Today, if you were to take your money and head to a bank to put it in a CD and lock it up for five years, you’d probably expect to get about a two percent annual percentage yield. Yet Utah-based Alta Finance wants to provide a 10.33 percent annual percentage rate by promising exposure to real estate revenue through loaning crypto assets.
The difference between annual percentage yield and annual percentage rate is that percentage yield takes compounding interest into account, while percentage rate does not. For a 36-month term, Alta promises a rate of 7.75 percent plus ALTA token rewards, or a 60-month term for 7.95 percent as of writing. ALTA tokens are priced at $0.185 as of writing—for those who stake 10,000 ALTA in an earn contract, that 7.75 or 7.95 percent moves to 8.91 or 9.14 percent. Those who stake 100,000 ALTA, see a 1.3x multiplier bringing that rate above 10 percent.
It’s a tall order, but Alta Finance aims to achieve this by running on the Ethereum and Polygon networks, with additional networks launching in the next several months. Earn contracts can be opened using USD Coin ($USDC), Tether ($USDT), Dai ($DAI), Frax ($FRAX), or ALTA cryptocurrencies, and the principal is returned in the same asset lent.
High returns are a staple of some cryptocurrencies and a big talking point for cryptocurrency supporters. Popular cryptocurrency exchange Binance offers up to a 104.62 annualized interest rate on Axie Infinity ($AXS) as of writing, with a number of other popular cryptocurrencies like Solana ($SOL) and Polygon ($MATIC) available at between 10 and 21 percent rates.
Alta’s business model on the back end is different from that of Binance or another staking model. The company takes on loans, invests in “high-performing real estate assets,” and returns a portion of that back to the lender as interest. When you stake cryptocurrency, on the other hand, you’re locking up your cryptocurrency to participate in the blockchain processes. The staking rewards come from newly minted coins.
“Staking and lending are very, very common in Defi, but the revenue sources from those come from a different place,” says Alta CEO and Founder Jeremy Crane.
Many people might be skeptical of cryptocurrency companies offering significantly higher rates than traditional financial institutions. People are right to be naturally protective of their money. Like anything to do with money, bad investments and scams are everywhere.
Crane compares lending to Alta to lending capital to a private lender.
“They could go lend their capital to a private lender and they would get a much higher yield than if they lent it to their bank,” Crane says.
At launch, Crane says that Alta will be investing in “innovative real estate products,” focusing on multifamily apartments initially.
“Earn is a great product. It will allow people to get a really stable yield. That’s a very big deal in crypto,” Crane says.
Alta is not a bank, and Alta Earn isn’t exactly the same thing as a CD. In fact, Alta Earn is currently not available for customers in the United States. The regulatory climate “isn’t there yet,” Crane says, though he hopes it might be by the end of this year or early next year.
Crane expects the customer base to be largely from Latin America, South America, and Asia when it debuts, with plans to make it available around the world.
“This Earn product we have is our first step to get there on a 20-year vision, multi-phased approach,” he says. “This is a fundamental technology shift. It is so fundamental on the ownership, which is why web3 has taken off, that it’s going to change the way everything happens on the internet over the next 10 to 20 years, and the average user probably won’t notice it until two to three years from now. Then they’ll start to notice it as the big players from web2 make this transition.
“From our standpoint, we [are focusing on] real estate—everyone needs a place to live and people need a place to work. It’s a core part of the human experience and a global part of the human experience.’ And it needs to be crypto-native and crypto-enabled, so we’re going to tackle that challenge.”
Like any business where money is at stake, trust is important in cryptocurrency investments. Earning that trust takes time.
“It takes a considerable amount of work, it takes fiscal discipline,” Crane says.
To build trust, the Alta team’s names, faces, and social media pages are available on the company’s website, and the company also publishes a balance sheet with all its funds in the Alta Finance Treasury, along with a monthly net asset report.
“That’s pretty standard for funds. We’re not a fund, but we’re going to do it,” Crane says of publishing a monthly report. “We feel like it’s important for people to have some transparency on the mechanics that are behind the scenes a little bit.”