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I love this assumption because this is why BlockFi, Nexo, Gemini and Coinbase Staking can offer people like 4% fixed, simply because its more believable. Behin

I love this assumption because this is why BlockFi, Nexo, Gemini and Coinbase Staking can offer people like 4% fixed, simply because its more believable. Behind the scenes they use the capital deposited with them to get 30% and more, in these Defi protocols of the day, and just pocket the difference. Similar to banks, just with much wider yields. "Why bother explaining just offer them something ‘super edgy’ like 3 percent higher than their bank gives!" The pyramid scheme parts of crypto offer much larger percentages, by multiple orders of magnitude. Although each protocol has to be evaluated independently. Typically these protocols earn from volume and size of transactions moving through other parts of the economy, as they take a cut while providing a service that makes it easier for volume to occur. They then just extrapolate the earnings over a prior time period, compared to the current amount of capital deposited with the protocol, and display a percentage return. These are not fixed returns as many factors can affect the actual return on capital. One primary factor is that if there was more capital deposited then the % would be much lower. People don't deposit capital to that extent because there are so many other places to get higher than 30% yields. Its just a boomtown, the pie is really that big. In traditional markets something similar occurs but people move capital chasing yields down to 2% or less. Using the same logic on the next opportunity "Oh I won't except 0.75%, I can get 2% on this other bond!"

randomhodler84 5y ago
That, and a lot of the pools will absolutely burn you with impermanent loss — plus more of a depreciating vanity token that the site included in the yield percentage. It’s a good racket — while some new shittoken is popular, get people to add your exit liquidity by pledging stablecoins and gas tokens to liquidity pools, borrow those pool claim tokens from the suckers (pay them “yield”), raid their liquidity, dump your shittokens, print more shittokens, “pay” the suckers with second set of shittokens, give them back their claim tokens (which are now mostly a claim on the first lot of shittokens), sucker goes to claim their winnings (their original capital) and is left with a big bag of worthless shittokens. And you have their ether, bnb, matic, stablecoins. 100% APY tho
- vmception 5y ago
  facts, and thats just the consensual transactions its actually kind of crazy about the ones that yank all of the liquidity and disappear, when they make enough from just the “normal” ponzi operation there are a couple that are sustainable models
  - randomhodler84 5y ago
    Earning Trade fees on stables seems the most legit, and doesn’t require another token as a reward. I’m not convinced staking rewards as a service can work over a longer tail, what ever happened to masternodes as a service lol… Still a lot of capital going there now. It’s interesting to see what happens when incentives end on the platforms that don’t just run away with customer funds. 98% of the capital is in place today because of incentives. These all must end eventually.

randomhodler84 5y ago

That, and a lot of the pools will absolutely burn you with impermanent loss — plus more of a depreciating vanity token that the site included in the yield percentage. It’s a good racket — while some new shittoken is popular, get people to add your exit liquidity by pledging stablecoins and gas tokens to liquidity pools, borrow those pool claim tokens from the suckers (pay them “yield”), raid their liquidity, dump your shittokens, print more shittokens, “pay” the suckers with second set of shittokens, give them back their claim tokens (which are now mostly a claim on the first lot of shittokens), sucker goes to claim their winnings (their original capital) and is left with a big bag of worthless shittokens. And you have their ether, bnb, matic, stablecoins. 100% APY tho

vmception 5y ago
facts, and thats just the consensual transactions its actually kind of crazy about the ones that yank all of the liquidity and disappear, when they make enough from just the “normal” ponzi operation there are a couple that are sustainable models
- randomhodler84 5y ago
  Earning Trade fees on stables seems the most legit, and doesn’t require another token as a reward. I’m not convinced staking rewards as a service can work over a longer tail, what ever happened to masternodes as a service lol… Still a lot of capital going there now. It’s interesting to see what happens when incentives end on the platforms that don’t just run away with customer funds. 98% of the capital is in place today because of incentives. These all must end eventually.