What is Earn?
Earn is a yield-offering product on the M2 Platform that allows users to deposit their crypto assets in exchange for rewards.
What types of plans are offered under Earn?
M2 offers the following Earn plans across various assets:
Fixed-duration plans: For specific durations of 30 days, 60 days, and 360 days. Assets deposited under Fixed-duration plans will be returned to the user, along with the rewards, at the end of the plan duration with auto-compounded rewards.
Custom-duration plans: A Fixed-duration plan but with a duration chosen by the user between 30 days and 360 days.
Flexible plans: A perpetual plan with no set end date. It can be canceled by the user anytime, either fully or partially. Amounts under a Flexible plan can be adjusted anytime.
How are Earn rewards calculated?
M2 operates on a 24-hour reward cycle, starting at 10:00 UTC.
While users can deposit assets into Earn plans at any time, all new subscriptions activate at the start of the upcoming reward cycle. Thus, assets start earning rewards post-activation.
Example 1: A user subscribes to a Fixed 60-day Earn plan at 17:00 UTC on 16/8/23. The subscription activates at 10:00 UTC on 17/8/23, and the first rewards will be credited on 18/8/23 at 10:00 UTC.
All Fixed/Custom plans mature at the end of their respective cycle.
Example 2: Continuing Example 1, the plan would mature at the end of the cycle on 16/10/23, i.e., at 10:00 UTC on 17/10/23.
Should a user cancel a plan, no rewards will be given for the reward cycle during which the plan was canceled and the cancellation was confirmed.
Example 3: Continuing from Example 2, if the user cancels the plan at 2100 on 21/8/23 and M2 confirms it, no rewards would be provided at the end of the reward cycle ending at 10:00 UTC on 22/8/23.
When are Earn rewards distributed?
Rewards accumulate on the qualifying amount at the end of reward cycles during which the Plan is active. The rewards earned at the end of a cycle become part of the qualifying amount for the next cycle. All plans auto-compound unless stated otherwise.
The initial subscription, along with accumulated rewards, are distributed either at the end of the plan (upon maturity) or upon cancellation (subject to charges mentioned in FAQ#6), whichever occurs first.
Example 4: Continuing Example 1, the initial subscription to the Fixed 60-day plan is 10,000. With an interest rate of 3.6% per annum, the rewards on 18/8/23 are 1. For the rewards cycle starting at 10:00 UTC on 18/8/23, the eligible amount is 10,001. Rewards on 19/8/23 at 10:00 UTC are 1.001. The eligible amount for the cycle starting at 10:00 UTC on 19/8/23 is 10,002.001, and so forth. If the plan is canceled on 19/8/23 at 21:00 UTC, the eligible amount of 10,002 will be returned, subject to a charges (per FAQ#6).
When do I begin earning rewards?
Rewards start accumulating from the beginning of the subsequent reward cycle after depositing into the Earn plan — essentially upon activation. The rewards add up at the cycle's end and become part of the eligible amount for the next rewards cycle, continuing until the plan matures or is canceled.
Can I cancel a plan before its maturity?
Flexible plans: Yes, these plans can be wholly or partially canceled at the user's discretion without any charges. Rewards are based on the smallest qualifying amount during the reward cycle.
Example 5: The eligible amount at cycle start is 1,000. If a user adds 500 to the Flexible plan at 11:00 UTC and removes 600 at 16:00 UTC, the qualifying amount for rewards at cycle end is 900.
Fixed/Custom plans: Cancellation requests made before plan maturity are subject to M2's approval. If M2 accepts an Earn plan cancellation, the qualifying amount will be returned, but charges specified by M2 might apply.
Are there charges if I cancel an Earn plan before its maturity?
Please refer to FAQ#6. Charges apply when Fixed/Custom plans are canceled early. The exact charges depends on the plan and will be conveyed to the user.
When are assets given back after closing an Earn plan?
The return of assets, post plan completion or cancellation, varies based on the asset and plan type. M2 endeavors to return assets to users within 24 hours from the relevant reward cycle's cut-off time for Flexible plans and within 48 hours for Fixed/Custom plans.
Are there any limits to Earn plans?
Yes. Every plan has both a minimum and maximum subscription cap per user. There's a set limit to the total assets M2 can accept under a particular plan (known as the pool limit). Once this pool limit is filled, the plan is considered fully subscribed. No further subscriptions are accepted unless M2 raises the pool limit.
Are there any fees for starting Earn plans?
There are no start-up fees for Earn plans. However, if a Fixed/Custom Earn plan is canceled before maturity, a cancellation charges might apply (refer to FAQ#6).
How does M2 generate yields from assets in Earn plans?
M2 consolidates assets from each plan and type, then allocates them for yield in various on-chain opportunities, differing by plan and asset type. Some of the avenues for yield generation are mining, staking, liquid staking, proprietary market neutral algorithmic trading and collateralized on platform lending.
What yield-generating opportunities are available, and how can M2 offer attractive returns?
The options differ by asset and plan, chosen based on risk-assessed opportunities. Bitcoin mining, which M2 has exclusive access to through global mining resources, is a prime example. It's often too complex and unscalable for typical users due to operational challenges. Yet, M2's proprietary access allow us to direct mining rewards to users through Earn plans, tailored to their specifications.
Why do Flexible plans and Fixed/Custom plans have different returns?
M2's Earn plans are designed to suit users' needs regarding flexibility and duration. Fixed and Custom plans provide a clear maturity date, helping M2 in liquidity management by aligning asset deployment with the plan's maturity. However, Flexible plans, which can be canceled anytime, require M2 to keep a more significant undeployed amount on hand.
Therefore, M2 offers higher yields on Fixed and Custom plans than on Flexible plans, rewarding users for committing their assets for a specific period.
How does M2 ensure asset return upon plan completion or cancellation?
M2 boasts a dynamic liquidity management system, complete with allocation rules, which balances yield and liquidity. It adjusts based on assets taken for Earn and prevailing redemption trends. A portion of these assets is always kept liquid to address redemptions and other liquidity needs, assuring prompt asset return upon plan completion or cancellation.
Is my principal safe with Earn plans?
Like all investments, Earn plans come with risks. M2 endeavors to minimize risk through diversification and rigorous due diligence on yield-generating opportunities. However, M2 doesn't guarantee principal preservation. Before committing to an Earn plan, users should understand the risks and consult professionals or review the Product Risk Disclosure.
How does M2 ensure the return of assets upon completion or cancellation of plans?
M2 utilizes a sophisticated, dynamic liquidity management system. This system, governed by specific allocation rules, continually balances between yield generation and liquidity. It adapts in real-time to changes in assets designated for Earn and prevailing redemption trends. To facilitate timely redemptions, M2 always maintains a portion of assets in a readily accessible state.
What risks are inherent in M2's yield generation?
Yields on M2 are generated on-chain through endeavors like bitcoin mining, staking, and liquid staking. The predominant risks in this yield generation process encompass both operational and market variables.
See the Disclosures in Section 7 of the Earn Terms & Conditions for a greater discussion on Risks.
How does M2 manage these risks?
At M2, the protection of user assets is of utmost importance. We have an exhaustive, continually updated risk assessment and monitoring system in place. This system is tailored to mitigate diverse risks, including operational, market, liquidity, and counterparty risks.
How does M2 determine which tokens are included in Earn plans? Will this list expand?
Token selection for Earn plans is a meticulous process, taking into account several criteria: the potential for sustainable yield generation, the token's popularity, its scale, and a comprehensive evaluation of both the asset and its underlying network. Currently, Earn plans span 21 assets, but we're actively exploring the inclusion of more assets and plans in the near future.
Will Earn plan reward rates be subject to change?
Yes, the reward rates of Earn plans are periodically reviewed and adjusted based on the evolving yield opportunities where M2 deploys assets.
How do alterations in Plan rates affect existing Earn plans?
Rate adjustments are instantaneously applied to all active Flexible plans. For Fixed/Custom plans, new rates are relevant only to new subscriptions, leaving ongoing plans unaffected. However, M2 retains the discretion to modify and duly notify users of rate changes for active Fixed/Custom plans.
Are there avenues to amplify returns on Earn plans?
M2 is in the process of introducing specific features that users can leverage to enhance their Earn plan rates. We'll be sharing more details on this initiative soon.
Disclaimer:
It is highly recommended to conduct thorough research prior to making any financial decisions. Please note that this article's purpose is solely for educational purposes and the author and the organization, M2, do not influence the reader's investment or trading choices.
Sudeep, Head of Product Active Treasury Management is a finance professional with extensive experience across lending and investment products, structuring alternative investments, investor relations for start-ups and strategic initiatives in the fin-tech space. Prior experience included heading up the lending borrowing at Coin DCX as well as other corporate and investment banking across some of the largest banks in India.
