Welcome to the second edition of the ProdigyFi Product 101 Series — your go-to guide for understanding how ProdigyFi works under the hood. If you missed the first edition, we recommend starting there. It’s a deep dive into Dual Currency Investments (DCIs), one of our core offerings. You can catch up on it here.

In this second instalment, we’re zooming out a bit to explore how DCIs differ across centralised finance (CeFi) and decentralised finance (DeFi). Because understanding where your yield comes from — and how it’s structured — can make a big difference in how you use it.

DCIs sit at the intersection of yield generation and market speculation. They let you potentially earn higher returns by agreeing to receive one of two assets at maturity — depending on where the market goes.

Originally designed by and for CeFi platforms, DCIs are now starting to make their way into DeFi, offering crypto-native users a new way to earn yield directly from their wallets. But while the mechanics may be similar, the experience, risks, and flexibility can vary quite a bit between the two.

Let’s say BTC is trading at $75,000 and Brodigy Bob deposits 10,000 USDC into a 7-day BTC-based DCI with a strike price of $70,000 — this is essentially a Buy Low strategy.

• If BTC finishes below $70,000 at expiry → he receives BTC at $70K, even if it is trading lower — meaning he buys BTC at the strike price using his USDC

• If BTC finishes above $70,000 → he earns a yield and gets back his originally invested USDC

So you’re trading off a bit of flexibility for the potential to earn more — and if you’re okay with receiving BTC at a set price, it could be a win-win.

Now that we’ve got the basics covered, let’s take a closer look at how DCIs work in CeFi compared to DeFi — and why that difference matters.

Several CeFi platforms cater to yield-seeking retail and high-net-worth investors with DCI products:

• Binance Earn: Provides “Dual Investment” products with customisable tenors and strike prices, often paired with BTC, ETH, or stablecoins.

• Crypto.com: Markets DCI-like products under “Dual Invest,” targeting casual investors.

• OKX and Bybit: Feature standardised “Dual Investment” or “Earn” products for mainstream users.

These platforms handle everything behind the scenes — from custody to options execution and settlement — creating a smooth, managed experience for users.

• CeFi platforms simplify the process to create a user-friendly experience— users select a coin, strike price, and duration, with the platform handling the rest.

• Large CeFi exchanges aggregate user exposure and hedge through internal desks or OTC markets, ensuring scale and stable pricing.

• Advertised as clear APYs, DCIs appeal to retail users unfamiliar with options mechanics.

• Some platforms operate under licenses, appealing to risk-averse investors seeking compliance.

• Users entrust funds with these platforms, which pose custodial risks as users risk losses from hacks or insolvency.

• Platforms rarely disclose hedging strategies or yield calculations, reducing transparency.

• Fixed strike prices and tenors restrict customisation for advanced users.

• KYC/AML requirements exclude users in certain jurisdictions or those without documentation.

DeFi is starting to experiment with DCIs as part of a broader movement to replicate — and eventually improve on — the products offered in CeFi and TradFi. While still early-stage, several DeFi platforms are already offering DCI-like strategies designed for crypto-native users.

ProdigyFi has emerged as a pivotal innovator in the DeFi DCI space, offering high-yield vaults purpose-built for Dual Currency Investments. Users can deposit crypto assets to earn enhanced returns with dual-asset settlement options, catering to both risk-on and risk-off investors. ProdigyFi leverages on-chain options infrastructure to offer fully-collateralised, risk-managed yield strategies through a flexible and permissionless vault marketplace. This allows users to tailor strategies to their market outlook.

While ProdigyFi is purpose-built for Dual Currency Investments, other DeFi protocols offer structured yield products that share similarities with DCIs:

• Cega: A leader in DeFi structured products, Cega’s Dual Currency strategy offers APY on assets like ETH, stETH, and USDC, leveraging options for yield generation without lending or bond components. Its audited contracts ensure robust security.

• Derive: Focuses on options-based vaults with dual-asset settlement, providing flexible yield strategies on Layer 2 networks like Arbitrum and Optimism.

These platforms aim to preserve the essence of DCIs while unlocking benefits unique to DeFi: self-custody, composability, and transparency.

• Users retain control via self-custodial wallets, with no KYC barriers, enabling global access.

• Smart contracts govern settlement and yield calculations, with all logic visible on-chain. Cega, for instance, underwent audits with no critical vulnerabilities found.

• DeFi protocols offer dynamic strike prices, maturities, and experimental settlement logic, programmable to user needs.

• Understanding strike prices, wallet interactions, and gas fees poses a steep learning curve for newcomers.

• Smart contract risk from bugs or exploits can lead to fund loss, even in audited protocols.

• Without centralised counterparties, scaling DCI products and hedging exposure may be challenging due to liquidity constraints.

• Dependence on oracles introduces risks of manipulation or latency affecting expiry outcomes.

Yes — but it’s still early days. The market for DeFi-based DCIs is small but growing. One factor to consider is DAO treasury management. Protocols with idle assets are exploring DCIs as a way to generate yield without selling off core holdings.

Despite the potential, a few key barriers remain:

• Concepts like strike prices and expiry logic deter less experienced users.

• Matching DCI trades and hedging exposure without centralised clearing may be difficult due to liquidity fragmentation.

• Reliable, tamper-proof oracles are critical for accurate settlements.

• Smart contract risk poses potential vulnerabilities, which could erode trust and lead to losses.

To cross the chasm, DeFi DCI protocols should focus on:

• Simplified UX: Use intuitive labels like “Buy ETH Low & Earn Yield” instead of technical terms like “Sell a Put at $3,000.”

• Streamline Interactions: Integrate with wallets, reduce transaction steps, and provide clear outcome simulations.

• Leverage Aggregators: List on platforms like DeFiLlama or Zapper for visibility and comparison.

• Utilise Layer 2s: Deploy on Arbitrum, Base, or zkSync to minimise gas fees and friction.

• Foster Communities: Incentivise power users through rewards, ambassador programs, or curated vaults.

There’s a world where DCIs could exist in a hybrid form — blending the best of CeFi and DeFi. Imagine wallet apps like MetaMask or Coinbase Wallet offering easy-to-use interfaces for DeFi DCI products, backed by audited smart contracts under the hood.

The user gets a familiar experience, but the infrastructure remains permissionless and transparent — a perfect middle ground between usability and decentralisation.

DCIs blend speculation with yield, making them one of the most intriguing structured products in crypto. CeFi dominates today, thanks to its simplicity and scale, but DeFi is catching up fast — offering more transparency, flexibility, and composability.

The DeFi DCI market is small but growing, with demand from yield-hungry users and DAOs. By simplifying user experience, leveraging Layer 2s, and integrating with aggregators, DeFi DCIs could become a staple in the yield generation toolkit. If DeFi can distill its narrative — eg “Get paid to buy the dip” or “Earn yield or stack tokens” — DCIs may emerge as one of its most accessible yet misunderstood innovations.

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