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This is going to probably not be received well given HN’s famously visceral hostility to crypto… But you can get 5%+ yields on Euro stablecoins in DeFi. And I’m

This is going to probably not be received well given HN’s famously visceral hostility to crypto… But you can get 5%+ yields on Euro stablecoins in DeFi. And I’m not talking fly by night ponzi pools. This is like on battle tested bluechip protocols like Curve on Uniswap. Is the risk zero? No. Should you put all your funds there? No. But parking a small segment to balance out the negative bank yields is pretty attractive from a risk reward standpoint. If you’re getting negative 0.5% at the bank, you can protect your capital from decaying by moving 10% or less of your cash savings into DeFi.

ArtTimeInvestor 5y ago
People will do that when there are more normal onramps to crypto. Currently to get crypto on Coinbase or wherever, one needs to go through a crazy signup process where you deliver photos of documents that enables anyone who gets ahold of these photos to identify as you and use these to sign up as you on other places. It is a catch 22. There should be a crypto way of doing KYC. Not signing up by delivering a photo of you passport, but by signing a message cryptographically.
- hanniabu 5y ago
  This is no different than traditional platforms
  - ArtTimeInvestor 5y ago
    There are differences. 1: You can walk into a bank and sign up for an account. You cannot walk into Coinbase and sign up for an account. 2: Most people already have a bank account. Most people do not have a Coinbase account.
- radu_floricica 5y ago
  > Currently to get crypto on Coinbase or wherever, one needs to go through a crazy signup process where you deliver photos of documents that enables anyone who gets ahold of these photos to identify as you and use these to sign up as you on other places. Really? I'd like to see a civil suit where an institution says I owe them money and shows a picture of my ID as proof of contract. There are ways of signing legally binding things online (DocuSign for example, which AFAIK was actually tested in a trial in EU), but they have more sophistication than that.
  - ArtTimeInvestor 5y ago
    This is a misunderstanding. What I mean is this: If online companies require a copy of some document as identification, then this document you just copied and sent out to them can be used to identify as you when signing up with other companies. The old brick and mortar way was better: When you walk into a bank to sign up for an account, the bank now cannot walk into another bank as you. A new crypto way would be better as well: Instead of copying data for identification, sign a message cryptographically.
    - radu_floricica 5y ago
      I understand what you mean. I'm talking about liability. Will they be able to make a revolut account? possibly (although if I remember correctly, they also had video identification, which makes it about as secure as a real bank, but let's pretend). But having an account as me and having me on hook for something are different things. Revolut doesn't allow borrowing. Most things that involve liability still have better security.
  - atatatat 5y ago
    > they have more sophistication than that Go on.
yieldmethis 5y ago
or use one of the many traditional finance options that offer ~5% yields with less risk than crypto (hard to quantify the risk of "crypto", but there's regulatory, technology and volatility risk even amongst stablecoins and DeFi). (this isn't an anti-crypto post, just making the point that 5% yields are not unique to crypto and that the choice isn't crypto vs. banks)
- gizdan 5y ago
  I'd love to know where you will find 5% yield outside of the stock market. Everywhere I've looked, interest rates are at near rock-bottom prices.
  - TomVDB 5y ago
    If there is only one investment vehicle (other than the stock market) that offers considerably higher returns than everything else, then that vehicle carries pretty by definition a much higher risk than you seem think it does.
    - boring_twenties 5y ago
      Strictly speaking, the returns only indicate a higher perception of risk, which may not necessarily translate to the same amount of actual risk. As far as I can tell, the risks of depositing stablecoins in something like Uniswap or Compound are the following: 1) The stablecoin might not be redeemable 1:1 for fiat in the future. Personally, I think this risk is negligible for USDC and minimal with DAI. 2) The smart contract code might have bugs leading to loss or theft of the deposited tokens. I think this is minimal with Uniswap or Compound. It's significantly higher with some other providers (which do seem to offer higher rewards, but not enough for my taste). 3) High Ethereum gas fees could make it very costly to withdraw your funds in the future. So far, I have seen these fees spike as high as US$200-300, but only for a brief period of time. Usually they settle back to $20-50. This might be the highest risk but is still acceptable, to me, anyway. Taken together, these risks are well worth getting ~5% instead of 0.1%, to me. YMMV, of course.
    - 5y ago
gizdan 5y ago
Personally I refused to entertain the idea of a stablecoins and after all the stuff that's happened around stablecoins has only reinforced that decision. It seems like it's not a matter of if, but when it becomes clear that the stablecoin is not really backed by real money. I'm a big believer in crypto, but I don't think stablecoins are it.
- xur17 5y ago
  I don't think it's fair / accurate to paint all stablecoins with a broad brush like that. Tether? Yes, it's at a bare minimum sketchy. USDC and GUSD are both regularly audited, and backed by cash reserves.
  - Armisael16 5y ago
    Saying that they’re backed by cash reserves is misleading. Yes, they do hold some cash to back the value of the coin, but that’s less than half of the total backing. CDs and treasuries and commercial paper are pretty solid stuff - but they definitely aren’t cash.
    - yebyen 5y ago
      USDC will no longer be backed by corporate bonds or commercial paper: https://www.bloomberg.com/news/articles/2021-08-23/coinbase-circle-to-move-all-usdc-reserves-into-cash-treasuries https://www.bloomberg.com/news/articles/2021-08-23/coinbase-... I don't know how you feel about short term treasury bonds, but I think they are nearly as good as cash. Slightly less liquid but with some return.
- trophycase 5y ago
  Get an algorithmically stablecoin, like DAI (but not DAI because a ton of DAI supply is collateralized with USDC and ETH/DAI LPs)

ArtTimeInvestor 5y ago

People will do that when there are more normal onramps to crypto. Currently to get crypto on Coinbase or wherever, one needs to go through a crazy signup process where you deliver photos of documents that enables anyone who gets ahold of these photos to identify as you and use these to sign up as you on other places. It is a catch 22. There should be a crypto way of doing KYC. Not signing up by delivering a photo of you passport, but by signing a message cryptographically.

hanniabu 5y ago
This is no different than traditional platforms
- ArtTimeInvestor 5y ago
  There are differences. 1: You can walk into a bank and sign up for an account. You cannot walk into Coinbase and sign up for an account. 2: Most people already have a bank account. Most people do not have a Coinbase account.
radu_floricica 5y ago
> Currently to get crypto on Coinbase or wherever, one needs to go through a crazy signup process where you deliver photos of documents that enables anyone who gets ahold of these photos to identify as you and use these to sign up as you on other places. Really? I'd like to see a civil suit where an institution says I owe them money and shows a picture of my ID as proof of contract. There are ways of signing legally binding things online (DocuSign for example, which AFAIK was actually tested in a trial in EU), but they have more sophistication than that.
- ArtTimeInvestor 5y ago
  This is a misunderstanding. What I mean is this: If online companies require a copy of some document as identification, then this document you just copied and sent out to them can be used to identify as you when signing up with other companies. The old brick and mortar way was better: When you walk into a bank to sign up for an account, the bank now cannot walk into another bank as you. A new crypto way would be better as well: Instead of copying data for identification, sign a message cryptographically.
  - radu_floricica 5y ago
    I understand what you mean. I'm talking about liability. Will they be able to make a revolut account? possibly (although if I remember correctly, they also had video identification, which makes it about as secure as a real bank, but let's pretend). But having an account as me and having me on hook for something are different things. Revolut doesn't allow borrowing. Most things that involve liability still have better security.
- atatatat 5y ago
  > they have more sophistication than that Go on.

yieldmethis 5y ago

or use one of the many traditional finance options that offer ~5% yields with less risk than crypto (hard to quantify the risk of "crypto", but there's regulatory, technology and volatility risk even amongst stablecoins and DeFi). (this isn't an anti-crypto post, just making the point that 5% yields are not unique to crypto and that the choice isn't crypto vs. banks)

gizdan 5y ago
I'd love to know where you will find 5% yield outside of the stock market. Everywhere I've looked, interest rates are at near rock-bottom prices.
- TomVDB 5y ago
  If there is only one investment vehicle (other than the stock market) that offers considerably higher returns than everything else, then that vehicle carries pretty by definition a much higher risk than you seem think it does.
  - boring_twenties 5y ago
    Strictly speaking, the returns only indicate a higher perception of risk, which may not necessarily translate to the same amount of actual risk. As far as I can tell, the risks of depositing stablecoins in something like Uniswap or Compound are the following: 1) The stablecoin might not be redeemable 1:1 for fiat in the future. Personally, I think this risk is negligible for USDC and minimal with DAI. 2) The smart contract code might have bugs leading to loss or theft of the deposited tokens. I think this is minimal with Uniswap or Compound. It's significantly higher with some other providers (which do seem to offer higher rewards, but not enough for my taste). 3) High Ethereum gas fees could make it very costly to withdraw your funds in the future. So far, I have seen these fees spike as high as US$200-300, but only for a brief period of time. Usually they settle back to $20-50. This might be the highest risk but is still acceptable, to me, anyway. Taken together, these risks are well worth getting ~5% instead of 0.1%, to me. YMMV, of course.
  - 5y ago

gizdan 5y ago

Personally I refused to entertain the idea of a stablecoins and after all the stuff that's happened around stablecoins has only reinforced that decision. It seems like it's not a matter of if, but when it becomes clear that the stablecoin is not really backed by real money. I'm a big believer in crypto, but I don't think stablecoins are it.

xur17 5y ago
I don't think it's fair / accurate to paint all stablecoins with a broad brush like that. Tether? Yes, it's at a bare minimum sketchy. USDC and GUSD are both regularly audited, and backed by cash reserves.
- Armisael16 5y ago
  Saying that they’re backed by cash reserves is misleading. Yes, they do hold some cash to back the value of the coin, but that’s less than half of the total backing. CDs and treasuries and commercial paper are pretty solid stuff - but they definitely aren’t cash.
  - yebyen 5y ago
    USDC will no longer be backed by corporate bonds or commercial paper: https://www.bloomberg.com/news/articles/2021-08-23/coinbase-circle-to-move-all-usdc-reserves-into-cash-treasuries https://www.bloomberg.com/news/articles/2021-08-23/coinbase-... I don't know how you feel about short term treasury bonds, but I think they are nearly as good as cash. Slightly less liquid but with some return.
trophycase 5y ago
Get an algorithmically stablecoin, like DAI (but not DAI because a ton of DAI supply is collateralized with USDC and ETH/DAI LPs)