7 ms·

I’m sorry for your loss but I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. I lo

I’m sorry for your loss but I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. I looked at these and they were so absurd there was no way I would invest. No fundamentals. No audit. No insurance. No stable company or bank. What was your thought process in putting funds here? Did you think it would just take longer to explode and you would be able to withdraw before? Did you genuinely believe?

it_citizen 3y ago
Being a true passive investor is much harder than most people think. We are flooded with stories of "amazing opportunities" and "systemic risks".
- deleted 3y ago
  [deleted]
deleted 3y ago
[deleted]
JumpCrisscross 3y ago
> I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication Necessarily risky. Not necessarily fabrication. Between those two there is room for both productive gains and delusional optimism.
- mrguyorama 3y ago
  Risk to return is non-linear, and at a system with a floor of 0%, 7% is an insane claim. Granted, this requires a reasonable amount of financial literacy, and plenty of people think they have that but don't.
  - maccard 3y ago
    > at a system with a floor of 0%, There's not a floor of 0%. Negative returns exist.
    - TheOtherHobbes 3y ago
      But are rarely promoted as an investor benefit.
TuringNYC 3y ago
>> I’m sorry for your loss but I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. The guy (SBF) was hanging out with and appeared to be anointed by Gensler and crew https://www.sec.gov/about/commissioners/gary-gensler https://www.sec.gov/about/commissioners/gary-gensler. How much due diligence does one expect common citizens to perform?
- mrguyorama 3y ago
  Why do you think that made the financials viable?
  - TuringNYC 3y ago
    >> Why do you think that made the financials viable? Even a person with a finance background such as myself cannot realistically state what yield is "viable", especially without history. Commercial Real Estate is paying 8.5% preferred these days...is that viable? Not sure, but I can look at history across rate environments. Crypto has no history so I think a lot of people were going on trust of the players. Many investments are about trusting the managers.
    - prepend 3y ago
      These investments were comparable to money market funds. There’s no way passive cash is viable at those returns. If Commercial Real Estate is paying 8.5% and someone starts offering “Crypto Commercial Real Estate” as a competing product for those same fundamentals but offers 400% return, would you still be unable to assess its viability?
      - TuringNYC 3y ago
        >> These investments were comparable to money market funds. There’s no way passive cash is viable at those returns. Totally agree. But why would you compare crypto high yield accounts to MM funds, rather than, say, CLOs or CLO funds, or structured notes (https://pprcapitalmgmt.com/invest-in-a-real-estate-fund/ https://pprcapitalmgmt.com/invest-in-a-real-estate-fund/) or factored receiveables funds
tombert 3y ago
Well, there was some hand-waviness claiming that GUSD was FDIC insured [1], and they kept comparing it to bank accounts. I will admit that I should have done more research before putting it in, but I just assumed that since Gemini was ostensibly working with regulators and they were plastering the safety of GUSD everywhere, I guess I just didn't do my due diligence. I'll accept my share of the blame. [1] https://www.gemini.com/dollar https://www.gemini.com/dollar It still mentioned "FDIC" stuff in small print, but it was much more prominent in earlier stuff.
- JumpCrisscross 3y ago
  > there was some hand-waviness claiming that GUSD was FDIC insured This should be piercing-the-veil fraud if true.
  - tombert 3y ago
    They're actually being sued by the SEC over this, claiming it's an unregistered security.
    - JumpCrisscross 3y ago
      > being sued by the SEC over this, claiming it's an unregistered security Good, but insufficient. Misleadingly using the FDIC’s brand should open a criminal investigation.
- prepend 3y ago
  But that’s so simple to validate. I mean, I have funds in a few accounts and every one of them shows up in FDIC’s bankfind tool and “member fdic” is advertised by the banks. The link you posted does mention fdic but it says Gemini’s deposits are fdic insured (probably true as what kind of a crazy company keeps cash in uninsured accounts). Definitely shady of them to word it like that as it’s likely meant to confuse and mislead. But again, pretty easy to validate and disprove before sending any funds. I hope you get something back and I guess the good news is that you only make this mistake once in life and teach everyone in your family how to avoid.
andrepd 3y ago
Yeah, if it hadn't imploded or he managed to exit before it did, I'm sure he would have enjoyed the money. Well it didn't go so well, tough luck for what was essentially a gamble. I still feel bad but only in the measure that poor economic literacy contributes to people falling for these scams. That and old-fashioned greed :) 7% risk-free savings with negative interest rates... Come on.
- tombert 3y ago
  I mentioned this in a sister comment, but in a bit of fairness to me, Gemini was claiming some degree of FDIC insurance on GUSD coins. I definitely should have read the fine print more thoroughly. Clearly I'm not the only one who was suckered by some of this verbiage though: https://www.sec.gov/news/press-release/2023-7 https://www.sec.gov/news/press-release/2023-7
nashashmi 3y ago
I’m not sure what the terms of the deal were. but I am sure if the payment for the 7% interest was to be made in the same coin and loans were to also be made at the same rate if not higher, then all of those coins would appreciate in value. what causes inflation and therefore depreciation is printing too much money. What causes appreciation for a coin is scarcity that can be created by interest rates, especially super high ones. When not enough coins are being minted And interest is accumulating Then it creates a deficiency in supply.
- nradov 3y ago
  It's sort of bizarre to talk about "inflation" for an asset where the actual value was always zero.
Canada 3y ago
It was possible in a market neutral way in crypto and without much risk for a while. You could provide liquidity for stablecoin swaps, collect the shitcoin rewards and regularly dump them. Withdraw at anytime. Of course, in that scenario you had good control and the counterparty can't rug you because you could verify what was going on. There was some technical risk, but it never actually occurred. It was because interest rates were zero, largely, that this was possible. The mistake here was giving the assets to another party who can do whatever they like and where you can't see directly what they were doing.
- nradov 3y ago
  Just because people got lucky for a while doesn't mean that risk was actually ever low. The reality is that risk on those trades was always extremely high, but it wasn't apparent through traditional risk metrics such as volatility or credit ratings. And there are more risks to worry about than just market risk and counterparty risk.
- ska 3y ago
  >without much risk for a while. > There was some technical risk, but These statements are a bit at odds. "But it never actually occurred" is a statement of chance, not risk. I also suspect you are downplaying significant systemic risk. "Withdraw at anytime" could go away quite easily in several scenarios.
geph2021 3y ago
I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication On the one hand, I agree with this: where was the 7% coming from?! There's a basic level of skepticism that should have raised alarm bells for the "average" person. On the other hand, this was an epic level of fraud. As an example, I was making ~8-10% off of peer-to-peer lending when rates were very low, done via very (seemingly) reputable lending platforms. Imagining if a SBF-level scammer was running one of these, and I very much feel for those that put trust in an overall system that generally doesn't have this scale of fraud.
- ska 3y ago
  There doesn't even have to be a scammer involved. (Although is also clearly true that the entire ecosystem is a magnet for scammers) Any of these schemes had to involve a much higher risk than conventional investing. You can wave your hands as much as you want, but that doesn't hide the fact that there was (and still is) systemic risk that was by a) nature incredibly difficult to quantify and b) probably pretty high, given the returns. There is no free lunch.
smileysteve 3y ago
Anecdotal, but btcJam was one of the first to the market of paying interest, and could offer 8% with significant reputation recourse. Btcjam were making the market between miners buying more equipment and capital much earlier. Eth staking was also in the plan this same time as FTX
- EVa5I7bHFq9mnYK 3y ago
  Yup, i remember, I gave 3 loans of a few BTC there to three "AAA+++" borrowers, only one repaid the loan, partially :) Their "arbitration" decided in my favor, the catch was I needed to go find the debtors (with a fake Brazilian identity) myself :)
  - smileysteve 3y ago
    I did an number with the same borrower that paid every time
    - EVa5I7bHFq9mnYK 3y ago
      He was in "reputation accumulation" phase.
3327 3y ago
[dead]
jesuspiece 3y ago
> What was your thought process in putting funds here? hope. desperation.
EVa5I7bHFq9mnYK 3y ago
Wait, I have a few CDs that are "FDIC insured", according to Fidelity, offered by banks I absolutely don't know. In fact, that's the reason I choose them over Treasuries, which are not FDIC insured. Is my money safe or could it be a fraud like FTX? I learned to trust Fidelity over the years, maybe now is the time to be less complacent.
- ChainOfFools 3y ago
  FTX is really no separate phenomenon than the underlying crypto industry itself. The entire space rests on the metrics generated at the whim of perhaps a hundred or two extremely (crypto-)influential individuals who are all affiliated with one another and whose incentives and behaviors are highly correlated even when that affiliation is weak or antagonistic. I'm referring here to the large established miners, both public and dark (i.e. bot farm based, corrupting gov. officials, etc.) As well as the pools that they pretend not to control, and to a lesser extent the operators of the larger exchanges - although they are not nearly as free to move in recent years as the miners still are. It's no accident in miners are extremely publicity shy. This group, which behaves like a cartel so it's reasonable to think about it as one, self-generates nearly every metric used to determine the size and depth of the entire industry. The fees and other costs to create fraudulent statistics would be impossible for anyone who is not a miner to swallow, but if you're mining at scale there is an enormous discount - because an inverse scale fraction of those fees are paid to yourselves. Transaction volume, price, number of nodes, number of accounts, velocity of funds, everything that is used to construct a picture of the real human interest in this market via the lens of virtual numbers that describe it is completely under the control of a few people. Although some of them are more regulated today than they were in the past, for a good part of a decade there was effectively no oversight into how any of these operations worked, and they were free to openly front run the market, buy electricity at substantially corruption-reduced cost or just outright steal it- and again in the early days this paid off extraordinarily well because early large block rewards could be sat on and held until they bubble-appreciate several thousand of percent above acquisition cost. when you're paying reduced (or nearly zero) cost for your production infrastructure you don't need to sell all of your product right away, and you thereby accumulate a future war chest to create a market 'bottom' anytime liquidity gets a little bit too loose for your liking: simply slow-roll selling new block rewards and voila, price stabilizes. Your carefully managed low public profile lets the media and public fill in their own self-serving explanation, which is that the public must be crazy about this stuff it cant stop buying it.
robbywashere_ 3y ago
What’s crazy is if this was so blatantly obvious too good to be true… why didn’t the SEC stop it ?
- avar 3y ago
  There isn't any prima facie problem with paying an extremely high interest rate. I'm sure you can find double digit interest rates for say bonds that represent payday loans, but you should expect the bondholders to default at a correspondingly high rate. But investors should be aware that higher rates imply higher risks.
  - deleted 3y ago
    [deleted]
SoftTalker 3y ago
Some of the smartest SV people fell for his con. Big names we all know. Anyone can be conned.
SilasX 3y ago
(Replying in the context of Genesis/Gemini since that's what the parent comment was about, not FTX.) >I’m sorry for your loss but I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. I'm amazed that this is itself amazing. The 7% was over a time when US inflation peaked at ~9%. It doesn't seem right to say, of a yield that doesn't compensate for inflation, that it's is so ridiculously high that only the most self-deluded investor thought it was achievable. Furthermore, the collapse didn't happen while those sky-high rates were being promised. As of November 1st 2022, rates had been cut to 5.6%, and then, that was only for the Gemini dollar (which Gemini issued and was willing to use as a loss leader). By then, other stablecoins were lower, like DAI at 4.9% [1], similar to the rate that overcollateralized platforms like Compound were charging to borrow it. (Disclaimer: I used Gemini Earn, but was able to remove all assets before suspension of withdrawals and hat not put anything in that I would need urgently.) [1] https://web.archive.org/web/20221027002940/https://www.gemini.com/earn https://web.archive.org/web/20221027002940/https://www.gemin... -- note, that's from Oct 27, before the final GUSD drop.
TeMPOraL 3y ago
> I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. Did something substantial changed on the market recently? Because right now I can literally get a risk-free 7% time-limited savings deposit from my bank (Santander), which HN tells me is completely legit, all while banks in most other countries in the EU are stuck at offering 0.01% or even negative interest rates. What gives? I've long given up on trying to make any sense out of it. EDIT: to be clear, I'm in EU too (Poland). I don't follow what FED is doing (outside of what I occasionally hear about it on HN). I imagine it has some impact on EU markets (US having most nuclear carriers, etc.), but I don't know how big. From my perspective, we're still "at a time of 0% interest rates", and Santander suddenly offering 7% rates is some kind of anomaly, compared to other banks - both locally and EU-wide.
- madsbuch 3y ago
  > Did something substantial changed on the market recently? Yes. The FED has increased to interest rates. So the marked can support that now.
- lightfield1002 3y ago
  The FEDs rate was close to 0% early 2022 and is now above 5%. Yes, something very substantial has changed.
- sofixa 3y ago
  It's quite easy really. The FED has done stuff which doesn't impact you directly, really. However what the ECB(European Central Bank, steward of the euro) and the NBP (Narodowy Bank Polski) have done, impacts you much more directly. https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ke... https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.mp230504~cdfd11a697.en.html#:~:text=Key%20ECB%20interest%20rates,-The%20Governing%20Council&text=Accordingly%2C%20the%20interest%20rate%20on,effect%20from%2010%20May%202023 https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.mp2305.... And of course, most relevant, Polish Central Bank: https://nbp.pl/en/monetary-policy/mpc-decisions/interest-rates/ https://nbp.pl/en/monetary-policy/mpc-decisions/interest-rat... The 7% interest rate you get in Poland is based on the one set by the central bank. Note that it is only like this since end of 2022, before that the rate was probably hovering around zero, like the ECB.
alexnewman 3y ago
wit 0% rates at the time, you can consider 7% as a risk asset, and not a big issue if the portfolio is diversified.

it_citizen 3y ago

Being a true passive investor is much harder than most people think. We are flooded with stories of "amazing opportunities" and "systemic risks".

deleted 3y ago
[deleted]

deleted 3y ago

[deleted]

JumpCrisscross 3y ago

> I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication Necessarily risky. Not necessarily fabrication. Between those two there is room for both productive gains and delusional optimism.

mrguyorama 3y ago
Risk to return is non-linear, and at a system with a floor of 0%, 7% is an insane claim. Granted, this requires a reasonable amount of financial literacy, and plenty of people think they have that but don't.
- maccard 3y ago
  > at a system with a floor of 0%, There's not a floor of 0%. Negative returns exist.
  - TheOtherHobbes 3y ago
    But are rarely promoted as an investor benefit.

TuringNYC 3y ago

>> I’m sorry for your loss but I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. The guy (SBF) was hanging out with and appeared to be anointed by Gensler and crew https://www.sec.gov/about/commissioners/gary-gensler https://www.sec.gov/about/commissioners/gary-gensler. How much due diligence does one expect common citizens to perform?

mrguyorama 3y ago
Why do you think that made the financials viable?
- TuringNYC 3y ago
  >> Why do you think that made the financials viable? Even a person with a finance background such as myself cannot realistically state what yield is "viable", especially without history. Commercial Real Estate is paying 8.5% preferred these days...is that viable? Not sure, but I can look at history across rate environments. Crypto has no history so I think a lot of people were going on trust of the players. Many investments are about trusting the managers.
  - prepend 3y ago
    These investments were comparable to money market funds. There’s no way passive cash is viable at those returns. If Commercial Real Estate is paying 8.5% and someone starts offering “Crypto Commercial Real Estate” as a competing product for those same fundamentals but offers 400% return, would you still be unable to assess its viability?
    - TuringNYC 3y ago
      >> These investments were comparable to money market funds. There’s no way passive cash is viable at those returns. Totally agree. But why would you compare crypto high yield accounts to MM funds, rather than, say, CLOs or CLO funds, or structured notes (https://pprcapitalmgmt.com/invest-in-a-real-estate-fund/ https://pprcapitalmgmt.com/invest-in-a-real-estate-fund/) or factored receiveables funds

tombert 3y ago

Well, there was some hand-waviness claiming that GUSD was FDIC insured [1], and they kept comparing it to bank accounts. I will admit that I should have done more research before putting it in, but I just assumed that since Gemini was ostensibly working with regulators and they were plastering the safety of GUSD everywhere, I guess I just didn't do my due diligence. I'll accept my share of the blame. [1] https://www.gemini.com/dollar https://www.gemini.com/dollar It still mentioned "FDIC" stuff in small print, but it was much more prominent in earlier stuff.

JumpCrisscross 3y ago
> there was some hand-waviness claiming that GUSD was FDIC insured This should be piercing-the-veil fraud if true.
- tombert 3y ago
  They're actually being sued by the SEC over this, claiming it's an unregistered security.
  - JumpCrisscross 3y ago
    > being sued by the SEC over this, claiming it's an unregistered security Good, but insufficient. Misleadingly using the FDIC’s brand should open a criminal investigation.
prepend 3y ago
But that’s so simple to validate. I mean, I have funds in a few accounts and every one of them shows up in FDIC’s bankfind tool and “member fdic” is advertised by the banks. The link you posted does mention fdic but it says Gemini’s deposits are fdic insured (probably true as what kind of a crazy company keeps cash in uninsured accounts). Definitely shady of them to word it like that as it’s likely meant to confuse and mislead. But again, pretty easy to validate and disprove before sending any funds. I hope you get something back and I guess the good news is that you only make this mistake once in life and teach everyone in your family how to avoid.

andrepd 3y ago

Yeah, if it hadn't imploded or he managed to exit before it did, I'm sure he would have enjoyed the money. Well it didn't go so well, tough luck for what was essentially a gamble. I still feel bad but only in the measure that poor economic literacy contributes to people falling for these scams. That and old-fashioned greed :) 7% risk-free savings with negative interest rates... Come on.

tombert 3y ago
I mentioned this in a sister comment, but in a bit of fairness to me, Gemini was claiming some degree of FDIC insurance on GUSD coins. I definitely should have read the fine print more thoroughly. Clearly I'm not the only one who was suckered by some of this verbiage though: https://www.sec.gov/news/press-release/2023-7 https://www.sec.gov/news/press-release/2023-7

nashashmi 3y ago

I’m not sure what the terms of the deal were. but I am sure if the payment for the 7% interest was to be made in the same coin and loans were to also be made at the same rate if not higher, then all of those coins would appreciate in value. what causes inflation and therefore depreciation is printing too much money. What causes appreciation for a coin is scarcity that can be created by interest rates, especially super high ones. When not enough coins are being minted And interest is accumulating Then it creates a deficiency in supply.

nradov 3y ago
It's sort of bizarre to talk about "inflation" for an asset where the actual value was always zero.

Canada 3y ago

It was possible in a market neutral way in crypto and without much risk for a while. You could provide liquidity for stablecoin swaps, collect the shitcoin rewards and regularly dump them. Withdraw at anytime. Of course, in that scenario you had good control and the counterparty can't rug you because you could verify what was going on. There was some technical risk, but it never actually occurred. It was because interest rates were zero, largely, that this was possible. The mistake here was giving the assets to another party who can do whatever they like and where you can't see directly what they were doing.

nradov 3y ago
Just because people got lucky for a while doesn't mean that risk was actually ever low. The reality is that risk on those trades was always extremely high, but it wasn't apparent through traditional risk metrics such as volatility or credit ratings. And there are more risks to worry about than just market risk and counterparty risk.
ska 3y ago
>without much risk for a while. > There was some technical risk, but These statements are a bit at odds. "But it never actually occurred" is a statement of chance, not risk. I also suspect you are downplaying significant systemic risk. "Withdraw at anytime" could go away quite easily in several scenarios.

geph2021 3y ago

I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication On the one hand, I agree with this: where was the 7% coming from?! There's a basic level of skepticism that should have raised alarm bells for the "average" person. On the other hand, this was an epic level of fraud. As an example, I was making ~8-10% off of peer-to-peer lending when rates were very low, done via very (seemingly) reputable lending platforms. Imagining if a SBF-level scammer was running one of these, and I very much feel for those that put trust in an overall system that generally doesn't have this scale of fraud.

ska 3y ago
There doesn't even have to be a scammer involved. (Although is also clearly true that the entire ecosystem is a magnet for scammers) Any of these schemes had to involve a much higher risk than conventional investing. You can wave your hands as much as you want, but that doesn't hide the fact that there was (and still is) systemic risk that was by a) nature incredibly difficult to quantify and b) probably pretty high, given the returns. There is no free lunch.

smileysteve 3y ago

Anecdotal, but btcJam was one of the first to the market of paying interest, and could offer 8% with significant reputation recourse. Btcjam were making the market between miners buying more equipment and capital much earlier. Eth staking was also in the plan this same time as FTX

EVa5I7bHFq9mnYK 3y ago
Yup, i remember, I gave 3 loans of a few BTC there to three "AAA+++" borrowers, only one repaid the loan, partially :) Their "arbitration" decided in my favor, the catch was I needed to go find the debtors (with a fake Brazilian identity) myself :)
- smileysteve 3y ago
  I did an number with the same borrower that paid every time
  - EVa5I7bHFq9mnYK 3y ago
    He was in "reputation accumulation" phase.

3327 3y ago

[dead]

jesuspiece 3y ago

> What was your thought process in putting funds here? hope. desperation.

EVa5I7bHFq9mnYK 3y ago

Wait, I have a few CDs that are "FDIC insured", according to Fidelity, offered by banks I absolutely don't know. In fact, that's the reason I choose them over Treasuries, which are not FDIC insured. Is my money safe or could it be a fraud like FTX? I learned to trust Fidelity over the years, maybe now is the time to be less complacent.

ChainOfFools 3y ago
FTX is really no separate phenomenon than the underlying crypto industry itself. The entire space rests on the metrics generated at the whim of perhaps a hundred or two extremely (crypto-)influential individuals who are all affiliated with one another and whose incentives and behaviors are highly correlated even when that affiliation is weak or antagonistic. I'm referring here to the large established miners, both public and dark (i.e. bot farm based, corrupting gov. officials, etc.) As well as the pools that they pretend not to control, and to a lesser extent the operators of the larger exchanges - although they are not nearly as free to move in recent years as the miners still are. It's no accident in miners are extremely publicity shy. This group, which behaves like a cartel so it's reasonable to think about it as one, self-generates nearly every metric used to determine the size and depth of the entire industry. The fees and other costs to create fraudulent statistics would be impossible for anyone who is not a miner to swallow, but if you're mining at scale there is an enormous discount - because an inverse scale fraction of those fees are paid to yourselves. Transaction volume, price, number of nodes, number of accounts, velocity of funds, everything that is used to construct a picture of the real human interest in this market via the lens of virtual numbers that describe it is completely under the control of a few people. Although some of them are more regulated today than they were in the past, for a good part of a decade there was effectively no oversight into how any of these operations worked, and they were free to openly front run the market, buy electricity at substantially corruption-reduced cost or just outright steal it- and again in the early days this paid off extraordinarily well because early large block rewards could be sat on and held until they bubble-appreciate several thousand of percent above acquisition cost. when you're paying reduced (or nearly zero) cost for your production infrastructure you don't need to sell all of your product right away, and you thereby accumulate a future war chest to create a market 'bottom' anytime liquidity gets a little bit too loose for your liking: simply slow-roll selling new block rewards and voila, price stabilizes. Your carefully managed low public profile lets the media and public fill in their own self-serving explanation, which is that the public must be crazy about this stuff it cant stop buying it.

robbywashere_ 3y ago

What’s crazy is if this was so blatantly obvious too good to be true… why didn’t the SEC stop it ?

avar 3y ago
There isn't any prima facie problem with paying an extremely high interest rate. I'm sure you can find double digit interest rates for say bonds that represent payday loans, but you should expect the bondholders to default at a correspondingly high rate. But investors should be aware that higher rates imply higher risks.
- deleted 3y ago
  [deleted]

SoftTalker 3y ago

Some of the smartest SV people fell for his con. Big names we all know. Anyone can be conned.

SilasX 3y ago

(Replying in the context of Genesis/Gemini since that's what the parent comment was about, not FTX.) >I’m sorry for your loss but I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. I'm amazed that this is itself amazing. The 7% was over a time when US inflation peaked at ~9%. It doesn't seem right to say, of a yield that doesn't compensate for inflation, that it's is so ridiculously high that only the most self-deluded investor thought it was achievable. Furthermore, the collapse didn't happen while those sky-high rates were being promised. As of November 1st 2022, rates had been cut to 5.6%, and then, that was only for the Gemini dollar (which Gemini issued and was willing to use as a loss leader). By then, other stablecoins were lower, like DAI at 4.9% [1], similar to the rate that overcollateralized platforms like Compound were charging to borrow it. (Disclaimer: I used Gemini Earn, but was able to remove all assets before suspension of withdrawals and hat not put anything in that I would need urgently.) [1] https://web.archive.org/web/20221027002940/https://www.gemini.com/earn https://web.archive.org/web/20221027002940/https://www.gemin... -- note, that's from Oct 27, before the final GUSD drop.

TeMPOraL 3y ago

> I’m really amazed you thought that 7% yield from savings at a time of 0% interest rates was anything other than a fabrication. Did something substantial changed on the market recently? Because right now I can literally get a risk-free 7% time-limited savings deposit from my bank (Santander), which HN tells me is completely legit, all while banks in most other countries in the EU are stuck at offering 0.01% or even negative interest rates. What gives? I've long given up on trying to make any sense out of it. EDIT: to be clear, I'm in EU too (Poland). I don't follow what FED is doing (outside of what I occasionally hear about it on HN). I imagine it has some impact on EU markets (US having most nuclear carriers, etc.), but I don't know how big. From my perspective, we're still "at a time of 0% interest rates", and Santander suddenly offering 7% rates is some kind of anomaly, compared to other banks - both locally and EU-wide.

madsbuch 3y ago
> Did something substantial changed on the market recently? Yes. The FED has increased to interest rates. So the marked can support that now.
lightfield1002 3y ago
The FEDs rate was close to 0% early 2022 and is now above 5%. Yes, something very substantial has changed.
sofixa 3y ago
It's quite easy really. The FED has done stuff which doesn't impact you directly, really. However what the ECB(European Central Bank, steward of the euro) and the NBP (Narodowy Bank Polski) have done, impacts you much more directly. https://www.ecb.europa.eu/stats/policy_and_exchange_rates/key_ecb_interest_rates/html/index.en.html https://www.ecb.europa.eu/stats/policy_and_exchange_rates/ke... https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.mp230504~cdfd11a697.en.html#:~:text=Key%20ECB%20interest%20rates,-The%20Governing%20Council&text=Accordingly%2C%20the%20interest%20rate%20on,effect%20from%2010%20May%202023 https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.mp2305.... And of course, most relevant, Polish Central Bank: https://nbp.pl/en/monetary-policy/mpc-decisions/interest-rates/ https://nbp.pl/en/monetary-policy/mpc-decisions/interest-rat... The 7% interest rate you get in Poland is based on the one set by the central bank. Note that it is only like this since end of 2022, before that the rate was probably hovering around zero, like the ECB.

alexnewman 3y ago

wit 0% rates at the time, you can consider 7% as a risk asset, and not a big issue if the portfolio is diversified.