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What is Yotta? What is their goal?
Yotta is a mobile app harnessing the power of behavioral economics to help customers make healthier financial decisions by hacking the psychology behind the lottery. Customers get the chance to win cash prizes every week, similar to playing the lottery but in an FDIC-insured account where customers cannot lose any money.
Yotta was founded to help Americans make healthier financial decisions and become more financially secure. According to the Federal Reserve, 40% of Americans can’t come up with $400 in an emergency. This leaves almost half the country in a financially vulnerable position. Even though 40% of Americans struggle to save, Americans spend $80 billion on the lottery annually or $640 per household on average.
If the lottery is such a sub-optimal financial decision and saving is important, why do people under-save and over-spend on the lottery? Because saving is boring. Yotta fixes this problem using the psychology that drives Americans to play the lottery to motivate them to save money. Yotta partners with high-value banks that pay way better rates and pools a portion of the interest earned to fund weekly prize drawings. We also take a portion and pay it to the customer no matter what. It’s a win-win.
What makes Yotta special?
Yotta is groundbreaking in being one of the first companies to bring the concept of prize-linked savings accounts (PLSA) to the U.S. A concept popular in countries across the globe, PLSAs had been forbidden until the “American Savings Promotion Act” was enacted in 2014 permitting financial institutions to hold contests, where the more money you’ve deposited into an account, the more likely you are to win prizes.
A PLSA program called Premium Bonds run by the UK government since 1956 has long been the number 1 savings vehicle in the country. Over 33% of the population participates, with over $100B deposited into the program.
Traditional savings accounts are not only boring, but they pay you almost nothing on your savings. $500 deposited into a Chase savings account earns you 5 cents a year in interest. With Yotta savers have a real chance at winning cash prizes up to $10 million every single week. To date, Yotta users have won over $2 million and a Tesla Model 3.
In less than 1 year since launching in July of 2020 Yotta has had over 150,000 users sign up for its prize-linked savings account and in early 2021, Forbes named Yotta co-founders Adam Moelis and Ben Doyle to its prestigious 30 under 30 lists for Social Impact for their work in launching Yotta and for its mission of helping Americans make healthier financial decisions.
What are some plans for the future?
Here are some plans for Yotta savings coming in the future:
Yotta Debit Card:
Yotta have been working hard to launch the Yotta debit card to users on a waitlist basis. This will allow users to access the fund in their account at any time and is the only debit card that could (literally) make you a millionaire. Earn tickets whenever you swipe. The Yotta Debit Card is a Mastercard debit card that comes with big perks:
- Get Your Item For Free — 1 in 500 chance to get the item you just bought for free.
- 1,000 bonus tickets — earn 1,000 bonus tickets after you spend $2,500 in your first 4 months
- 10% tickets back — for every $10 you spend, get a ticket into next week’s contest
- Premium metal card — get a premium metal card when you have 10+ referrals
Yotta are on track to be the first neobank to integrate with Anchor Protocol, and they’re looking to offer an implied average APY of 8% to our customers. The APY delta from the Anchor Earn rate and what they offer their customers will be used to cover the fiat ramp + custodian fees so that everyone can have a friction-free experience when depositing into our Crypto Bucket.
Yotta will be launching a credit-building product aiming to boost users’ credit scores while helping them save money and giving them additional tickets into Yotta’s weekly sweepstakes. Here’s how it works:
Apply for the Credit Builder Bucket
No hard credit check. If approved, you get $1,000 deposited into your Credit Builder Bucket.
Get tickets to win prizes
Funds are held in a special locked bucket. You earn 40 tickets every week into the Yotta sweepstakes.
Build credit history with each on-time payment
You pay $55 every month for 24 months. We report each payment to all three credit bureaus every month.
Similar products have seen users improve their credit score by 42+ points within 60 days.
Unlock your $1,000 savings
Once you’ve paid off the loan, the Credit Builder bucket is unlocked and you get access to the entire loan amount of $1,000.
No fees. Higher Rewards.
Earn a higher yield on your Yotta Balance without changing your Yotta experience. We manage the cryptocurrency side for you, allowing you to easily convert back to USD at your convenience.
Keep Your Money Safe and Secured
Your money is stored in stablecoins like UST, which are cryptocurrencies pegged 1:1 with the US Dollar. We partner with trusted organizations like Terraform Labs (backed by Coinbase, currently managing over $300 million) to offer a much higher yield than a traditional bank.
No caps. No minimum or maximum deposits. Average 8% APY¹
Whether it’s $5 or $50,000, you still receive a ticket for every $5, bringing the implied average APY to 8%. You could earn more or less depending on your luck.
Is your money safe?
Similar to a normal bank, your money is lent out to borrowers to earn interest. Your funds are highly collateralized (Over 100%), so even if a borrower defaults, you have access to your money. While money in the Yotta Crypto Savings Bucket is not FDIC insured (as with any cryptocurrency), we utilize trusted protocols like Anchor to offer you a low risk, highly secure way to earn a high yield on your savings.
What are the risks?
As the Decentralized Finance Ecosystem, a $100 Billion industry, is entirely reliant on the integrity of the smart contracts these processes operate on, we are happy to partner with the best companies offering solutions in this space. While Terraform Labs and the Anchor Protocol offer extensive risk management practices and security measures, we always recommend to use discretion and consider potential risks while investing in emerging technologies.