For the first month, initially 100% of the fund (less the development reserve mentioned above), then thereafter, a minimum of 50% and up to 80% of the fund will be converted to crypto currencies and placed across a number of exchanges for the purpose of lending those currencies to traders on the exchanges to earn margin lending interest. Margin lending interest differs depending upon the currency and according to supply/demand disparity. They range from .02% per day to 5% per day.
The Cycoin team will open funding wallets on major exchanges providing margin lending facilities to traders, such as Poloniex, Bitfinex and BitMEX. On each exchange, we will assess the market of lending rates offered for differing currencies and place our funds for loan at rates that will ensure relatively quick investment. For short term loans, within 2-3 hours and for longer term loans, within the day.
Longer term rates often exceed shorter term rates. We will seek generally to place our funds on loan for 15 – 30 day periods. All rate versus term markets will be monitored across each currency offered with each investment decision made to ensure maximised yield.
We will convert all margin interest earned to Bitcoin and Ether and distribute this to Cycoin Wallets proportional to the amount of Cycoin held monthly.