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> For the average currency user, why is it so important to get rid of banks and the government and these suspicious-sounding “third parties?” Yes, we all hate b

> For the average currency user, why is it so important to get rid of banks and the government and these suspicious-sounding “third parties?” Yes, we all hate bankers, but is the tyranny of Venmo so oppressive that we should shed the U.S. dollar entirely and begin trading in an alternative currency? One can get a 3 to 12% APY on stablecoins on decentralized lending/yield platforms. Meanwhile, a 1+% APY on a savings account at a regular bank in the US is an anomaly. It doesn't have to be political or ideological, there is a good financial case to be made for crypto-currency based solutions.

tablespoon 5y ago
> One can get a 3 to 12% APY on stablecoins on decentralized lending/yield platforms. Meanwhile, a 1+% APY on a savings account at a regular bank in the US is an anomaly. It doesn't have to be political or ideological, there is a good financial case to be made for crypto-currency based solutions. If you're seeing differences like that, it's not an apples to apples comparison. Those greater yields almost certainly represent greater risk (like with junk bonds).
- pattusk 5y ago
  I don't think the comparison to junk bounds is fair, and higher yields do not necessarily have to represent higher (objective) risk. The Uniswap USDC-USDT Pool currently has an APY of 8.54%. There are certainly more risks than letting the money sit in a savings account: smart contract risk (hack), regulatory risk and a failure of either of the two stable coins to maintain their peg. However I'd describe each of these risks as "black swans". In contrast, a C rated junk bond these days will have around a 4% yield. I may be overly bullish on crypto, but I don't think the risk of investing in a company that is about to default compares to being a liquidity provider on Uniswap in the USDT-USDC stablecoin pool, where (asides from the risks mentioned above) your capital will sit at a constant (USD) value and accrue fees from traders.
  - akvadrako 5y ago
    On twino you can get 10% guaranteed for loans. And the only risk is the company goes under, though they've been running for years. It seems like in both the cryptocoin case and fiat case, the risk is priced similarly.
    - intev 5y ago
      Nope. You made some leaps there. In one case you are providing a loan to, essentially a stranger that has been "vetted" but there's literally nothing stopping them taking off with the money. Twino won't try too hard if you lose your 10k. With the liquidity pools, you are adding your money to literally 100s of millions of dollars already in the pool. No one can really take off with the money because you can track everything. I'd say the risk is significantly less. In practice this means that the large, established stable coin liquidity pools which have existed for years, have never been hacked which means your loss rate is 0%. The loan repayment rates, I am sure are not 100%.
      - akvadrako 5y ago
        Twino has a buyback guarantee in case the borrower defaults.
        intev 5y ago
        > TWINO offers a buyback guarantee on some of its loans. Basically, the buyback guarantee is a promise made by TWINO to its investors to repurchase loans that are not repaid by the borrower. It looks as though that the buyback is not a guarantee on all their loans, just some. I'm guessing this also comes with lower yields because they would need to take insurance to cover their risk. So unless you compare it to the lower yields, my point stands. With a default rate of 5% last year [1], I'd say the loans are way riskier. [1] https://www.twino.eu/en/statistics/ https://www.twino.eu/en/statistics/
        akvadrako 5y ago

tablespoon 5y ago

> One can get a 3 to 12% APY on stablecoins on decentralized lending/yield platforms. Meanwhile, a 1+% APY on a savings account at a regular bank in the US is an anomaly. It doesn't have to be political or ideological, there is a good financial case to be made for crypto-currency based solutions. If you're seeing differences like that, it's not an apples to apples comparison. Those greater yields almost certainly represent greater risk (like with junk bonds).

pattusk 5y ago
I don't think the comparison to junk bounds is fair, and higher yields do not necessarily have to represent higher (objective) risk. The Uniswap USDC-USDT Pool currently has an APY of 8.54%. There are certainly more risks than letting the money sit in a savings account: smart contract risk (hack), regulatory risk and a failure of either of the two stable coins to maintain their peg. However I'd describe each of these risks as "black swans". In contrast, a C rated junk bond these days will have around a 4% yield. I may be overly bullish on crypto, but I don't think the risk of investing in a company that is about to default compares to being a liquidity provider on Uniswap in the USDT-USDC stablecoin pool, where (asides from the risks mentioned above) your capital will sit at a constant (USD) value and accrue fees from traders.
- akvadrako 5y ago
  On twino you can get 10% guaranteed for loans. And the only risk is the company goes under, though they've been running for years. It seems like in both the cryptocoin case and fiat case, the risk is priced similarly.
  - intev 5y ago
    Nope. You made some leaps there. In one case you are providing a loan to, essentially a stranger that has been "vetted" but there's literally nothing stopping them taking off with the money. Twino won't try too hard if you lose your 10k. With the liquidity pools, you are adding your money to literally 100s of millions of dollars already in the pool. No one can really take off with the money because you can track everything. I'd say the risk is significantly less. In practice this means that the large, established stable coin liquidity pools which have existed for years, have never been hacked which means your loss rate is 0%. The loan repayment rates, I am sure are not 100%.
    - akvadrako 5y ago
      Twino has a buyback guarantee in case the borrower defaults.
      - intev 5y ago
        > TWINO offers a buyback guarantee on some of its loans. Basically, the buyback guarantee is a promise made by TWINO to its investors to repurchase loans that are not repaid by the borrower. It looks as though that the buyback is not a guarantee on all their loans, just some. I'm guessing this also comes with lower yields because they would need to take insurance to cover their risk. So unless you compare it to the lower yields, my point stands. With a default rate of 5% last year [1], I'd say the loans are way riskier. [1] https://www.twino.eu/en/statistics/ https://www.twino.eu/en/statistics/
        akvadrako 5y ago