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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 regulato

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.
  - trophycase 5y ago
    Not necessarily. While I agree it is riskier, I think there's an argument to be made that higher returns can also come from an arbitrage on information/regulatory hurdles/slow moving corporations.

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.
- trophycase 5y ago
  Not necessarily. While I agree it is riskier, I think there's an argument to be made that higher returns can also come from an arbitrage on information/regulatory hurdles/slow moving corporations.