3 ms·

I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right?

by Gasp0de 4y ago

plasticchris 4y ago
Not always, I bonds were offering more earlier this year
- theturtletalks 4y ago
  I Bonds are an exception since everyone is capped at $10K and the rate changes quarterly based on inflation. BlockFi and other DeFi platforms were offering 8%, but had a minimum balance needed ($100K in most cases).
- colinmhayes 4y ago
  The government is losing money on I bonds
- quickthrowman 4y ago
  I bonds are subsidized by the US Treasury (this is why there’s a purchase limit), which has never defaulted on its debt.
  - BlueTemplar 4y ago
    Technically speaking, yes, though the USA is not invulnerable : for instance the dollar has lost a third of its value in the decade after the Nixon shock...
cesarb 4y ago
> I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right? That wouldn't be obvious at all to me; the lowest-risk investment in my country (federal government bonds) is currently offering over 13% interest (https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm).
- nwatson 4y ago
  That's for bond purchase and payback in Brazilian Reais with a bona fide government (with Lula back). To guarantee an 8% payback in crypto is a completely different game, and there's a significant downside for someone taking the deal. The expected return rate is always going to be negative on a proposition like that.
  - lupire 4y ago
    Lula might be a good guy, but that doesn't mean he has immediately restabilized the country.
- quickthrowman 4y ago
  The classic ‘risk free’ asset is US Treasurys, the US has never defaulted on its debt. Any yield above the risk free rate has implied risk, Brazilian bonds yield 13% because Brazil has defaulted on its debt several times. Brazilian bonds are at least an order of magnitude riskier than US Treasurys, and probably more than that. FTX was paying well above the risk free rate (currently 3.25-3.5%, it’s been climbing since January 2022), implying they were taking risk to earn the yield they were paying.

I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right?

plasticchris 4y ago

Not always, I bonds were offering more earlier this year

theturtletalks 4y ago
I Bonds are an exception since everyone is capped at $10K and the rate changes quarterly based on inflation. BlockFi and other DeFi platforms were offering 8%, but had a minimum balance needed ($100K in most cases).
colinmhayes 4y ago
The government is losing money on I bonds
quickthrowman 4y ago
I bonds are subsidized by the US Treasury (this is why there’s a purchase limit), which has never defaulted on its debt.
- BlueTemplar 4y ago
  Technically speaking, yes, though the USA is not invulnerable : for instance the dollar has lost a third of its value in the decade after the Nixon shock...

cesarb 4y ago

> I mean it should be obvious that anyone who offers 8% interest has to do some high-risk stuff with your funds, right? That wouldn't be obvious at all to me; the lowest-risk investment in my country (federal government bonds) is currently offering over 13% interest (https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm https://www.tesourodireto.com.br/titulos/precos-e-taxas.htm).

nwatson 4y ago
That's for bond purchase and payback in Brazilian Reais with a bona fide government (with Lula back). To guarantee an 8% payback in crypto is a completely different game, and there's a significant downside for someone taking the deal. The expected return rate is always going to be negative on a proposition like that.
- lupire 4y ago
  Lula might be a good guy, but that doesn't mean he has immediately restabilized the country.
quickthrowman 4y ago
The classic ‘risk free’ asset is US Treasurys, the US has never defaulted on its debt. Any yield above the risk free rate has implied risk, Brazilian bonds yield 13% because Brazil has defaulted on its debt several times. Brazilian bonds are at least an order of magnitude riskier than US Treasurys, and probably more than that. FTX was paying well above the risk free rate (currently 3.25-3.5%, it’s been climbing since January 2022), implying they were taking risk to earn the yield they were paying.