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How does a 9.3% savings account sound?

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  • #76
    Originally posted by Nysoz View Post
    Gamble and stable coins don't quite belong in the same sentence. are 390-780%.
    ““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.””

    Sorry, for the misinterpretation. The word gambling is usually associated with odds or percentages. What are the odds?
    You need to quantify “worst case” for “I told you so.”
    Over collateralized is also the value in “worst case”. Break this down into odds or percentages.
    Just saying “I told you so” is not a ton of value. Are you saying that there is a zero chance for loss? On any account or in total? Risk free at 10%?
    Let’s not get caught up in words.
    It would be a gamble to me and I would be interested in liquidity risk being zero with a holding period.
    The risk hasn’t been quantified.
    The return of interest has.
    risk/return is the question.


    • #77
      Originally posted by Larry Ragman View Post

      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.
      people use the word "risk" as if it has some clear or universal definition. when in reality its usually undefined and has a different meaning for each participant in the conversation.

      warren buffett says buying bonds now is more risky than buying stocks. as an example.


      • #78
        Originally posted by Tangler View Post

        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.
        who said anything about safety?

        and stablecoin is just a term for a digital token which is pegged to the value of another asset typically a fiat currency, in this case USD. don't conflate the fact that the word "stable" is part of the conversation to mean that someone is implying that there is no risk in participation across the whole stack.


        • #79
          Originally posted by Tim View Post
          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.
          I am actually not sure they changed the lockup period, likely they didn't. But at first ACH deposit limits were very low, so to move any sizeable dollars you had to wire it in. Then they raised ACH limits to like $25k per day making it much easier to avoid wires. And so it was that transition that got me. Not sure if a scammer could move funds by ACH, buy btc, 45 days later move the btc off the platform then somehow reverse the ACH transaction, but that was basically their argument for the policy. Which in a way should give some folks comfort in that they're being conservative in this one sense and trying to mitigate risk.

          alternative investment, definitely.


          • #80
            Yeah I agree there's a huge spectrum between gambling/speculation and 'risk free'. When it first started, it was very questionable as it's not normal or traditional. The longer it stays around and the more is learned about it, it slowly creeps up towards the risk free end rather than the gambling/speculating end. It's no where close to where the traditional assets are, but closer than it was a year ago.

            There's definitely the risk of overcollateralization but if risk managed properly, that risk falls on the borrower. The risk is if the company acting as the intermediary doesn't act fast enough then once the borrower loses all their money and collateral the borrowee? would be on the hook.


            • #81
              Originally posted by Nysoz View Post
              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.
              celsius touts that they pay out 80% of the revenue to the users of the platform and they publish a lot of numbers around this and the CEO hosts a live AMA every week.


              • #82
                Nocoiners??? Should I be triggered by this?

                If someone is paying 10% interest it has risk. Period. That is a lot of interest and the money has to come from somewhere. While everything is going up there is plenty of money to pay this out but when things turn sour the best case scenario is they drop the rates. More likely you will lose principle.

                This was done with Real estate not that long ago. Same game different players.


                • #83
                  Originally posted by nycEMMD View Post
                  Alternatively, I think we need a stablecoin thread, I think someone suggested it in another post, maybe we should write one up. Maybe I'll do a deep dive on stablecoins and tie it into lending and defi
                  So, your argument is that if only I (and other conservative investors) understood stablecoins I would conclude there is less risk in investing in that asset category than I infer from published fixed rates of return? Ok, please start your thread. I look forward to it. After all, what is the purpose of the forum if not to educate each other.


                  • #84
                    Originally posted by Lordosis View Post
                    Nocoiners??? Should I be triggered by this?

                    If someone is paying 10% interest it has risk. Period. That is a lot of interest and the money has to come from somewhere. While everything is going up there is plenty of money to pay this out but when things turn sour the best case scenario is they drop the rates. More likely you will lose principle.

                    This was done with Real estate not that long ago. Same game different players.
                    Maybe it's like being called a muggle lol.

                    This is where risk management comes into play. If they manage the risk properly, the person borrowing loses their collateral and you still get paid/have your principle. If enough people lose or not enough people are borrowing then rates decrease. You're supposedly only at risk of losing principle if the entire company goes under. That's from what I understand and will also wait for the stable coin thread for more education.

                    I do agree that name calling or semi-personal attacks don't benefit anyone and makes one lose any credible argument. If you're looking to sway someone, do it with information and education. We're all educated here and have different risk tolerance. All people can do is start discussion, provide information, and let the individual figure out if the time/risk is worth the reward.


                    • #85
                      Originally posted by nycEMMD View Post
                      Just reading comments in this thread, yet again, a bunch of people that have no understanding of how stablecoins and defi work yet posting the same tired FUD we've been hearing from the nocoiners for the past few years

                      Not quite my friend. BTC and ETH have much lower risk than most index funds yet offer higher returns. If you don't understand why stablecoins offer such a high interest rate you need to do some more reading
                      blockfi certainly and celsius to a bit lesser degree aren't really defi. like, the de in defi is decentralized. these entities are centralized


                      • #86
                        I am assuming the interest is taxed as ordinary income?


                        • #87
                          Originally posted by Random1 View Post
                          Late to the thread, but stated above “ I think that most of cash deposits are lent out to individuals”. The only individual who would take a 10%+ loan now , is someone with poor credit risk. Otherwise , they could get a loan at a much lower rate. So your interest rate is dependent upon poor credit risk individuals with high interest loans paying back their debt on time or at all. When the economy slows down , these are the first to default.
                          No. as someone else has I think already pointed out, you can't get a loan without posting collateral, these loans are over collateralized so there is very little risk to the lender if they're operating correctly. this isn't fractional reserve banking 2.0


                          • #88
                            Originally posted by Panscan View Post

                            Lol Btc and eth less risk than index funds, man that is so much hopium it hurts. Stablecoin have so much interest bc of the Ponzi schemes of crypto which are constantly imploding.

                            look at blockfi which has imploded and has consistently lowered the amount of interest they pay.
                            your definition of imploding seems to be far different than the traditional one.

                            when the fed or the gov or your bank lowers interest rates, does that mean they're imploding?

                            point to an example of these entities imploding or being demonstrated to be a ponzi scheme?


                            • #89
                              Originally posted by Panscan View Post

                              they could sell their crypto and get out of scam world and use it for actually viable transactions.

                              you keep saying just because someone is not hopelessly in love with crypto or defi they don’t know anything about it and frankly it’s really annoying.

                              overcollateralized loans are another joke which just shows how volatile the underlying asset is. BRB let me put up 1k in collateral to have access to 500 dollars of funds , it’s the dumbest thing. Fools and their money soon parted
                              a lot of the crypto world in terms of the number of coins is a scam. you'll find me using the word crypto very rarely

                              i wouldn't call over collateralized loans a joke. a logical person might actually call under collateralized loans a joke. i guess it depends on your perspective but I'd like to hear more of your explanation around this

                              you're definitely correct that dumb people do dumb stuff with their money. but then you're twisting this around to the perspective of the borrower not the lender. unless you're arguing that both sides are dumb, which would be a weird position to take.


                              • #90
                                Originally posted by Random1 View Post
                                I will admit I dont know alot about crypto which is part of the reason I pose some of these questions is to try to "figure" it out. Yes, even after all these degrees I don't have a good understanding, and that is part of the reason I have skepticism about this. For almost every thing in finance , it is a zero sum game , for someone to win , some one else has to lose, and I see this as no exception. For me at this stage in life, figuring out how not to lose is more important than winning.
                                this isn't that hard to understand.

                                post collateral, borrow funds to use as one would choose, pay agreed upon interest rate

                                if your collateral drops in value, you may have to pay down your loan, or post more collateral. if you don't you are at risk of automatic liquidation to pay off the loan

                                if your collateral does not go down in value, you pay your interest and eventually pay your loan, or just carry the debt

                                who is the loser?