How does a 9.3% savings account sound?

[jacoavlu]

This story is ending as expected. A lot of people losing their money. David Stein talked about in this week's Money for the Rest of Us podcast. He gave specific examples of people losing money, including himself. His $500 at Voyager was cut to $250, and now he is in line with other creditors for whatever scraps are left after bankruptcy. It turns out that lending and offering 9% "guaranteed" is a workable business model so long as the price of crypto is rising. But with crypto falling, look out below.

Bonus content (below): "I just wake up and cry..."
https://www.marketwatch.com/story/i-...ms-11657803496

the majority of people will read headlines about this stuff and basically end up saying “see, it’s crypto I told you so” when in truth there are actually meaningful conversations to be had and valuable lessons to be learned that can be applied both narrowly and broadly. I think this thread is a good example.

[xraygoggles]

Stablecoins backed by USD in their Treasury will be fine in the long term (USDC & GUSD most likely; USDT unsure).

They will overtake BTC and ETH as the top marketcap coins, because they have a real use-case and product market fit.

All these speculative algos and unbacked stablecoins need to fail - that's normal, and good.

[jacoavlu]

Stablecoins backed by USD in their Treasury will be fine in the long term (USDC & GUSD most likely; USDT unsure).

They will overtake BTC and ETH as the top marketcap coins, because they have a real use-case and product market fit.

All these speculative algos and unbacked stablecoins need to fail - that's normal, and good.

UST failed, I’m not really aware of others. Not really the point of this thread

the funny thing with USDC is that as a centralized / regulated / captured stablecoin like this gets larger and is such large underpinning of “defi” then the result is a whole ecosystem is built on an unstable foundation.

Because USDC is heavily centralized. GUSD same. Even Tether is trending in this direction. If the US gov can confiscate a nation state such as Russia’s US treasury reserves with the stroke of a pen then they can easily do the same with a regulated stablecoin like USDC. So much for decentralization.

im not a defi participant so I don’t really care. It will just be interesting to see it play out

[VagabondMD]

the majority of people will read headlines about this stuff and basically end up saying “see, it’s crypto I told you so” when in truth there are actually meaningful conversations to be had and valuable lessons to be learned that can be applied both narrowly and broadly. I think this thread is a good example.

My take-away is not that "crypto is bad". It is that 9% guaranteed is not sustainable.

[xraygoggles]

UST failed, I’m not really aware of others. Not really the point of this thread

the funny thing with USDC is that as a centralized / regulated / captured stablecoin like this gets larger and is such large underpinning of “defi” then the result is a whole ecosystem is built on an unstable foundation.

Because USDC is heavily centralized. GUSD same. Even Tether is trending in this direction. If the US gov can confiscate a nation state such as Russia’s US treasury reserves with the stroke of a pen then they can easily do the same with a regulated stablecoin like USDC. So much for decentralization.

im not a defi participant so I don’t really care. It will just be interesting to see it play out

Yes that's true vis-a-vis decentralization. But because they will become more popular over time, so will the ETH blockchain, which is what they are built on, and one reason why it won't fail or go to zero.

[jacoavlu]

My take-away is not that "crypto is bad". It is that 9% guaranteed is not sustainable.

current rates on stablecoins at blockfi is 7%, tapers down toward 4-5% with larger balances. There is no guarantee.

[jacoavlu]

Yes that's true vis-a-vis decentralization. But because they will become more popular over time, so will the ETH blockchain, which is what they are built on, and one reason why it won't fail or go to zero.

yeah it’s just another factor in eth trending toward centralization. Which is probably fine for what it’s solving for. But then there are competing chains doing similar things or the same thing, at lower cost. Which is not bullish for eth token.

[Lordosis]

I am getting 42% on my magic staked in the magic dragon DAO. It may disappear tomorrow but it sure is a fun ride!

[jacoavlu]

I am getting 42% on my magic staked in the magic dragon DAO. It may disappear tomorrow but it sure is a fun ride!

not sure but kinda thinking ur serious?

[Turf Doc]

so what do we think of this nowadays...

[jacoavlu]

so what do we think of this nowadays...

I haven’t gone back and read from the beginning but if I did I’d guess it’s a good example of the fact sometimes there are opaque and not obvious risks and counterparties are never to be trusted particularly in “crypto”

blockfi has actually i think most recently started processing withdrawals again which I hope continues but I haven’t kept up

there was rumor that when they took the FTX loan / bailout that a condition of the deal FTX required they move blockfi customer assets to FTX. And that FTX has required this of similar deals where partners had to move their treasuries to FTX custody

blockfi now denies this was the case at least in terms of their assets. Though they for sure had some FTX exposure since they paused withdrawals

honeslty don’t think it was ever a ponzi. Their rates steadily declined as market rates went down and eventually got low enough it made no sense to continue to use them

If it was really a ponzi all the regulators for sure missed it

[Panscan]

I haven’t gone back and read from the beginning but if I did I’d guess it’s a good example of the fact sometimes there are opaque and not obvious risks and counterparties are never to be trusted particularly in “crypto”

blockfi has actually i think most recently started processing withdrawals again which I hope continues but I haven’t kept up

there was rumor that when they took the FTX loan / bailout that a condition of the deal FTX required they move blockfi customer assets to FTX. And that FTX has required this of similar deals where partners had to move their treasuries to FTX custody

blockfi now denies this was the case at least in terms of their assets. Though they for sure had some FTX exposure since they paused withdrawals

honeslty don’t think it was ever a ponzi. Their rates steadily declined as market rates went down and eventually got low enough it made no sense to continue to use them

If it was really a ponzi all the regulators for sure missed it

How is it not a ponzi ? There is no market for borrowing Btc as described in their methods as claimed in this thread a year ago or whatever. It was never needed for liquidity purposes as I believe we talked about at that time.

It is all a ponzi to loan stuff out for trading , people get blown up and can’t pay back the loans. Blockfi is basically harvesting the spread between what they pay you and what they get for loaning your out your money to degens. Therefore the only people interested in this service are SBF equivalents who will accept a 15% cost of borrowing, and eventually blow up.

it’s just not a sustainable or sensical business model in normal times. There is no demand for Btc lending.

[Turf Doc]

I haven’t gone back and read from the beginning but if I did I’d guess it’s a good example of the fact sometimes there are opaque and not obvious risks and counterparties are never to be trusted particularly in “crypto”

blockfi has actually i think most recently started processing withdrawals again which I hope continues but I haven’t kept up

there was rumor that when they took the FTX loan / bailout that a condition of the deal FTX required they move blockfi customer assets to FTX. And that FTX has required this of similar deals where partners had to move their treasuries to FTX custody

blockfi now denies this was the case at least in terms of their assets. Though they for sure had some FTX exposure since they paused withdrawals

honeslty don’t think it was ever a ponzi. Their rates steadily declined as market rates went down and eventually got low enough it made no sense to continue to use them

If it was really a ponzi all the regulators for sure missed it

I mean there was never a 9.3% market rate right? The explanation in the initial post made no sense to me and i dont see how it could have. Theres no free lunch so it seems like this was more like a junk bond with a crypto wrapper

[ShredtheGnar]

It was nice while it lasted. I pulled all my funds out once the interest payments dropped to inflation rate. Glad I did.

[jacoavlu]

I mean there was never a 9.3% market rate right? The explanation in the initial post made no sense to me and i dont see how it could have. Theres no free lunch so it seems like this was more like a junk bond with a crypto wrapper

during bull run there was definitely a market lending cash to people who had seen significant gains in their bitcoin and other crypto and wanted cash but didn't want the tax hit of selling and realizing gains. there was also a market for institutional lending to market makers and traders and such. and there was the gbtc arbitrage trade.

did those earnings really support the yield rates they were paying? unclear. when they got bailed out buy FTX they clearly had liquidity problems as Celsius collapsed and there was a bit of a bank run on all these platforms but it's not entirely clear what the problem was.

for sure they made mistake with the gbtc trade because that discount to NAV turned significantly negative and persisted so entities that bought a bunch of gbtc thinking they were going to profit on the arb were forced to either sell at a loss to get liquidity back, or hold on and hope for the discount to close, which it never has

and so they took a loan from FTX who turned out to be just a total house of cards.