In the world of finance, your capital always faces an element of risk. Greater risk offers the potential of higher returns. At Kudona, we provide the maximum security of your assets at all times through our partners,  and strict internal processes.

Are you ready to earn significant interest again?

Still have questions? Take a closer look at our FAQs.

How is this not too good to be true?

You are probably wondering a few things about Kudona. How can we generate better rates than almost all other products out there?

The short answer:
We use a more efficient system than the big banks do. But odds are, you probably want to know this in more detail.

Let’s get into it.
The old world of banking
In order to understand how to get higher interest rates with Kudona, we first need to understand how traditional banks work.

1. You deposit money at your bank.
2. They loan it back out in the form of mortgages, small business loans, credit cards, and more.
3. The person that borrows money pays interest to the bank. On average, banks make 3-4% annually by loaning out your money.
4. They then turn around and pay you for your deposits. However, they pay you almost nothing right now. The average interest rate in Europe on an overnight account (meaning you can withdraw any time) is 0.05%.
On top of that, most banks even charge you negative interest rates on your deposits once you cross a certain threshold (e.g. €50,000 or more). That means you are paying your bank to store money so they can make a profit on it by loaning it out.

Kudona is setting out to change this.
Why do banks work this way?
There is a clear explanation why banks can only offer these low rates: Banks are highly inefficient institutions. Inefficiencies result in high costs for the banks. High costs mean you get less interest on your savings.
Just think about the process you need to undergo with your bank in order to get a mortgage on a flat or house approved. An employee at the bank needs to analyse your financial data, verify that all documents you provided are in order, evaluate whether you will be capable of repaying the mortgage in the next few years and then also assess the value of the house (i.e. whether it is good as collateral for the bank or not). Very labour intensive and costly. What if processes like this could be automated and the inefficiencies could be cut out?

How Kudona saves
and makes you money?

That is exactly what Kudona is leveraging. Over the past decade technologies have emerged that replicated the model of a bank but without the inefficiencies of a bank.

These platforms also take deposits and loan out the deposits for higher interest rates to other market participants.

However, instead of a bank employee reviewing and approving transactions they operate fully automated through audited code. That allows for more efficiency and better interest being paid to you.

Similar to a bank that requires collateral on mortgage (your house), these digital platforms also require collateral in the form of other digital assets. The collateral is often up to the value of 150-180% of the loan. That means that your deposits are safely backed-up by collateral to make sure that you can withdraw your savings any time.