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Welcome to the very first edition of the ProdigyFi Product 101 Series — your crash course on all things ProdigyFi. Whether you are a fresh-faced Brodigy or a long-time OG, this is your go-to spot for all things product. And naturally, we are kicking things off with a little Dual Currency Investment (DCI) 101 (since, well, DCIs are kinda our thing).
If you are new around here — welcome! And if you are a regular, pull up a chair and let us all level up together. After all, we are all Brodigies here, right? So, LFG.
Dual Currency Investments (DCIs) might sound complex, but at their core, they are a way to earn higher returns while taking on some currency risk. Originally designed in traditional finance (TradFi) as structured products, DCIs have since made their way into the decentralised finance (DeFi) ecosystem, offering investors a new way to navigate currency markets.
In this article, we are breaking down the essentials — what DCIs are, where they came from, how they work, and why they matter in both TradFi and DeFi. Plus, we have included a couple of infographics to make things easier to follow. Let’s get into it.
Dual Currency Investments (DCIs) let you earn higher yields by taking on some currency risk — you deposit in one currency, but you might get paid in another.
They started in TradFi (think big banks and HNW investors) and are now available in DeFi through platforms like ProdigyFi.
In Tradfi, DCIs serve a bunch of purposes — boosting yield, managing currency risk, speculating on forex moves, and diversifying your portfolio.
In DeFi, DCIs can be combined with things like staking or yield farming to amplify returns — all powered by smart contracts.
They’re not risk-free — exchange rate swings, smart contract bugs, and liquidity issues can bite — so know what you’re signing up for.
At a basic level, DCIs are structured products that let you earn a fixed return while taking on some currency exchange risk. Here’s how it works: you deposit funds in a base currency (like USD), but depending on how the exchange rate moves, you could receive your payout in that currency or an alternate one (like EUR).
The trade-off? The fixed return, or coupon rate, is usually higher than what you would get from a regular fixed-income product. But you are taking on currency risk — if the exchange rate does not move in your favour, you might end up getting paid in a less desirable currency.
For example, say Bob deposits USD in a DCI with EUR as the alternate currency. If the USD/EUR exchange rate at maturity is above the strike rate, Bob receives his principal and coupon in USD. If the rate falls below the strike rate, Bob receives a payout in EUR at the agreed-upon rate. This structure allows investors to potentially benefit from favourable currency movements while earning a guaranteed return.
DCIs can be tailored to suit different risk levels, with options to adjust the tenor (duration), strike rates, and coupon rates (read: interest rates). And in DeFi, DCIs sometimes come with added features like staking or yield farming, giving investors more ways to earn returns while also expanding their appeal to crypto-native investors.
DCIs emerged in the TradFi sector during the late 20th century as banks sought to offer higher-yielding alternatives to fixed-income products in low-interest-rate environments. They were initially designed for institutional and high-net-worth investors looking to capitalise on currency volatility without directly engaging in foreign exchange (forex) trading. The product gained traction in regions like Japan and Europe, where stable but low-yielding currencies (eg: JPY and EUR) prompted investors to seek enhanced returns through currency-linked instruments.
The inspiration for DCIs stemmed from the growing sophistication of structured products in the 1980s and 1990s, driven by advances in derivatives pricing and risk management. Banks like HSBC, BNP Paribas, and Deutsche Bank pioneered these offerings, leveraging their expertise in forex and derivatives markets to create tailored solutions for clients. The product’s flexibility and ability to hedge or speculate on currency movements made it a staple in institutional portfolios.
Fast forward to the rise of DeFi, and DCI-like products have started to appear in decentralised markets. Various platforms introduced decentralised structured products that mimic DCI mechanics, allowing retail investors to participate using stablecoins or crypto assets. This shift reflects the broader trend of financial innovation, where blockchain technology enables transparent and permissionless access to complex investment strategies.
DCIs are all about blending fixed-income returns with currency exposure. Here’s what they are typically used for:
Enhanced Yield Generation
DCIs offer higher coupon rates than traditional fixed-income products, appealing to yield-seeking investors.
Currency Exposure
They allow investors to speculate on or hedge against currency movements without direct forex trading
Risk Management
By structuring payouts around predefined strike rates, DCIs provide a controlled approach to currency risk.
Portfolio Diversification
Exposure to multiple currencies reduces reliance on a single currency’s performance.
A standard DCI includes the following components:
Base Currency: The currency in which the investment is made (eg: USD).
Alternate Currency: The secondary currency for potential payout (eg: EUR).
Strike Rate: The exchange rate threshold determining the payout currency.
Maturity Date: The date when the investment settles, typically ranging from days to months.
Coupon Rate: The fixed interest rate paid regardless of the payout currency.
And here are the terms used on ProdigyFi:
Subscription Amount: The amount of the Investment Token you want to deposit.
APY: The APY is the yield that you will earn when you subscribe into that particular vault (or essentially, the coupon rate). Annual Percentage Yield (APY) represents the annual return equivalent obtained by consistently purchasing the product at the specified yield throughout an entire year.
Linked Price: The price at which you want to buy or sell your assets at.
Expiration Date: The date on which the subscription expires and the set Linked Price is checked to determine settlement scenarios.
In DeFi, DCIs may also integrate with yield farming or staking protocols, allowing investors to earn additional returns by locking assets in liquidity pools or smart contracts.
DCIs attract a wide range of investors, each with their own goals:
Yield Seekers
If you are in a market where traditional savings or bonds are not cutting it, DCIs can offer higher returns — especially in low-rate environments like the post-2008 financial crisis or the 2020s.
Currency Speculators
Got a strong opinion on where the USD/EUR or BTC/USDT pair is headed? DCIs let you take a position without diving into full-blown forex or crypto trading.
Hedgers
For businesses and individuals exposed to currency fluctuations — think exporters, importers, or international investors — DCIs provide a way to lock in returns while managing currency risk.
Crypto Enthusiasts
In DeFi, DCIs have opened the door for crypto investors to diversify beyond typical yield farming or staking, incorporating products linked to stablecoins or more volatile assets like ETH and BTC.
Institutional Investors
Hedge funds, banks, and asset managers use DCIs to squeeze out extra yield or manage currency risk across global portfolios.
That said, DCIs are not for everyone. If you are risk-averse or want guaranteed principal protection, they might not be the best fit.
DCIs shine in certain market conditions. Here’s when they tend to work best:
Currency Volatility
When exchange rates are swinging wildly — like during geopolitical events or central bank rate hikes — the chance for higher returns increases.
Low-Interest-Rate Environments
If traditional fixed-income products are barely paying anything, DCIs can step in with more attractive yields.
Clear Currency Views
Got a strong read on where a currency is headed? DCIs let you put your money where your forecast is.
DeFi Bull Markets
When the crypto market is booming or DeFi yield opportunities are ripe, DCIs can be a way to stack returns without over-leveraging.
For example, in 2022–2023, the USD surged against the EUR due to aggressive rate hikes by the Federal Reserve. Investors who saw that coming could have locked in attractive USD payouts through USD/EUR DCIs, capitalising on both the currency shift and high coupon rates.
DCIs are available in both TradFi and DeFi ecosystems, each with distinct platforms and accessibility:
Banks and Financial Institutions
Major banks like HSBC, BNP Paribas, and Deutsche Bank offer DCI products to institutional and high-net-worth clients. These are typically structured as over-the-counter (OTC) products tailored to client needs.
Investment Firms
Wealth management divisions, such as Deutsche Bank Wealth Management, provide DCI solutions as part of broader portfolio strategies.
Availability
Primarily in developed markets with robust forex infrastructure, such as the US, Europe, and Asia.
While ProdigyFi is purpose-built for Dual Currency Investments, other DeFi protocols like Pendle and others offer structured yield products that share similarities with DCIs — such as fixed returns, target prices, or exposure to asset volatility. Some of these platforms provide high-yield stablecoin strategies that offer comparable benefits to DCIs, though they aren’t strictly DCI products and come with their own unique risks and design structures. Think of them as offering DCI-like strategies without the full DCI framework.
The platform is a next-generation DeFi platform specialising in Dual Investment products, allowing users to earn high yields while setting target buy/sell prices for crypto assets like BTC or ETH against stablecoins. Its vaults offer flexible tenors and competitive APYs, making it ideal for hedgers, HODLers, and treasury managers. Prodigy’s permissionless design democratises access while emphasising transparency and smart contract security.
Pendle is a DeFi protocol focused on yield tokenisation and trading, enabling users to create DCI-like strategies by splitting yield-bearing assets into principal and yield tokens. Investors can deposit stablecoins or crypto assets into Pendle’s automated market maker (AMM) pools to earn fixed or leveraged yields, with payouts tied to asset price movements. Pendle also offers flexible tenors and low entry barriers.
Derive is a decentralised protocol for trading on-chain options, perpetuals, and structured products. It offers a self-custodial, modular platform that supports programmable strategies for both retail and institutional users. With Derive, users can create or invest in custom derivatives to express market views or earn yield through structured products — all transparently and permissionlessly on-chain.
Cega is a DeFi structured products protocol offering exotic options-based strategies designed to generate enhanced yield. One of its offerings is the Dual Currency Strategy, which lets users earn high APYs by selling options on crypto assets like ETH. While not a traditional DCI platform, Cega’s structured yield products share many DCI-like traits — including fixed returns, directional exposure, and strike-based outcomes — but come with their own unique mechanics and risks.
DCIs can add serious value to a portfolio when used strategically. Here’s how they can fit in:
Boosting Yields
DCIs typically pay higher coupon rates than traditional bonds or savings accounts, making them a smart play for income-focused investors. For example, on ProdigyFi, Brodigy Sally can deposit USDC into a Dual Investment vault with a target conversion to ETH, capturing attractive APYs while managing volatility.
Diversification
Since DCIs involve multiple currencies, they can spread risk and reduce over-reliance on a single currency’s performance. Brodigy Sally, who also holds BTC, allocates a portion to a BTC/USDT Dual Investment, gaining exposure to stablecoins while still earning yield.
Hedging
If you are exposed to foreign currencies, DCIs can lock in favourable exchange rates and manage exchange rate risk. Brodigy Bob, for instance, uses a USDT/ETH Dual Investment on ProdigyFi to protect his business revenue while generating yield.
Speculative Plays
Have a strong view on where a currency pair is headed? DCIs let you put that view to work without diving into complex forex trading. In Brodigy Bob’s case, he then allocates 10–20% of his crypto portfolio to a USDT/BTC Dual Investment, setting a target conversion rate for USDT while earning returns during the holding period.
DCIs offer some compelling benefits that can make them a valuable addition to both TradFi and DeFi portfolios:
Higher Returns
The coupon rates often beat what you’d get from bonds or savings accounts — especially in low-rate markets.
Customisability
Strike rates, tenors, and currency pairs can be tailored to fit your risk appetite and market outlook.
Risk Management
With structured payouts, you know your potential outcomes upfront — a nice contrast to the unpredictability of direct forex trading.
DeFi Accessibility
In the DeFi space, DCIs open the door to structured products once reserved for big institutions. Now, anyone with stablecoins or crypto can get in on the action.
Hedging Potential
For businesses or investors with foreign currency exposure, DCIs provide a way to lock in exchange rates and mitigate risk.
Take the crypto market, for example. In a volatile market, a USDT/ETH DCI can help you earn yield while protecting against ETH price drops, offering a balanced approach to portfolio management.
DCIs may sound like a win-win, but they come with some key risks to keep in mind:
Currency Risk
If the exchange rate moves against you, you might end up getting paid in a less favourable currency, which can eat into your returns.
Liquidity Risk
In TradFi, DCIs can be tough to offload before maturity. In DeFi, liquidity can also dry up fast in volatile markets.
Counterparty Risk
In TradFi, you are trusting the issuer to deliver. For instance, BNP Paribas faced scrutiny for sanctions violations in 2014, raising questions about counterparty risk.
Smart Contract Risk
In DeFi, smart contracts power everything — but they’re not foolproof. Hacks like the 2022 Ronin Network exploit show just how vulnerable these platforms can be.
Complexity
DCIs aren’t the simplest products. You need to understand how currency markets work and how strike rates and tenors impact your payout.
Bottom line: DCIs can be powerful, but they’re not for everyone. Before diving in, do your homework, assess your risk tolerance, and consider talking to a financial advisor.
Dual Currency Investments (DCIs) are the perfect blend of traditional finance and the DeFi frontier, giving investors a versatile way to boost yields, gain currency exposure, and manage risk. In TradFi, big players like HSBC and Deutsche Bank have long offered DCIs to institutional and high-net-worth clients. But in DeFi, platforms like ProdigyFi are shaking things up, making these structured products accessible to everyday investors.
Integrating DCIs into a well-balanced portfolio can help you tap into currency market opportunities while keeping risks in check. And as financial markets continue to evolve, DCIs are set to remain a go-to strategy for navigating the ever-shifting world of global currencies.
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