ZenGo is expanding past the basic features of a cryptocurrency wallet — letting users hold, send and receive crypto assets. Users can now set aside some of their crypto assets to yield interest. In other words, ZenGo now acts as a savings account.
The company has collaborated with two DeFi projects for the new feature. DeFi means “decentralized finance,” and it has been a trend in the cryptocurrency area. DeFi projects are the blockchain equivalent of conventional financial merchandise.
Behind the scene, ZenGo makes use of the Compound protocol, a lending DeFi project. It works like LendingClub; however, on the blockchain. Some users ship money to Compound to add to liquidity pools. Other users borrow money from that pool.
Rates of interest fluctuate depending on supply and demand. That’s why users earn more interest when they inject DAI or USD Coin in Compound.
ZenGo further makes use of Figment in order to stake Tezos. It isn’t a lending market. When users lock some money in a staking project, it implies that they support the operations of a particular blockchain.
For the end-user, it works like a savings account whether you’re relying on Compound or Figment. Other wallet applications let users access DeFi projects, corresponding to Coinbase Wallet and Argent.