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Pegged tokens like USDC and USDC can still be used to speculate in DeFi platform like AAVE with pretty lucrative returns.
by qqii 6y ago
Pegged tokens like USDC and USDC can still be used to speculate in DeFi platform like AAVE with pretty lucrative returns.
- PragmaticPulp 6y agoWhere do the returns come from? Does the interest return come from actual investments? Or is it paid forward by newcomers? The latter is the literal definition of a ponzi scheme. There's no free lunch when it comes to generating interest.
- rodiger 6y agoBorrowers pay more than lenders. You get a cut of those fees as interest. There's risk there of course, but it isn't magic money or a ponzi.
- warkdarrior 6y agoSo the borrowing costs must be quite high to warrant that revenue.
- cdiddy2 6y agoCurrently 18% borrow APY with 143M USDC being borrowed. You can check it here https://app.aave.com/markets https://app.aave.com/markets
- qqii 6y agoIt is as the other commenter said, returns come from other people borrowing collateral and paying interest on it. It may also interest you to know that AAVE was granted an Electronic Money Institution license by the U.K. Financial Conduct Authority (https://register.fca.org.uk/s/firm?id=0010X00004U9vVAQAZ https://register.fca.org.uk/s/firm?id=0010X00004U9vVAQAZ).