How does a 9.3% savings account sound?

[jacoavlu]

““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.

as usual, i basically can't follow you.

10% is an equities like return, would you agree?

and I think most of us would agree that a real risk in equities is a 50% loss over the course of some months

so then you have to try to compare that risk scenario with one of these big neobank type products

[jacoavlu]

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.

I for one never said no risk. I haven't gone back to read the old posts but I recall this point being made back then as well.

its a very different game vs real estate because real estate isn't instantly liquid 24/7/365

[jacoavlu]

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.

blockfi platform for one has the users in a front position ahead of the company investors in the case of a catastrophic scenario. they're I'm pretty sure heavily VC backed. if there was some doomsday event requiring liquidation to pay creditors, the platform users get paid before the investors. or so they say

[jacoavlu]

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.

as far as risk you have to look at the whole stack. again, it's an equities like return so I would consider any money that I put into something like this as a piece from my equities allocation overall. though I hold almost no bonds so I guess that doesn't really matter does it. but anyway that's what I'd advocate

stablecoins are definitely going to be a thing. we will see these regulated stablecoins integrated into traditional banking systems in the coming years. there is such a huge advantage in the settlement aspects compared to the antiquated systems operating now

[jacoavlu]

I am assuming the interest is taxed as ordinary income?

as interest income

[udrag14]

9.3% a year....boring



Big boy APY! 2% a day

[jacoavlu]

9.3% a year....boring



Big boy APY! 2% a day

you should start a separate thread to discuss or post over in the defi thread

I get that maybe your post is a bit tongue in cheek. but its this type of stuff that leads a lot of folks to view all "crypto" as one and the same when in truth there is a very broad spectrum. bitcoin vs eth vs other crypto shitcoins. blockfi and similar entities vs the wild wild west uncharted frontier defi stuff vs outright meme token gambling

[Tim]

as usual, i basically can't follow you.

10% is an equities like return, would you agree?

and I think most of us would agree that a real risk in equities is a 50% loss over the course of some months

so then you have to try to compare that risk scenario with one of these big neobank type products

They are equating it to cash like deposits and safety. Or seem to be.
Stable, no risk.

[jacoavlu]

They are equating it to cash like deposits and safety. Or seem to be.
Stable, no risk.

who is "they" and what is "it"

[Tim]

who is "they" and what is "it"

I quoted the posts. Feel free to read.

[xraygoggles]

I will reiterate: the only stablecoins anyone should put any money in are on platforms which are fully backed, regulated, and endorsed by the US. Namely Gemini and Coinbase. So I would really only trust those two, GUSD and/or USDC. BlockFi also has GUSD, but I'm wary of the company in general...

I personally keep some savings in GUSD, and feel relatively safe in doing so, having done the requisite due diligence of the company.

If you were to pursue a decentralized stablecoin, I feel like DAI is the best bet - it was able to survive large drops in the past, including covid crash, and come out alive. It uses a complex algorithm related to collateralization on the MakerDAO DeFi platform, which is interesting to learn about. It doesn't rely on any shady intermediaries or deceitful accounting trickery as some other ones might (*cough* Tether *cough)

[xraygoggles]

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

May be true, but: catch more flies with honey; teach a man how to fish, etc.

BTC and ETH have much lower risk than most index funds yet offer higher returns.

Surely you can't be serious! (I am serious, and don't call me Shirley.)

How in the world did you come to this conclusion?

[Tangler]

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.

This makes sense.

The “new magic thing argument” makes less sense.

At least to me.

If it paid 0.5% or 1% I might find it comparable to a high yield online savings, but 10%?

Again, i might be wrong but that is ok.

I will take my risk in the form of stock index funds and a small value tilt.

[Tim]

I will reiterate: the only stablecoins anyone should put any money in are on platforms which are fully backed, regulated, and endorsed by the US. Namely Gemini and Coinbase. So I would really only trust those two, GUSD and/or USDC. BlockFi also has GUSD, but I'm wary of the company in general...

I personally keep some savings in GUSD, and feel relatively safe in doing so, having done the requisite due diligence of the company.

If you were to pursue a decentralized stablecoin, I feel like DAI is the best bet - it was able to survive large drops in the past, including covid crash, and come out alive. It uses a complex algorithm related to collateralization on the MakerDAO DeFi platform, which is interesting to learn about. It doesn't rely on any shady intermediaries or deceitful accounting trickery as some other ones might (*cough* Tether *cough)

This is helpful. By stablecoins and keeping some savings. Does that mean you would keep a house down payment there? An alternative investment for returns is one thing, my question is more about the word being used, stable.

[jacoavlu]

I quoted the posts. Feel free to read.

I did, and I don't read someone saying that. regardless, if someone did, you can disregard their framing

so again, best to compare the risk to other ~10% expected return classes