Locked Pays a Few Points More: How Long Should You Lock For

Locked usually pays a bit more than Flexible, but how much more depends on the market at the time. What you should calculate first isn't "how many points", it's "what are those points worth". Once you have that, whether to lock stops being abstract.

Turn the spread into money first

Say you have 10,000 USDT, Locked pays two percentage points above Flexible, and you lock for thirty days. The spread is 10,000 × 2% × 30 ÷ 365, about 16 USDT.

Sixteen dollars. For those sixteen dollars you accept that whatever happens in those thirty days, you can't move this money.

The arithmetic works for any combination. Substitute your own numbers, or just run it twice and subtract. We'd suggest doing it every time before you consider locking, because percentages create an illusion of a big gap and absolute amounts don't lie.

Of course, the bigger the amount the bigger the spread. A million USDT locked for thirty days at the same two points is over sixteen hundred, which is a different order of decision. So there's no universal answer here, only a universal action: work out the amount, then decide.

What Locked actually locks in

Plenty of people think Locked locks in "a higher return". What it actually locks in is "a return that stops moving".

The Flexible APY floats with borrowing demand (the mechanics are in what the Flexible APY tracks). Once you've locked thirty days, two things can happen: the market runs hot, the Flexible rate climbs above what you locked, and you lose out; or the market goes quiet, Flexible collapses, and the number you locked looks excellent.

So the essence of Locked is that you and the platform have swapped views on future rates: you gave up the upside and bought protection from the downside. It's a neutral trade, with no one taking advantage, and how it turns out depends on where rates go.

Which means "is Locked always better than Flexible" has no answer: you'd have to wait for the term to end and average what Flexible actually paid over that period to know which side won. And you have to decide before locking.

How to pick the term

The order should be: establish how long you won't need this money, then pick the best APY among the terms that fit inside that. Never the other way round: never shove money in because one term shows a good rate. Generally the longer the term the higher the APY, but the increments flatten out fast: going from seven days to thirty can add a fair bit; going from thirty to ninety often adds less than you'd expect, and you carry two more months of uncertainty.

Two months in crypto can hold more events than six months in traditional markets. That isn't scaremongering; it has happened repeatedly over the past few years. So our preference is: take the shorter term and decide again at maturity. The APY you give up buys the freedom to re-evaluate every month.

Staggering maturity dates, concretely

The "split it into a few tranches with staggered maturities" idea above deserves detail, because it's the highest-value move in this whole area.

Say you have money you're certain is staying put and you want to use Locked. Rather than locking all of it for three months at once, split it in three: one month, two months, three months. From the second month on, you have something maturing every month.

When a tranche matures, if you still don't need the money, lock it again for three months. After a few rounds you settle into "a three-month tranche maturing every month" — you get the longer-term rate and keep a monthly rhythm of money being released.

What it solves

One: it stops you making a big decision at a single moment. When everything matures at once you're facing "should I lock this entire pile for another three months", and that kind of decision gets made carelessly. Split, and you only handle a third at a time.

Two: it gives you a near exit when something goes wrong. Whenever trouble arrives, you're at most a month from a tranche being released, rather than sitting out three months.

Three: it smooths rate movements. Tranches locked at different moments capture different rates, so over time you land near the average instead of being stuck with one unlucky low.

What it costs

A few more actions, and that's all. Two minutes a month to handle the maturing tranche. For most people that inconvenience buys a very worthwhile amount of flexibility.

One warning: don't apply this to money you shouldn't be locking in the first place. Staggering maturities solves the arrangement problem after you've decided to lock; it isn't the answer to whether to lock. That comes back to the same line: how soon will you need this money.

A crude split that works

No elaborate asset allocation, just three rules.

• Money that might move within three months goes entirely to Flexible. Don't lock it because "I probably won't need it"; that "probably" fails often.
• Money that's clearly staying put can go to Locked, but not all at once. Split it into two or three tranches with staggered maturities, so something is always close to maturing and you're never completely stuck.
• Don't lock up more than you're holding in Flexible. There's no financial theory behind this one, it's purely experience: it guarantees that at any moment more than half your money is movable.

Staggering maturities is what traditional finance calls laddering. It works just as well here, and implementing it only takes a few extra taps at subscription.

The cost nobody counts: opportunity cost

What we calculated above is "how much more Locked earns". The complete account has another side: what you gave up during the lock-up. That side never sends you a bill, which is why it gets treated as zero.

Market opportunities

Big crypto moves tend to arrive suddenly. If something you judge worth acting on happens during your lock-up, you either miss it or find money elsewhere. That isn't to say you'd have caught it — most people don't, and some who do still lose. But when you're keeping the books, be clear: what you paid was optionality. Whether you'd have used that option well is a separate question.

A better product appearing

Campaigns roll out continuously. Lock into a three-month product today and something better may appear next week. Locked means you watch. Immaterial on small amounts; not small on large ones.

The psychological cost

The most underrated item. When the market drops hard and your money is locked and immovable, your anxiety is noticeably higher than it would be if you could withdraw and chose not to. The same position feels completely different depending on whether you can move it, and that pressure sometimes makes you do something bad somewhere else.

Add those three in, and how much of that sixteen dollars is left is something you have to weigh. Which is also why we suggest calculating the amount first: the point isn't to talk you out of locking, it's to let you decide whether it's worth it once you know exactly what you're being paid.

When Locked genuinely is the better call

Having poured a lot of cold water, here are the situations where it does work.

The market is dead quiet and the Flexible APY is crushed

When things are slow, few people borrow and the Flexible rate falls to something ugly. Locking a short term then fixes a rate that's still tolerable. If Flexible keeps sliding, you've won. It can go the other way, of course, but locking when Flexible is already low leaves limited room to fall further.

You know exactly what this money is for and when

For example, you know you need this money in three months to cover a fixed expense. The lock-up lines up with the use, liquidity was never the issue, and there's no reason to give up that return. The key word is "know": "I probably won't need it" doesn't count; "it's already scheduled for a date" does.

You've filled the Flexible bonus cap

A very practical scenario: the bonus tier only covers the first few hundred coins and your balance is far above that. The excess earns only the base rate in Flexible, while the Locked rate at the same moment is clearly higher. Putting the excess into Locked is a reasonable way to claw back some return.

Note the order here: fill the Flexible high-rate cap first, and only consider Locked for what's left over. Do it the other way round and you've given up your highest available APY in exchange for a middling one.

You need friction to control yourself

Not the most respectable reason, but genuinely useful for a lot of people: money in Flexible tempts you to do something with it every time the market twitches; money in Locked has that impulse physically separated from you. If you know you have this weakness, a short Locked term is a bolt-on for self-control.

One caveat: this reason only justifies short terms. Using a one-year product to manage your impulses costs you a year of helplessness. Bad trade.

Three terms people skip

Auto-renew is on by default

It renews at maturity at the new cycle's rate, which may be much lower. Decide deliberately whether to leave it on; if you do, set a reminder for the maturity date.

Early redemption comes in three kinds

Not allowed, allowed with no return, allowed at the Flexible rate: three completely different costs. Confirm which one before subscribing; the comparison is in what early redemption costs.

How "estimated return" is calculated

The subscription page usually shows an estimated return. That figure comes from the APY currently displayed, the amount you typed, and the full term — the ideal case: no early redemption, the APY unchanged for the whole term, and no tiered caps considered.

For a fixed-rate Locked product it's broadly accurate. But if the product has a floating component, or your amount exceeds the bonus tier, what you actually receive will be below it. Build a habit: after reading the estimated return, run it again yourself in the interest estimator at the base rate. The gap between the two numbers is the part to pay attention to.

Also, the estimated return is usually shown as a quantity of coins, not a fiat value. For stablecoin products those are close, but if you deposited a volatile asset the number means something else entirely; you may end up with more coins and less value.

Subscription caps and accrual start

Some Locked products have a cap and sell out; some only start accruing from the next settlement cycle, so what you think is thirty days locked is twenty-nine days earning. Individually these details are tiny; stacked, they put your real return below your estimate.

What to do on maturity day

People obsess over subscribing and then handle maturity casually. Maturity day is the chance to re-evaluate, and wasting it is a shame.

Step one: let it land back in Flexible. Whatever you plan to do, first get the money into a state where it can move. The problem with auto-renew is precisely that it skips this step and decides for you.

Step two: look at where rates and the market are now. During your lock-up the Flexible APY may have changed, and so may the environment. Judge with today's conditions, not with a judgement you made three months ago.

Step three: ask the question again: how long won't I need this money. The answer from three months ago may no longer hold; you might have a new plan for the money, or the old plan may have been cancelled.

Step four: then decide whether and how long to lock. A decision made on current information is far better than one auto-renew made for you.

The whole thing takes under five minutes, a few times a year. Against that, the few minutes auto-renew saves cost you complete control of that money.

Four traps people have genuinely walked into

Concrete mistakes beat abstract advice.

One: moving everything out of Flexible into Locked for a promotional rate, then wanting to add to a position two weeks later when the market moves, and the money is locked. The only choices left are scraping money from elsewhere or watching. The extra interest is wildly out of proportion to the missed opportunity — though of course, that move might have reversed, in which case you dodged one. The issue isn't whether you'd have profited, it's that you had no choice.

Two: picking the longest term because it showed the best APY, then hitting a family emergency part-way through. The early-redemption rule happened to be "not allowed", so you find money elsewhere. The longer the lock-up, the higher the chance of something happening. That's pure arithmetic on time.

Three: forgetting to turn auto-renew off, so maturity day rolled straight into a new cycle at a much lower rate. By the time you notice, several days have gone and exiting costs you the return.

Four: locking everything to the same maturity date. The whole lot releases at once, you're facing one big "should I lock all of this again" decision, and people are careless with big decisions. Split into staggered tranches and each time you only make a small one.

What all four share: every one of them would have been avoided by settling the timing first and looking at the rate second. Which is why we keep insisting on fixing the term before you look at the APY.