You see “up to 3.5% interest” advertised on a fintech app. Then you open your bank app and see 0.25%. Same euros, same saver, very different headline. Where does the gap come from?
Behind every neobank yield there is a specific mechanism: a partner-bank deposit, a money market fund, a direct passthrough of the ECB rate. Behind unflat there is a different mechanism: an overcollateralized DeFi lending market. None of them is magic. Each one carries its own trade-offs in transparency, custody, coverage, currency.
This article walks through how the yields on Trade Republic, N26 and Revolut Earn actually work, what risk the saver is really carrying in each case, and where unflat sits in the same picture. The point is not “unflat is better”. It is to give you the operational understanding to choose, with full sight of what you are signing up for.
Neobanks promise yield. Where does it come from?
Every euro yield comes from one of three options: a remunerated deposit at a partner bank, a money market fund investing in very short-dated paper, or a lending market where capital is lent against collateral.
Neobanks do not issue money and do not run public lending books. What they do is route your idle balance into one of those three options, sometimes in combination, and keep a spread or a fee in exchange for distribution and the in-app experience.
Knowing which option powers the yield you see is the first question worth asking. It changes the risk, the coverage, and what happens to your money when market conditions move.
Trade Republic: the ECB rate
Trade Republic remunerates uninvested cash by aligning it with the ECB Deposit Facility Rate, capped at a defined balance per customer. The headline number you see on the interest rate page therefore moves with ECB Governing Council decisions.
Where does your money actually live? In deposits at Trade Republic’s partner banks, with a portion held at the ECB itself, as disclosed in the legal documents page. Deposits at partner banks are covered by the EU harmonized Deposit Guarantee Scheme (DGS): up to 100,000 euros per customer per partner bank, set by directive 2014/49/EU.
The concrete trade-offs. When the ECB cuts, your yield drops almost immediately. There is a cap on the remunerated balance (historically around 50,000 euros, worth verifying on the Trade Republic page at the time of reading).
N26 Instant Savings: money market fund
N26 Instant Savings (and the equivalent products on the higher N26 plan tiers) routes your cash into a money market fund managed by a third-party asset manager, typically BlackRock or Amundi depending on country and product tier.
What is a money market fund? A regulated fund investing in very short-dated money market instruments: bank deposits, certificates of deposit, very short government paper. Net fund yield tends to track the ECB rate minus product costs, with a small volatility cushion in stressed periods.
The coverage point matters. A money market fund is not a bank deposit. The fund share you own sits inside the fund’s segregated assets, separate from the asset manager’s balance sheet: that is the protection mechanism, not the DGS. DGS coverage applies only when cash is genuinely parked at a partner bank account; for money market funds, it does not.
The trade-offs. Yield moves with very short rates, so it is also designed to fall when the ECB cuts. Product liquidity is typically T+1: you sell the share today, you have the cash on your account tomorrow. No lockup. Costs: a small fund management fee (TER) and sometimes a markup from N26, varying by plan.
Revolut Flexible Accounts: money market funds in EUR and USD
Revolut Flexible Accounts (for European customers) follow the same operational model as N26: the cash is allocated to money market funds managed by a regulated asset manager (Fidelity in EU markets, per the published prospectuses), in EUR or USD at the customer’s choice.
This introduces two extra dimensions. The first is currency: if you choose a USD money market fund, you take on EUR/USD FX risk; if the euro strengthens, your euro-translated net yield is lower than the USD headline. The second is fee structure: Revolut applies its own fee on top of the fund’s TER, with reductions in premium tiers (Premium, Metal, Ultra). Reading the fund prospectus and the fee schedule before subscribing is worth the few minutes.
Operationally, “Flexible” means T+1 at most: the app shows funds as accessible within minutes, but the actual fund settlement follows the market calendar. There is no contractual lockup. Coverage works the same way as N26: not DGS, but money market fund segregation.
Who is it for? Customers already inside the Revolut ecosystem who want to park cash with a yield aligned to the ECB cycle (or the Fed cycle, for the USD version) without opening a new account elsewhere.
unflat: DeFi lending via Morpho
unflat follows a different model. The cash you deposit (USDC today, EURC on the roadmap) is allocated into Morpho Protocol, an overcollateralized decentralized lending market with over 5 billion dollars in managed assets and zero exploits.
What “overcollateralized” means in practice. Anyone borrowing on Morpho must post more collateral than the amount they borrow (typically over 150%). If the collateral value falls below a threshold, smart contracts automatically liquidate the position and repay the lenders, that is, those supplying capital. The way Morpho vaults work is verifiable on-chain at any time, by anyone.
Historical yield on unflat has reached up to 7% net APY. The number is variable and depends on borrowing demand on the market: in periods of low demand it falls, in periods of high demand it rises.
The specific risks are different from those of a neobank: smart contract risk, stablecoin depeg risk, EUR to USDC FX risk today (eliminated when EURC support goes live). Mitigation is structural, on-chain, and we walk through it layer by layer in how we protect your funds on unflat. The wallet is non-custodial: only you can sign transactions with your private key.
Side-by-side comparison of the four models
Putting the four models next to each other, on the same base.
| Dimension | Trade Republic | N26 Instant Savings | Revolut Flexible | unflat |
|---|---|---|---|---|
| Yield source | Partner-bank deposit / ECB | Money market fund | Money market fund (EUR or USD) | Overcollateralized DeFi lending |
| Indicative yield (variable) | Aligned to ECB deposit rate | Close to ECB deposit rate | Close to ECB (EUR) or Fed (USD) | up to 7% net APY |
| Custody | Partner bank | Asset manager (BlackRock / Amundi) | Asset manager (Fidelity) | Non-custodial wallet |
| Lockup | None | None (T+1) | None (T+1) | None |
| Coverage | DGS up to 100k euros | Fund-level asset segregation | Fund-level asset segregation | No public guarantee |
| Currency | EUR | EUR | EUR or USD | USDC today (FX risk), EURC on roadmap |
| Transparency | Legal documents | Fund prospectus | Fund prospectus | Verifiable on-chain |
The table is not “here is the winner”. It is: same euros, four different options. Each one fits a specific profile.
Which model fits which type of saver?
Three valid situations.
Operating cash stays in your bank. Salary, bills, monthly spending, that account stays where it is. None of the products on this list replaces a current account. They are complements.
Emergency cushion (3 to 6 months of expenses) wants DGS coverage. Trade Republic, or a traditional savings account, is consistent with that goal: coverage up to 100,000 euros per bank, fast withdrawal, yield aligned to the ECB cycle. The fact that the yield falls when the ECB cuts is the price of the coverage.
“Idle euros” beyond the cushion, multi-year horizon. Here options open up. Money market fund products (N26, Revolut) give you the simplest in-app experience, aligned with the rate cycle, no DGS but fund-level segregation.
unflat: a different risk-return profile
unflat is a different choice: higher yield against different risks, non-custodial custody, on-chain transparency, no public guarantee. The question is not “which one wins”: it is how much of your savings you want to allocate to a different risk profile, and how much you want to keep on the traditional rail.
For a more systematic comparison between DeFi and traditional banking, we dedicated a full piece to the DeFi vs traditional banking comparison across 10 dimensions.
If you want to see how unflat came to be and how it fits into this picture, read the story behind the fintech or explore more DeFi savings guides on our blog.