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What do people do with their money when central banks only offers 0.03 percent interest while inflation is 9 percent. They can convert their money to a crypto s

What do people do with their money when central banks only offers 0.03 percent interest while inflation is 9 percent. They can convert their money to a crypto stablecoin and get upto 20 percent yield.

dd36 4y ago
How are they getting a 20% yield and at what risk?
- nicoburns 4y ago
  Because it's a pyramid scheme
- the_snooze 4y ago
  Those are literally Bernie Madoff returns.
- CTDOCodebases 4y ago
  My guess would be they are staking UST (stable coin) on Anchor Protocol. The staked funds are lent to traders. Thats how they can promise such high returns since 20% a year is only 0.055% per day. Traders will typically trade positions with a risk to reward ration of 1:1.5 or higher. These fees are negligible at this point for a position that will take a few hours or days to close. This is how you can trade with leverage on exchanges. Risks are protocol exploit or depegging of the staked coin.
  - dd36 4y ago
    Trading what? IB lends leverage at like 2%. 20% implies a ton of risk compared to what’s available.
  - nodemaker 4y ago
    Right answer. (There are some other new interesting protocols on the horizon too MARS, PRISM)
    - dd36 4y ago
      Trading what on what exchanges?
this_was_posted 4y ago
Considering the crypto itself does not produce anything of value I´d be surprised if it would continue to outperform the stock market as crypto starts to stabilise. Maybe it could be used to be a little more resistant to inflation than with regular cash, but wouldn´t make any sense to me if the value of crypto would consistently grow to a bigger percentage of all wealth on earth.
- nodemaker 4y ago
  Crypto is a technology just like Microsoft Windows is. As more people use it its value increases. Only difference is now there is no bill gates and the rewards are shared by all early adopters.
deleted 4y ago
[deleted]
YorickPeterse 4y ago
And the next day the value of their portfolio drops by 200%, and never quite recovers. If your argument is that banks and savings in particular offer poor interest, the proper answer is to look into index funds and focus on long term growth, rather than short-term speculation.
- nodemaker 4y ago
  I said stablecoin for a reason.
Broken_Hippo 4y ago
You are under the impression that most folks are investing money somehow? Nope. Most folks are pretty poor, and realistically the money at the banks isn't collecting interest at all. The banks provide a service: Somewhere fairly safe to stick your money, where it will be available to pay for food and rent and utilities. What most folks actually save for - when they can - is emergencies. We are talking less than a month's income at a possibly average salary. This money needs to be easily accessible. you know, in case your car breaks down. You might save for a down payment, but realistically you aren't going to be much better off by investing in anything long term. And when you are at these income levels, investing in anything that could mean you lose your money is too devastating to deal with, even if you supposedly can get "up to a 20 percent yield". Not to mention that you can't use that money for anything without planning.
- blisterpeanuts 4y ago
  If "de-banking" gains popularity as a way to suppress and punish dissident populations[1][2], crypto stands to gain. There are still issues with traceability and privacy but the basic technology seems pretty sound as an alternative to a state-run currency. 1. https://townhall.com/columnists/johnrlottjr/2022/02/23/canada-isnt-alone-in-using-debanking-as-a-weapon-against-political-opponents-n2603647 https://townhall.com/columnists/johnrlottjr/2022/02/23/canad... 2. https://www.businessinsider.com/mypillow-ceo-mike-lindells-bank-cuts-ties-with-him-2022-2 https://www.businessinsider.com/mypillow-ceo-mike-lindells-b...
  - Ekaros 4y ago
    Wouldn't those doing the "de-banking" also make it impossible for anyone to provide service to the "de-banked" or punish those who allow it to happen? After all they still need to live in physical world and ignoring some customers is easier than being hit for bigger fine than the gains or outright stopped from operating.
shafyy 4y ago
They invest it one of dozens of other regulated ways. For example: Stock market, housing, financial derivatives, etc. Also: A crypto stablecoin is (supposed to be) pegged to a major currency, usually the USD. So in terms of return, it shouldn't matter if you have your money invested in stablecoin or cash under your mattress. Oh wait, it does matter, because most stablecoins are scams and you'll eventually lose all your money.
- nodemaker 4y ago
  Assuming the stablecoin doesnt lose its peg (choose a decentralized one), you can get 20 percent yield from staking it.

dd36 4y ago

How are they getting a 20% yield and at what risk?

nicoburns 4y ago
Because it's a pyramid scheme
the_snooze 4y ago
Those are literally Bernie Madoff returns.
CTDOCodebases 4y ago
My guess would be they are staking UST (stable coin) on Anchor Protocol. The staked funds are lent to traders. Thats how they can promise such high returns since 20% a year is only 0.055% per day. Traders will typically trade positions with a risk to reward ration of 1:1.5 or higher. These fees are negligible at this point for a position that will take a few hours or days to close. This is how you can trade with leverage on exchanges. Risks are protocol exploit or depegging of the staked coin.
- dd36 4y ago
  Trading what? IB lends leverage at like 2%. 20% implies a ton of risk compared to what’s available.
- nodemaker 4y ago
  Right answer. (There are some other new interesting protocols on the horizon too MARS, PRISM)
  - dd36 4y ago
    Trading what on what exchanges?

this_was_posted 4y ago

Considering the crypto itself does not produce anything of value I´d be surprised if it would continue to outperform the stock market as crypto starts to stabilise. Maybe it could be used to be a little more resistant to inflation than with regular cash, but wouldn´t make any sense to me if the value of crypto would consistently grow to a bigger percentage of all wealth on earth.

nodemaker 4y ago
Crypto is a technology just like Microsoft Windows is. As more people use it its value increases. Only difference is now there is no bill gates and the rewards are shared by all early adopters.

deleted 4y ago

[deleted]

YorickPeterse 4y ago

And the next day the value of their portfolio drops by 200%, and never quite recovers. If your argument is that banks and savings in particular offer poor interest, the proper answer is to look into index funds and focus on long term growth, rather than short-term speculation.

nodemaker 4y ago
I said stablecoin for a reason.

Broken_Hippo 4y ago

You are under the impression that most folks are investing money somehow? Nope. Most folks are pretty poor, and realistically the money at the banks isn't collecting interest at all. The banks provide a service: Somewhere fairly safe to stick your money, where it will be available to pay for food and rent and utilities. What most folks actually save for - when they can - is emergencies. We are talking less than a month's income at a possibly average salary. This money needs to be easily accessible. you know, in case your car breaks down. You might save for a down payment, but realistically you aren't going to be much better off by investing in anything long term. And when you are at these income levels, investing in anything that could mean you lose your money is too devastating to deal with, even if you supposedly can get "up to a 20 percent yield". Not to mention that you can't use that money for anything without planning.

blisterpeanuts 4y ago
If "de-banking" gains popularity as a way to suppress and punish dissident populations[1][2], crypto stands to gain. There are still issues with traceability and privacy but the basic technology seems pretty sound as an alternative to a state-run currency. 1. https://townhall.com/columnists/johnrlottjr/2022/02/23/canada-isnt-alone-in-using-debanking-as-a-weapon-against-political-opponents-n2603647 https://townhall.com/columnists/johnrlottjr/2022/02/23/canad... 2. https://www.businessinsider.com/mypillow-ceo-mike-lindells-bank-cuts-ties-with-him-2022-2 https://www.businessinsider.com/mypillow-ceo-mike-lindells-b...
- Ekaros 4y ago
  Wouldn't those doing the "de-banking" also make it impossible for anyone to provide service to the "de-banked" or punish those who allow it to happen? After all they still need to live in physical world and ignoring some customers is easier than being hit for bigger fine than the gains or outright stopped from operating.

shafyy 4y ago

They invest it one of dozens of other regulated ways. For example: Stock market, housing, financial derivatives, etc. Also: A crypto stablecoin is (supposed to be) pegged to a major currency, usually the USD. So in terms of return, it shouldn't matter if you have your money invested in stablecoin or cash under your mattress. Oh wait, it does matter, because most stablecoins are scams and you'll eventually lose all your money.

nodemaker 4y ago
Assuming the stablecoin doesnt lose its peg (choose a decentralized one), you can get 20 percent yield from staking it.