How does a 9.3% savings account sound?

[jacoavlu]

like I said before if you say you don’t know how they can do what they claim they’re gonna do, why you would do it . Yea I understand the 9% interest sounds nice but you’re basically saying it seems too good to be true but the allure is too much for you to resist?

I would have to think they are being very aggressive with your money to justify giving you almost 10% with it which obviously is risky in the event the market goes south, completely excluding the lack of federal backing

yolo right

I updated couple days ago and said I was only going to go a small amount and observe. I'll report back.

[Doc Spouse]

Providing liquidity via a pool or staking (loaning) your coins for margin. The former is easy to get in trouble with if the pool is too low. The latter is easy to get in trouble with if someone figures out a way to game the system. There is no doubt you can make decent money with this as many people have. There is also no doubt that it's risky and you could lose money as many people have. I mean, it's crypto. It's risky anyway. Don't mortgage your house or gamble with more than you can afford to lose.

The tether saga continues, which will have far reaching implications for btc's price - https://coingeek.com/crypto-crime-ca...gh-for-tether/ That article is a bit heavy-handed, but the sharks are circling because they've smelled blood in the water for quite some time.

[jacoavlu]

Providing liquidity via a pool or staking (loaning) your coins for margin. The former is easy to get in trouble with if the pool is too low. The latter is easy to get in trouble with if someone figures out a way to game the system. There is no doubt you can make decent money with this as many people have. There is also no doubt that it's risky and you could lose money as many people have. I mean, it's crypto. It's risky anyway. Don't mortgage your house or gamble with more than you can afford to lose.

The tether saga continues, which will have far reaching implications for btc's price - https://coingeek.com/crypto-crime-ca...gh-for-tether/ That article is a bit heavy-handed, but the sharks are circling because they've smelled blood in the water for quite some time.

when you say people have lost money are referring to instances involving stablecoins?

if so I’d be interested to read

[Doc Spouse]

when you say people have lost money are referring to instances involving stablecoins?

if so I’d be interested to read

https://cryptobriefing.com/50-million-lost-the-top-19-defi-cryptocurrency-hacks-2020/

https://cyware.com/news/cybercriminals-siphoning-funds-from-cryptocurrency-services-and-exchanges-eea23e9d

https://www.theblockcrypto.com/post/...7-million-lost

Not your wallet, not your coins holds true.

One of the dangers of providing liquidity though, to be fair, they're working on this one.

https://blog.bancor.network/beginners-guide-to-getting-rekt-by-impermanent-loss-7c9510cb2f22

[jacoavlu]

https://www.theblockcrypto.com/post/84804/defi-protocol-origin-attack-7-million-lost

Not your wallet, not your coins holds true.

so while involving a stablecoin this loss is really a separate issue. Myriad similar hacking losses can be found

certainly BlockFI or any other entity could be hacked and have your assets stolen, whether stablecoins or BTC or ETH or whatever

but this is not a loss related to a stablecoin "run on the bank" collapse or a loss from the securities lending type thing happening here, I think you would agree

[jacoavlu]

this news is not new but if comes to fruition may provide some support to the legitimacy of the crypto stablecoin world in general - Visa working with USDC

https://www.forbes.com/sites/michael...h=1c50fd894b1f

doesn't change the fact that I still don't understand the market for interest on lending of stablecoins

one thought I've had is that the stablecoin interest could be a loss leader. BlockFI allows trading as well, so maybe they know that if customers have stablecoin balances on the platform they're likely to buy BTC or ETH or other crypto with said balance

though they don't make money from trading fees so that wouldn't seem to me to explain the stablecoin interest

edit: they do make money from trades because there’s a trading spread that’s not readily apparent, equates to about 0.7% trading fee which in the crypto world isn’t horrible but they’re are better options

[jacoavlu]

leaving this here for those interested.

https://podcasts.apple.com/us/podcast/we-study-billionaires-the-investors-podcast-network/id928933489#episodeGuid=gid%3A%2F%2Fart19-episode-locator%2FV0%2FY7EcABwPmgA_1fIZUDEWbWkxTUAcVjSnY-QhMeMDFI0

[wkerr0730]

I've spent a lot of time looking at this and struggle to determine the risk.

There is a risk of the asset (USDC, GUSD, etc. Stay away from Teether), Risk of the Platform (Blockfi) Then the risk of the lending.

The way they generate high yield is by loaning your assets to institutions that trade crypto on margin. The reason this is semi-safe is that to get a loan you need to post collateral and be overcollateralized with an LTV of generally 25%. So in theory.. the risk should be mitigated for the lending.

[Larry Ragman]

I've spent a lot of time looking at this and struggle to determine the risk.

There is a risk of the asset (USDC, GUSD, etc. Stay away from Teether), Risk of the Platform (Blockfi) Then the risk of the lending.

The way they generate high yield is by loaning your assets to institutions that trade crypto on margin. The reason this is semi-safe is that to get a loan you need to post collateral and be overcollateralized with an LTV of generally 25%. So in theory.. the risk should be mitigated for the lending.

This thread is 9 months old, so perhaps jacoavlu will give us an update on his investment. For my part, I bear in mind that anything that is returning 4X the market rate carries a high risk, and regardless if I were you I would not count on theoretical mitigations.

[wkerr0730]

I'm with you Larry Ragman and sorry to res an old thread. I just find it super interesting and think the underlying mechanisms should be inspected a bit more rather then writing it off.

I did this with over 50K with both Celsius and Blockfi and never had any issues over the last 6 months, which I know is a small sample size.

[jacoavlu]

i’ve earned a little over $50k this year on blockfi and celsius.

i no longer hold any btc on these platforms. the interest came down to a point i deemed not worth the counterparty risk

i still hold USDC on celsius, earning 10% currently

i think most of the cash deposits end up getting lent out to individuals not institutions

blockfi for a while decided to get strict about withdrawals, that cash deposited via ACH had to stay on the platform for 60 days. i didn’t like being locked up like that. not sure if that’s still their policy. when i did have disagreement i appreciated that they actually had a phone number i could call and talk to someone

Larry Ragman i would challenge your view a little bit in that you have to ask yourself what the definition of market rate is. is it the prevailing rate in the manipulated market with artificially suppressed rates, which pushes savers to take risk to avoid losing to rising inflation? or is it the outlier rate arising in a free market comprised of nothing but voluntary participants?

[Larry Ragman]

i’ve earned a little over $50k this year on blockfi and celsius.

i no longer hold any btc on these platforms. the interest came down to a point i deemed not worth the counterparty risk

i still hold USDC on celsius, earning 10% currently

i think most of the cash deposits end up getting lent out to individuals not institutions

blockfi for a while decided to get strict about withdrawals, that cash deposited via ACH had to stay on the platform for 60 days. i didn’t like being locked up like that. not sure if that’s still their policy. when i did have disagreement i appreciated that they actually had a phone number i could call and talk to someone

Larry Ragman i would challenge your view a little bit in that you have to ask yourself what the definition of market rate is. is it the prevailing rate in the manipulated market with artificially suppressed rates, which pushes savers to take risk to avoid losing to rising inflation? or is it the outlier rate arising in a free market comprised of nothing but voluntary participants?

Thanks for the update. It is always interesting to me to see how the scenarios posted here actually play out.

Your challenge on my use of “market rate” seems fair. I probably meant something more like risk free rate, but maybe in this comparison conventional market rates. Regardless, I generally find rates of return to be proportional to the amount of risk accepted. That said, risks can be mitigated by knowledge and experience. In this case I am happy to learn from others.

[Tangler]

Sounds risky.

Yes.

Too good to be true.

You can have risk & high returns or safety, not both.

This time it is different?

Admittedly, I don’t understand it. So, even if it is true and “stable” i will wait on the sidelines and try to learn.

[Tim]

jacoavlu
Changing the lockup period.
Glad they had phone support.
Not sure if that is still their policy.

The combination of those three in your explanation imply (to me) a fluid situation. The ability to change the “deal” itself is a risk. What if their policy changed the “phone support” was no longer available? I am just noodling a “run on the bank” situation.

I think you earned the $50k by monitoring the counterparty risk. Regardless of the rate.

This seems to me to be an alternative investment that takes skill and knowledge. Thus the risk justifies the higher returns. That implies that some will incur losses. Thanks for contributing you experiences.

[Nysoz]

To play contrarian why does it have to be too good to be true? It’s a new asset class so can it be compared to the bloated financial system? How much interest could you get paid if Bank of America didn’t have to pay all of their employees or have locations?

When online banks came out people were weary of the higher interest rates but now it’s accepted and normal. This is potentially just taking the next step further.

It certainly has it’s risks for sure but is it worth it? I always find the best teacher is experience. If you’re curious about it, just put like $100-1000 in there. Once you have skin in the game you’re more likely to follow and learn about it more. You can also see how the interest accrues and what it takes to deposit and withdraw limitations. Worst case you’re out the $100-1000 as a learning experience but then can also say “I told you so” to all the crypto people lol.