5 ms·

There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablec

by NickM 5y ago

There are a lot of areas of crypto where I feel like I have a pretty good understanding, but I genuinely don't understand why anyone would "invest" in a stablecoin. What advantage does holding something like USDT offer over simply putting dollars in a bank account?

vmception 5y ago
Yield farming with stablecoin pairs (ie USDC/USDT liquidity pool shares) has no impermanent loss and high returns, and you are liquid to buy any dips in the crypto market because you can unbundle your liquidity pool share at any time and you just have a bunch of stablecoins and dont even have to wait for custodial exchange withdrawals confirmations So you are better positioned and can act faster on a broader universe of assets, than a large portion of the crypto space.
- rfd4sgmk8u 5y ago
  This -- the returns on stablecoin liquidity provision are beyond expectation, and are totally transparent. You can see the actual interest/rewards in real time from the chain. I think it is far less risky than appears on the surface, but some diligence is required. Don't drop all your capital in sketchy projects started last week. Given some additional maturity to the markets, I see this as being THE forex markets of the future.
deleted 5y ago
[deleted]
rafale 5y ago
You can send it to any wallet. No KYC needed. You can do so programmatically thru a standardized RPC endpoint. You can send it to smart contracts (i.e. decentralized apps), to borrow against it, leverage it, lend it,... plenty if things to do once the USD makes it into a programmable blockchain. Still a scam imo.
- pjc50 5y ago
  > No KYC needed. That is a legal opinion not a technical one, and it's far from clear that the enforcement of KYC will be kept off coins forever.
frankbreetz 5y ago
Also, not an expert, but I believe it is easier to trade for other currencies and there are less rules around it. They are not really "investing" in stablecoins, but cashing out their cypto holdings and will eventually cash out into real dollars
fabianhjr 5y ago
Having the rug pull experience minus the volatility.
ffggvv 5y ago
basically when buying and selling in an exchange you would buy and sell using tether. similiar to how in your investment account you trade dollars for stocks and stocks for dollars. as opposed to trading stocks for stocks. and the reason you wouldn’t just deposit actual dollars on the exchange is to avoid regulations and laws related to actually depositing dollars
chroem- 5y ago
Stablecoins have instant transfers between exchanges because they're not dependent on the legacy banking system. Their primary purpose is moving money around. There are also algorithmic stablecoins which maintain their price by adjusting supply rather than being backed by reserves.
- deleted 5y ago
  [deleted]
themodelplumber 5y ago
Seems like an intra-market advantage. > having USDT (as opposed to the U.S. dollar) removes transaction costs and delays that impair trade execution within the crypto market. https://www.investopedia.com/terms/t/tether-usdt.asp https://www.investopedia.com/terms/t/tether-usdt.asp
purple_ferret 5y ago
Pretty straightforward: You can currently get 8.88% APY return on lending stablecoins on Celsius[0]. It's also much easier to borrow and use in incredibly risky contracts, yield farming, etc Stablecoins let you engage in much more risk than USD without the volatility of crypto prices. [0]https://celsius.network/earn-rewards-on-your-crypto https://celsius.network/earn-rewards-on-your-crypto
- ceejayoz 5y ago
  If a bank offered me 8.88% APY for depositing USD, I'd be pretty suspicious of a catch.
  - backprop1993 5y ago
    There is a catch, but you won't find out what it was until they loose all of the money they are holding. There is probably a 50/50% chance this is just a Ponzi, and if it isn't it is some complicated strategy which can not handle black or even grey swan events, and there is a 5% chance there is a bug in their code that allows for all the funds to be stolen. But in the mean time you can get an 8% return.
    - lupire 5y ago
      "50/50" is pure speculation.
  - godot 5y ago
    Well, there's no FDIC, so there's no government making sure you get your money back if the organization holding your money shut down. There's a number of companies offering something similar, like Celsius and Blockfi and a few others. Do your own research, and no need to go near it if not comfortable with it. Things could go either way from here on out, perhaps crypto is the future and 8.88% interest for stablecoins will be the standard; or perhaps it'll all come crashing down and all cryptos go poof in a few years. Who knows? Point being, when a new paradigm comes along, it usually seems strange and uncomfortable enough to feel suspicious. Maybe it's legit, maybe not, there's a chance for either case.
X6S1x6Okd1st 5y ago
Many trades on exchanges happen against stablecoins instead of USD directly. All trades on DeFi that go from 'fiat' to crypto go through stablecoins. If you want a cut of the fees paid by speculators then you are probably interested in stablecoins because that's how you market make in these markets.
JayStavis 5y ago
Nobody invests purely in a stablecoin if it's value is pegged to fiat. All else equal it's actually worse than holding dollars in a bank account which has a nominal interest rate. The point of stable coins is to have a working capital system that is compatible with the rest of the crypto ecosystem. The reason is that most services in crypto aren't natively compatible with fiat due to fragmented legal & regulatory environments. Stablecoins are instant transfers to anywhere in the world. It's why a lot of countries are trying to build regulatory frameworks for stablecoins. Two caveats: (1) USDC actually can earn a lot more in a coinbase earn account or vault than your dollars in your bank account, so lot's of people are saving with stable coins via higher interest rates -- I just wouldn't call it "investing". (2) Some stable coins are pegged to a value that isn't real fiat money. Some good thoughts here: https://twitter.com/balajis/status/1422993084002934788 https://twitter.com/balajis/status/1422993084002934788
ptero 5y ago
I can come up with a bunch of possibilities (not sure how important they are for different people), but they revolve around using crypto for transfer, not price hedging, long term investment or short term speculation. An example often cited for El Salvador, where a US worker A sends money to a family member B at home. If A uses banks and dollars, B may need to travel to a bank (long trip on a bus through areas not very friendly to strangers), pay sizeable cross-border commission, evade gangs looking for people withdrawing money, etc. With crypto, they could receive it at home. Businesses buying and selling things that accept crypto need to have significant amount in crypto to handle transactions. Neither of those parties wants BTC with its wild swings; they just want a "crypto dollar" that they can exchange, if and when needed, for a real one, so they build a position in it. My 2c.
- el-salvador 5y ago
  > An example often cited for El Salvador, where a US worker A sends money to a family member B at home. >If A uses banks and dollars, B may need to travel to a bank (long trip on a bus through areas not very friendly to strangers), pay sizeable cross-border commission, evade gangs looking for people withdrawing money, etc. I understand the advantages of USDT, like making crossborder transactions faster/cheaper. However the often cited example but not 100% accurate because it ignores some of the features of the Salvadoran financial system. There is a a system of "financial agents/correspnondents". There is no need to visit a branch of the bank to receive a remmittance if it is under US$ 500. That can be done in a Supermarket, pharmacy or the main tienda in town. It can even be done with an app (like the one used by the largest credit union). This is the map of one of just one of the networks, this network owned by cooperatives owned by its users, like a credit union, and not a private company like a bank or multinational bank.: https://www.fedecredito.com.sv/puntos-de-atencion https://www.fedecredito.com.sv/puntos-de-atencion > With crypto, they could receive it at home. Remmittances can be received using finantial apps too. The largest private bank in El Salvador has a simple bank account. It can be opened with a selfie, a photo of the ID card. Other banks also offer this simple bank accounts. Currently the transaction costs via the normal remmittance system, are lower, than by using the only three bitcoin atms in the country. Twitter users reported that recently when the bitcoin price reached $40,000, the only Bitcoin ATM in San Salvador ran out of cash. And that the only way to contact their technical support was via Whatsapp message to a phone number based in another country, Colombia.
samizdis 5y ago
Matt Levine's Money Stuff column yesterday [1] had a pretty thorough take on stablecoins and their uses - and their potential pitfalls, with a bit of Tether history thrown in. It's the second chunk of the column under the heading "Speaking of Stablecoins". [1] https://www.bloomberg.com/opinion/articles/2021-08-11/crypto-hackers-are-nice-now https://www.bloomberg.com/opinion/articles/2021-08-11/crypto...
gdvvc 5y ago
You don't need to pay taxes. Example: You earn $1000/month. Cost of living is $500/month, labour tax is $500/month. By using cryptocurrency you can skip tax and save up $500/month, in legit employment (labour law, worker rights protection) you save up $0/month, you work for free, hand to mouth.
- ceejayoz 5y ago
  Don't mistake OJ getting away with murder for OJ being permitted to murder. You need to pay taxes. You're just illegally not doing so.
- hestefisk 5y ago
  That presumes you get paid in crypto, not fiat.
- jazzyjackson 5y ago
  Or I can just get paid cash under the table, same thing
- vmception 5y ago
  Weird take. If your employer is obligated to withhold taxes from you per pay period, then they can do that and still pay you the rest in stablecoins. If your employer is not obligated to withhold taxes because you are a contractor, then not having taxes withheld has nothing to do with earning fiat or earning stablecoins. If you are trying to avoid the record of payment by earning stablecoins, this is neither an efficient way to do it nor is it legal.
throwup2021 5y ago
As an individual trader running an algorithmic arbitrage operation at > 40 exchanges, I have to. You can count me in for USDT 56k. I am small fish. My algorithms constantly watch USDT/USD price at 3 exchanges which are independent from Tether Inc, and if USDT drops below $0.95 at one of them, they stop issuing orders selling to USDT.
- backprop1993 5y ago
  Are you saying that the exchanges are forcing a $1 +/- 0.05 price range for Tether instead of letting it float freely? Interesting.
  - ceejayoz 5y ago
    No, they're saying their personal USDT trading strategy involves a cessation of activity if Tether breaks the $1 peg, as it probably indicates trouble requiring human intervention.
  - merely-unlikely 5y ago
    Not forcing per se - the arbitrage incentivizes market makers to keep the value roughly in the expected range. This happens in any asset class but the mechanic is quite straightforward in this case.
backprop1993 5y ago
Could they be selling it at a discount, like $1.00 - X discount per Tether and allowing these other firms to benefit in order to get the flow? Bulk discounts to their friends?
Fiahil 5y ago
DAI offers some ~2% APY on coinbase, that's much more than my saving account!
- SanFranManDan 5y ago
  For substantially more risk…
togilvie 5y ago
If you are a market maker / arbitrageur working across multiple exchanges, US dollars can take days to settle and wire/withdrawal capacity is limited. USDT offers instant transfers, so you can rebalance across locations with ease. That's why it's being heavily used by the largest market makers in crypto.
xtracto 5y ago
I live in Mexico so I get paid in MXN which historically has been, let´s say less than optimal ( https://www.tradingview.com/symbols/USDMXN/ https://www.tradingview.com/symbols/USDMXN/ ). I have a portfolio of different risk profiles (ETFs, bonds, IRA, etc [Mexico equivalents of course]). Some of that is in stablecoins, which are pegged to the US Dollar, because it is the easiest way for me to store them, instead of going to a "casa de cambio" and exchange the bills themselves (with the risk of being robbed, shot or killed). It's a pretty good use case if you ask me haha.
- IncRnd 5y ago
  It might be a pretty good use case but only until there is a run on Tether.
  - xtracto 5y ago
    I don't believe in Tether. I use other stablecoins (mainly DAI and USDC). And also, that's why you diversify your portfolio: All assets have risks.
scotty79 5y ago
You can buy stablecoin at the exchange you prefer (because it has low fees or supports your preferred payment method). Then you can transfer them to other exchanges and buy crypto there. Works the other way too. You can optimize your trading and withdrawal fees this way. So very mediocre utility. The only entity the stable coins are most wonderful deal is the the one that emits them. They basically have money printing machine for the crypto-economy. And if the project tanks they are left with hard money in hand and everybody else ends up with now worthless stablecoin, because the only source of it's value and utility was the stability. Some stable coins like DAI have bit more indirect mechanisms of attaching their price to dollar. This seem to work and managed to keep DAI value stable without any manual intervention while ETH price (which is involved in control mechanisms) swung wildly.
rfd4sgmk8u 5y ago
Gemini pays 7.4% APY interest on your GUSD/DAI stablecoin holdings. This is better than any bank in the universe.
- ceejayoz 5y ago
  Would you trust a bank that promised a 7.4% APY savings account, or would you go "hmmmmmm..."? > This is better than any bank in the universe. "If it sounds too good to be true..."
  - rfd4sgmk8u 5y ago
    I used to believe this -- "too good to be true", then I played with the tech and realized the folk borrowing the money at a higher rate (of course) were earning 2x that via various defi contracts. Most of the defi world is a scam, however, stablecoin<->stablecoin liquidity pools are handling millions of dollars and paying the liquidity providers handsomely at 0.1%. It is then that you understand who exactly is making big money in this space :-) I'm not saying there is no risk -- indeed, there is considerable risk and no FDIC insurance; BUT, the game is far more complex than looks on the surface.
    - ceejayoz 5y ago
      > I used to believe this -- "too good to be true", then I played with the tech and realized the folk borrowing the money at a higher rate (of course) were earning 2x that via various defi contracts. Bernie Madoff's ponzi scheme survived for decades before it was revealed to be "too good to be true". If those defi contracts collapse, your savings that got loaned out to them are gone. You're not getting that APR, and you're out the principal too.
      - rwiggum 5y ago
        That's not how it works. If the defi contracts collapse, the borrowers get margin called. The borrowers must overcollateralize quite a bit, usually 1.5x or 2x what they are borrowing. You could argue that the sell order will fall through in the case of a total market collapse. But the market has fallen 90% in the past and this has not happened.
deleted 5y ago
[deleted]

by NickM 5y ago

vmception 5y ago

Yield farming with stablecoin pairs (ie USDC/USDT liquidity pool shares) has no impermanent loss and high returns, and you are liquid to buy any dips in the crypto market because you can unbundle your liquidity pool share at any time and you just have a bunch of stablecoins and dont even have to wait for custodial exchange withdrawals confirmations So you are better positioned and can act faster on a broader universe of assets, than a large portion of the crypto space.

rfd4sgmk8u 5y ago
This -- the returns on stablecoin liquidity provision are beyond expectation, and are totally transparent. You can see the actual interest/rewards in real time from the chain. I think it is far less risky than appears on the surface, but some diligence is required. Don't drop all your capital in sketchy projects started last week. Given some additional maturity to the markets, I see this as being THE forex markets of the future.

deleted 5y ago

[deleted]

rafale 5y ago

You can send it to any wallet. No KYC needed. You can do so programmatically thru a standardized RPC endpoint. You can send it to smart contracts (i.e. decentralized apps), to borrow against it, leverage it, lend it,... plenty if things to do once the USD makes it into a programmable blockchain. Still a scam imo.

pjc50 5y ago
> No KYC needed. That is a legal opinion not a technical one, and it's far from clear that the enforcement of KYC will be kept off coins forever.

frankbreetz 5y ago

Also, not an expert, but I believe it is easier to trade for other currencies and there are less rules around it. They are not really "investing" in stablecoins, but cashing out their cypto holdings and will eventually cash out into real dollars

fabianhjr 5y ago

Having the rug pull experience minus the volatility.

ffggvv 5y ago

basically when buying and selling in an exchange you would buy and sell using tether. similiar to how in your investment account you trade dollars for stocks and stocks for dollars. as opposed to trading stocks for stocks. and the reason you wouldn’t just deposit actual dollars on the exchange is to avoid regulations and laws related to actually depositing dollars

chroem- 5y ago

Stablecoins have instant transfers between exchanges because they're not dependent on the legacy banking system. Their primary purpose is moving money around. There are also algorithmic stablecoins which maintain their price by adjusting supply rather than being backed by reserves.

deleted 5y ago
[deleted]

themodelplumber 5y ago

Seems like an intra-market advantage. > having USDT (as opposed to the U.S. dollar) removes transaction costs and delays that impair trade execution within the crypto market. https://www.investopedia.com/terms/t/tether-usdt.asp https://www.investopedia.com/terms/t/tether-usdt.asp

purple_ferret 5y ago

Pretty straightforward: You can currently get 8.88% APY return on lending stablecoins on Celsius[0]. It's also much easier to borrow and use in incredibly risky contracts, yield farming, etc Stablecoins let you engage in much more risk than USD without the volatility of crypto prices. [0]https://celsius.network/earn-rewards-on-your-crypto https://celsius.network/earn-rewards-on-your-crypto

ceejayoz 5y ago
If a bank offered me 8.88% APY for depositing USD, I'd be pretty suspicious of a catch.
- backprop1993 5y ago
  There is a catch, but you won't find out what it was until they loose all of the money they are holding. There is probably a 50/50% chance this is just a Ponzi, and if it isn't it is some complicated strategy which can not handle black or even grey swan events, and there is a 5% chance there is a bug in their code that allows for all the funds to be stolen. But in the mean time you can get an 8% return.
  - lupire 5y ago
    "50/50" is pure speculation.
- godot 5y ago
  Well, there's no FDIC, so there's no government making sure you get your money back if the organization holding your money shut down. There's a number of companies offering something similar, like Celsius and Blockfi and a few others. Do your own research, and no need to go near it if not comfortable with it. Things could go either way from here on out, perhaps crypto is the future and 8.88% interest for stablecoins will be the standard; or perhaps it'll all come crashing down and all cryptos go poof in a few years. Who knows? Point being, when a new paradigm comes along, it usually seems strange and uncomfortable enough to feel suspicious. Maybe it's legit, maybe not, there's a chance for either case.

X6S1x6Okd1st 5y ago

Many trades on exchanges happen against stablecoins instead of USD directly. All trades on DeFi that go from 'fiat' to crypto go through stablecoins. If you want a cut of the fees paid by speculators then you are probably interested in stablecoins because that's how you market make in these markets.

JayStavis 5y ago

Nobody invests purely in a stablecoin if it's value is pegged to fiat. All else equal it's actually worse than holding dollars in a bank account which has a nominal interest rate. The point of stable coins is to have a working capital system that is compatible with the rest of the crypto ecosystem. The reason is that most services in crypto aren't natively compatible with fiat due to fragmented legal & regulatory environments. Stablecoins are instant transfers to anywhere in the world. It's why a lot of countries are trying to build regulatory frameworks for stablecoins. Two caveats: (1) USDC actually can earn a lot more in a coinbase earn account or vault than your dollars in your bank account, so lot's of people are saving with stable coins via higher interest rates -- I just wouldn't call it "investing". (2) Some stable coins are pegged to a value that isn't real fiat money. Some good thoughts here: https://twitter.com/balajis/status/1422993084002934788 https://twitter.com/balajis/status/1422993084002934788

ptero 5y ago

I can come up with a bunch of possibilities (not sure how important they are for different people), but they revolve around using crypto for transfer, not price hedging, long term investment or short term speculation. An example often cited for El Salvador, where a US worker A sends money to a family member B at home. If A uses banks and dollars, B may need to travel to a bank (long trip on a bus through areas not very friendly to strangers), pay sizeable cross-border commission, evade gangs looking for people withdrawing money, etc. With crypto, they could receive it at home. Businesses buying and selling things that accept crypto need to have significant amount in crypto to handle transactions. Neither of those parties wants BTC with its wild swings; they just want a "crypto dollar" that they can exchange, if and when needed, for a real one, so they build a position in it. My 2c.

el-salvador 5y ago
> An example often cited for El Salvador, where a US worker A sends money to a family member B at home. >If A uses banks and dollars, B may need to travel to a bank (long trip on a bus through areas not very friendly to strangers), pay sizeable cross-border commission, evade gangs looking for people withdrawing money, etc. I understand the advantages of USDT, like making crossborder transactions faster/cheaper. However the often cited example but not 100% accurate because it ignores some of the features of the Salvadoran financial system. There is a a system of "financial agents/correspnondents". There is no need to visit a branch of the bank to receive a remmittance if it is under US$ 500. That can be done in a Supermarket, pharmacy or the main tienda in town. It can even be done with an app (like the one used by the largest credit union). This is the map of one of just one of the networks, this network owned by cooperatives owned by its users, like a credit union, and not a private company like a bank or multinational bank.: https://www.fedecredito.com.sv/puntos-de-atencion https://www.fedecredito.com.sv/puntos-de-atencion > With crypto, they could receive it at home. Remmittances can be received using finantial apps too. The largest private bank in El Salvador has a simple bank account. It can be opened with a selfie, a photo of the ID card. Other banks also offer this simple bank accounts. Currently the transaction costs via the normal remmittance system, are lower, than by using the only three bitcoin atms in the country. Twitter users reported that recently when the bitcoin price reached $40,000, the only Bitcoin ATM in San Salvador ran out of cash. And that the only way to contact their technical support was via Whatsapp message to a phone number based in another country, Colombia.

samizdis 5y ago

Matt Levine's Money Stuff column yesterday [1] had a pretty thorough take on stablecoins and their uses - and their potential pitfalls, with a bit of Tether history thrown in. It's the second chunk of the column under the heading "Speaking of Stablecoins". [1] https://www.bloomberg.com/opinion/articles/2021-08-11/crypto-hackers-are-nice-now https://www.bloomberg.com/opinion/articles/2021-08-11/crypto...

gdvvc 5y ago

You don't need to pay taxes. Example: You earn $1000/month. Cost of living is $500/month, labour tax is $500/month. By using cryptocurrency you can skip tax and save up $500/month, in legit employment (labour law, worker rights protection) you save up $0/month, you work for free, hand to mouth.

ceejayoz 5y ago
Don't mistake OJ getting away with murder for OJ being permitted to murder. You need to pay taxes. You're just illegally not doing so.
hestefisk 5y ago
That presumes you get paid in crypto, not fiat.
jazzyjackson 5y ago
Or I can just get paid cash under the table, same thing
vmception 5y ago
Weird take. If your employer is obligated to withhold taxes from you per pay period, then they can do that and still pay you the rest in stablecoins. If your employer is not obligated to withhold taxes because you are a contractor, then not having taxes withheld has nothing to do with earning fiat or earning stablecoins. If you are trying to avoid the record of payment by earning stablecoins, this is neither an efficient way to do it nor is it legal.

throwup2021 5y ago

As an individual trader running an algorithmic arbitrage operation at > 40 exchanges, I have to. You can count me in for USDT 56k. I am small fish. My algorithms constantly watch USDT/USD price at 3 exchanges which are independent from Tether Inc, and if USDT drops below $0.95 at one of them, they stop issuing orders selling to USDT.

backprop1993 5y ago
Are you saying that the exchanges are forcing a $1 +/- 0.05 price range for Tether instead of letting it float freely? Interesting.
- ceejayoz 5y ago
  No, they're saying their personal USDT trading strategy involves a cessation of activity if Tether breaks the $1 peg, as it probably indicates trouble requiring human intervention.
- merely-unlikely 5y ago
  Not forcing per se - the arbitrage incentivizes market makers to keep the value roughly in the expected range. This happens in any asset class but the mechanic is quite straightforward in this case.

backprop1993 5y ago

Could they be selling it at a discount, like $1.00 - X discount per Tether and allowing these other firms to benefit in order to get the flow? Bulk discounts to their friends?

Fiahil 5y ago

DAI offers some ~2% APY on coinbase, that's much more than my saving account!

SanFranManDan 5y ago
For substantially more risk…

togilvie 5y ago

If you are a market maker / arbitrageur working across multiple exchanges, US dollars can take days to settle and wire/withdrawal capacity is limited. USDT offers instant transfers, so you can rebalance across locations with ease. That's why it's being heavily used by the largest market makers in crypto.

xtracto 5y ago

I live in Mexico so I get paid in MXN which historically has been, let´s say less than optimal ( https://www.tradingview.com/symbols/USDMXN/ https://www.tradingview.com/symbols/USDMXN/ ). I have a portfolio of different risk profiles (ETFs, bonds, IRA, etc [Mexico equivalents of course]). Some of that is in stablecoins, which are pegged to the US Dollar, because it is the easiest way for me to store them, instead of going to a "casa de cambio" and exchange the bills themselves (with the risk of being robbed, shot or killed). It's a pretty good use case if you ask me haha.

IncRnd 5y ago
It might be a pretty good use case but only until there is a run on Tether.
- xtracto 5y ago
  I don't believe in Tether. I use other stablecoins (mainly DAI and USDC). And also, that's why you diversify your portfolio: All assets have risks.

scotty79 5y ago

You can buy stablecoin at the exchange you prefer (because it has low fees or supports your preferred payment method). Then you can transfer them to other exchanges and buy crypto there. Works the other way too. You can optimize your trading and withdrawal fees this way. So very mediocre utility. The only entity the stable coins are most wonderful deal is the the one that emits them. They basically have money printing machine for the crypto-economy. And if the project tanks they are left with hard money in hand and everybody else ends up with now worthless stablecoin, because the only source of it's value and utility was the stability. Some stable coins like DAI have bit more indirect mechanisms of attaching their price to dollar. This seem to work and managed to keep DAI value stable without any manual intervention while ETH price (which is involved in control mechanisms) swung wildly.

rfd4sgmk8u 5y ago

Gemini pays 7.4% APY interest on your GUSD/DAI stablecoin holdings. This is better than any bank in the universe.

ceejayoz 5y ago
Would you trust a bank that promised a 7.4% APY savings account, or would you go "hmmmmmm..."? > This is better than any bank in the universe. "If it sounds too good to be true..."
- rfd4sgmk8u 5y ago
  I used to believe this -- "too good to be true", then I played with the tech and realized the folk borrowing the money at a higher rate (of course) were earning 2x that via various defi contracts. Most of the defi world is a scam, however, stablecoin<->stablecoin liquidity pools are handling millions of dollars and paying the liquidity providers handsomely at 0.1%. It is then that you understand who exactly is making big money in this space :-) I'm not saying there is no risk -- indeed, there is considerable risk and no FDIC insurance; BUT, the game is far more complex than looks on the surface.
  - ceejayoz 5y ago
    > I used to believe this -- "too good to be true", then I played with the tech and realized the folk borrowing the money at a higher rate (of course) were earning 2x that via various defi contracts. Bernie Madoff's ponzi scheme survived for decades before it was revealed to be "too good to be true". If those defi contracts collapse, your savings that got loaned out to them are gone. You're not getting that APR, and you're out the principal too.
    - rwiggum 5y ago
      That's not how it works. If the defi contracts collapse, the borrowers get margin called. The borrowers must overcollateralize quite a bit, usually 1.5x or 2x what they are borrowing. You could argue that the sell order will fall through in the case of a total market collapse. But the market has fallen 90% in the past and this has not happened.

deleted 5y ago

[deleted]