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Ya you haven’t said it, I guess my point is I think people are perceiving these to be more safe/stable than they likely are and basically comparing them to savings accountsComment
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well you guys are all free to keep your head in the sand, or look into things for yourself. We were all trained to think critically. And if you have incomplete information, well then what is more information going to cost? In this case, you can gain information in a free and noninvasive way. My recommendation in such situations is to always pursue the information before making a decision
or you can simply give it the sniff test, dismiss it and move on.👍 2Comment
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This is why I think crypto will become regulated in the next year. Everyday people, who can’t afford to lose are starting to invest in it like it is a bank account or a reasonable investment. No PDS is required because it’s supposedly a currency and not an investment (!).Comment
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“regulated” as in what, or how ?
IRS guidance exists as to taxation aspects. Declaration now on page 1 Form 1040. Exchanges and other crypto financial services companies have to follow Know Your Customer rules.
Mainstream banks and brokerages and payment processors are realizing that the race already started and they slept through their alarm. But now they are showing up
the moat around bitcoin is getting wider and wider.
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Lots of people in this thread focus on that word “currency” and because bitcoin doesn’t fit what we think of as a currency, well then the bitcoin proponents must be wrong. That’s a tired and lazy argument. It’s kind of unfortunate that the term cryptocurrency stuck because it incorrectly frames the conversation
remember, lots of poor people don’t hold assets the way you and I do. Stocks, bonds, real estate, private business. They hold dollars, or their native currency, and that’s it.
Are we certain how that’s going to work out for them long term?
At least with bitcoin, we know the denominator.👍 1Comment
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Couldn’t you say that about any pyramid scheme which guarantees an x payout. Well ya they aren’t in the business of losing money until the scheme implodes.
the banks are regulated with how aggressive they can be with their money, which I’m going to assume is many levels higher of regulation than these crypto things are. If the banks were confident they could make 20% reasonably safely I bet they would be doing interest rate arbitrage as well to get access to as much money as they can.
obviously these entities have to be doing something pretty aggressive to “guarantee “ 8% “interest .” I put these things in quotes because It seems silly to assume they mean the same thing from these entities as they do from a fdic insured bank
would also point out that you can see value in crypto with being cautious of these “crypto bank entities” and their outlandish guarantees.
no such thing as a free lunch. If you’re getting similar returns to the s&p I’m going to assume there is at least similar if not greater risk, which is a far cry from a “bank “ or a “guarantee” as I’ve heard multiple times in person from peers talking about these entities
The yield you get from most of the platforms is a combination of:
- interest rate arbitrage (lending at higher rates to borrowers than depositors). This is the biggest portion.
- trading fees from the exchanges occurring on the platform (ex: Eth to USDC) - most prominent platforms (like Uniswap) pay out fees to their depositors, pro-rated to your contribution to the liquidity pool.
- some yield from their marketing budgets to attract new depositors (vague and not sure how much this contributes to the yield).Comment
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Other risks include: project losing funding (small chance), another project takes market share (small chance), or some other major sea change that renders the entire field of DeFi useless (unlikely).
It's not a scam however - it's risk-adjusted returns, which is what you should be looking at in any investment.Comment
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The biggest risk is coding exploit or hack into the smart contract, which is what happened with yearn.finance in one of their stablecoin vaults. They repaid all their depositors however.
Other risks include: project losing funding (small chance), another project takes market share (small chance), or some other major sea change that renders the entire field of DeFi useless (unlikely).
It's not a scam however - it's risk-adjusted returns, which is what you should be looking at in any investment.
alt coins and “defi” is a completely separate conversation. Start a new thread.
Inclusion of these issues is another problem around trying to have a real conversation about bitcoin, lowercase b bitcoinComment
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Fair point re regulation, there are still a lot of unknowns, that's true. However, it's not Ponzi or pyramid scheme.
The yield you get from most of the platforms is a combination of:
- interest rate arbitrage (lending at higher rates to borrowers than depositors). This is the biggest portion.
- trading fees from the exchanges occurring on the platform (ex: Eth to USDC) - most prominent platforms (like Uniswap) pay out fees to their depositors, pro-rated to your contribution to the liquidity pool.
- some yield from their marketing budgets to attract new depositors (vague and not sure how much this contributes to the yield).Comment
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personally, I think I’m not smart enough to try to understand and or express a reasonable opinion as to validity of the model. Certainly following along though, for entertainmentComment
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The predictions the model makes seem like pie-in-the-sky predictions, but I do have to say the data points have lined up fairly well thus far.Comment
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