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Can you elaborate on how a stablecoin gives the holder any yields? I thought the whole idea is that it doesn’t appreciate or depreciate.
by tylerrobinson 5y ago
Can you elaborate on how a stablecoin gives the holder any yields? I thought the whole idea is that it doesn’t appreciate or depreciate.
- graeme 5y agoYou can lend them to centralized lending platforms such as Celsius, or on Defi platforms, for 9+% APR. This is a highly risky activity pitched as not risky.
- tylerrobinson 5y agoAh, thank you for explaining. I assume the idea here is that the borrower of the stablecoin is then using it to make a bet on the continued price appreciation of some other currency, making it a leveraged bet. Crazy risky. Who is supposed to enforce the terms of the borrowing? Or is it done programmatically somehow?
- graeme 5y agoYup, exactly. Most used seem to be loans to buy more crypto. With centralized lenders (Nexo, Celsius, Blockfi) you sign over ownership of your crypto to them and hope they will meet their promises. In Defi it’s programmatic. I am less familiar with the mechanics there. I figure there is massive risk when I see 20+% yields but do not understand the system.