[Analysis] Is Rand Network trying to take the Crypto Banking Space?

In this article, we will cover what Rand Network is about, what problem it solves, how is it different from other crypto banks, how they keep the funds of users safe, and many more. Also, we will cover the RND token and its tokenomics.

I personally like a lot the vision of the Rand team. They understood the fact that many millennials are highly unsatisfied with their experience of banking. The Rand team is developing a lot of products that can change forever the way people perceive banking.

As usual, none of this is financial advice. Let’s dive in!

What is Rand Network?

Rand App is a personal financial app that automates the payment of all the users monthly costs. People despise paying for memberships on a monthly basis. Many people try to save money because they live in a same address with friends and family on various memberships such as Amazon Prime, Spotify, and Netflix. These all pile up each month and create a significant annual expenditure that must be paid.

Users may make their money work harder by pooling it with friends or relatives. Rand Network links people to generate “secure returns” (not a financial advice) while also assisting users to preserve money rather than waste it. The yield aggregator powers the whole network, allowing Rand to generate interest with user funds via various decentralized and centralized yield schemes.

Rand was founded as a way for the average person to earn additional money to help pay the bills. Rand tries to gamify the digital asset investment process by developing a simple, dependable, low-risk, and easy-to-access gateway.

Using a sound money-making process provided by contemporary blockchain technology, Rand simplifies as many technical and financial issues for the user as possible. The aim is to develop a simple leisure game that anybody with some spare change can start playing.

What problem is Rand Network solving?

In Europe alone, there are 143 million GenZ young adults, with the majority having an average savings of $5,300 (source). Traditional savings products are neither appealing nor lucrative to younger generations since the principal (the amount of money accessible to save/invest) and traditional finance interest rates are both extremely low.

To generate a measurable profit from their money, they would need a very long investment time horizon and substantially higher average interest rates on deposits in standard bank accounts. Young folks are continually participating in high-risk/high-stakes alternatives such as gambling, lottery, or speculating on random cryptocurrencies to earn larger returns in order to make their savings work for them and generate returns.

The Rand App allows younger generations to make wiser financial decisions and develop their wealth by assisting Gen-Z in shifting their knowledge of personal finances through an easily accessible platform, reducing one of the most prevalent pain areas for young adults! Rand also advocates for investing and saving today in order to pay for higher bills later.

What are Public and Private vaults on Rand Network?

Private vaults: Private Vaults are formed amongst the user’s circle of friends and/or family, in which known connections are asked to pool cash and earn together, covering all of your monthly costs in one location. Private vaults allow you and/or a group of individuals to reach your common financial goals more quickly and efficiently.

How do Private vaults work on Rand Network? – Source: Rand Network Gitbook

Rand users will have access to real-time tracking of their savings and profits from every reward they win. If a Vault member wishes to leave before the vault’s term expires, they must pay a penalty charge. The penalty cost will be taken from the user’s first pool contribution in Rand Tokens (RND) or its equivalent. This is done to discourage early withdrawals from Vaults, as the cash taken away diminishes the total income. The penalty fines will subsequently be invested in the Safety Module to provide further benefits for Rand token holders.

Public vaults: Rand Network hosts and creates Public Vaults in order to provide a financial gateway for everyone. Users can get access to it by depositing their funds, and by the end of the week, all of the yield/interest generated by the cumulative deposits of the participants is awarded to a number of winners picked at random. If you do not win, your original payment is kept or can be taken whenever it is convenient for you. It really is that simple. This is a similar principle to Pooltogether.

How do Public Vaults work on Rand Network? – Source: Rand Network

Public vaults, for the most part, function similarly to private vaults. The primary distinction is that Rand hosts Public Vaults, and the yield generated is dispersed to winners chosen at random. In this situation, all Rand users are eligible to participate and have the possibility to win rewards from a substantially larger prize pool, perhaps earning a larger payout than if they were participating in a Private Vault.

This sounds good, but how does Rand work?

When users check in to the mobile app, they have the option of participating either in a Public Vault to win prizes or creating their own Private Vault to share with friends and family. In either scenario, the first step is to fund their Rand wallet.

How to fund your Rand Wallet?

Users can deposit using cryptocurrency by linking their MetaMask account and transferring funds to their Rand wallet. Furthermore, through their partner Criptan, European Rand Network customers will be able to deposit FIAT savings from their bank by direct bank transfer or debit card. Users’ cash will be transformed into stable coins once they have put them in the Vault of their choice (USDC).

The stablecoins will then be sent to the Rand Yield Aggregator, which will automatically redistribute them among the highest yielding DeFi money market strategies. When the vault time expires, the stablecoins that were originally pooled for collecting interest will be returned to the Vaults, together with the earned interest.

What is the Rand Token?

Rand Token, abbreviated RND, is an ERC-20 governance token with native Rand ecosystem utility features.

The Rand team aspires to offer our community as much decision-making authority as possible by decentralizing Rand Network from its inception until it becomes a Decentralized Autonomous Organization, or DAO. Please read our Governance page for additional information about your DAO journey.

What could inspire you to hold the Rand Token? Not Financial Advice.

  • Governance.
  • Higher sustained APYs.
  • Access to exclusive Community Public Vaults.
  • Safety Model staking.
  • Free Withdrawals.
  • Penalty fees are paid in RND for early withdrawals.

Source: Rand Website

What about the tokenomics of the RND token?

Tokenomics of the RND token. Looking okay from my POV (NFA). Source: Rand

Where does the yield comes from on Rand Network?

“If you don’t understand where the yield comes from, you are the yield.”

Famous crypto saying: “If you don’t understand where the yield comes from, you are the yield.” – Source: Memeking

Rand, like conventional banks, lend users’ deposits to third parties as a liquidity provider so that the money can be returned with interest later. The yield from Rand can be more efficient than traditional banks by automating this procedure amongst different DeFi money marketplaces.

Rand’s magic lies in its Yield Aggregator, which functions similarly to a typical bank, giving interest to clients for borrowing money. Rand acts as a liquidity provider by lending deposits from users to other parties, who then return that money with interest. Rand is more effective than a regular bank since we have ten times fewer related expenses by employing this automated method between DeFi money markets.

Which protocol will Rand use to generate yield?

According to the documentation, Rand will farm on the following protocols. Among others:

  • YearnFinance
  • Alpha Homora
  • Acala

Longer term, Rand plans to include hedge fund tactics to enhance yield creation and prevent DeFi yields from falling below 5% if we enter a severe bear market. This will allow the team to diversify our strategies when market conditions change and respond accordingly.

Are the funds on Rand insured?

From what I understood, not necessarily. However, Rand uses a safety module which creates an additional layer of security. In short, users who stake their RND or DOT in the safety module will cover the potential shortfall.

To me this sounds a little bit risky as Rand claims that if you depost your RND or DOT, then you get tokenised receipt of your deposit. Let’s say rRND and rDOT that you can use in the yield aggregator to earn yield (great). But what a shortfall event happens. Then your original RND and DOT in the safety module would be use to cover the shortfall. So afterthat, you would still have you rDOT and rRND but they would not be backed 1:1 with your deposit in the safety module. This issue happens a lot with bridges.

Rand still mentions an insurance that would then cover the “loss of capital”.

In case of loss of capital, Rand will take funds from the external insurance that will be covering most of the TVL. In case the external insurance is not capable of covering the entire deficit, the treasury will collateralize a loan with some of the funds that will then be repaid during the time. In the case this is still not enough, Rand will collateralize a loan or directly spend all the funds that are locked as Safety Module first cover.

So from what I understand there is a 3 layer security:

  1. External insurance
  2. Colletarisation of the loan with user funds
  3. Safety module

If none of the preceding layers are sufficient to cover the gap, the SM will spend up to 30% of the assets locked to offset the deficit. If the money confiscated from the SM is insufficient to satisfy the whole debt, an ad-hoc Rand issuance event known as Recovery Issuance is launched. The issued RND, along with the amount pulled from the SM, are used to pay the shortfall.

Is Rand Network audited?

Not for now at least. It seems that Rand is not audited at the moment. But coming soonâ„¢.

Not yet apparently. Source: Rand Network

How to download the Rand Mobile app?

Unfortunately, the RAND mobile app is not yet available. Soonâ„¢

Rand Network: Pros and Cons

  • Pros:
    • Innovative project:
      • I love the idea of the no loss lottery with travels or cars. Instead of just money
      • Private vaults are also cool. To not have to worry about subscriptions again
    • 4 Pillars of Rand Network:
      • Prize account. Seems to be a no-loss lottery
      • Private accounts with up to 8% yield
      • Debit card
    • Doxxed Team
    • Reliable partners
    • Great design. I love it
  • Cons:
    • So far there is no product to test
    • The team talks about an insurance without giving too much details
    • There is no audit yet
    • I’d wish additional transparency on the yield strategies.

Overall, I really like the vision of the Rand Network. They clearly try to innovate which is what is needed in crypto. I registered on the website and I hope to be able to test as soon as they release it!

Further questions to go deeper:
>> How will it work tax wise?
>> Reglementation especially in Europe?
>> Will they need a banking licence?
>> The team mentions that by pooling money with friends, you can make the money work harder? How come? If more people in a vault the yield increase?

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