How does a 9.3% savings account sound?

[jacoavlu]

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.

you are quoting a post by someone that doesn't understand how these overcollateralized loans and is therefore making incorrect assumptions

there is no "magic" argument. the fundamentals have been spelled out.

[jacoavlu]

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.

well, these tokens literally are stable. go look at a price chart of USDC, GUSD, USDT. they oscillate around $1.00 with a deviation on the y axis at fractions of a penny.

here is some reading if you'd like a gov perspective https://home.treasury.gov/system/fil...t_Nov1_508.pdf

[xraygoggles]

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.

The reason GUSD and USDC are considered the most stable is they have 1:1 backing of USD in their Treasury. So the risk you are taking is not in the stablecoin losing value necessarily, but in the company going under, which is a possibility, sure, but for me a very low probability currently.

Like I said, I wouldn't put all your savings in there, just in case some black swan even occurs, since there is no FDIC insurance on these platforms. I put 1/3 of total cash savings in stables, with the remainder of my cash reserves in muni bonds & cash.

[jacoavlu]

The reason GUSD and USDC are considered the most stable is they have 1:1 backing of USD in their Treasury. So the risk you are taking is not in the stablecoin losing value necessarily, but in the company going under, which is a possibility, sure, but for me a very low probability currently.

Like I said, I wouldn't put all your savings in there, just in case some black swan even occurs, since there is no FDIC insurance on these platforms. I put 1/3 of total cash savings in stables, with the remainder of my cash reserves in muni bonds & cash.

I think the platform risk is far higher than the risk of the underlying capital backing of the stablecoin. platform would include blockfi, celsius or whatever that you're interacting with, plus the blockchain platform the stablecoin is built upon. for instance GUSD is an ERC-20 token, on the ethereum chain

[xraygoggles]

I think the platform risk is far higher than the risk of the underlying capital backing of the stablecoin. platform would include blockfi, celsius or whatever that you're interacting with, plus the blockchain platform the stablecoin is built upon. for instance GUSD is an ERC-20 token, on the ethereum chain

Right - platform risk, that's what I said. If Coinbase or Gemini goes under, you are screwed. But I consider that unlikely.

ERC-20 protocol is basically what almost every single DeFi token and stablecoin is built on, so again, highly unlikely to implode. Network effects, etc.

[jacoavlu]

Right - platform risk, that's what I said. If Coinbase or Gemini goes under, you are screwed. But I consider that unlikely.

ERC-20 protocol is basically what almost every single DeFi token and stablecoin is built on, so again, highly unlikely to implode. Network effects, etc.

yes, i didn't mean to imply that you had stated otherwise. moreso clarifying for others reading

[Tangler]

you are quoting a post by someone that doesn't understand how these overcollateralized loans and is therefore making incorrect assumptions

there is no "magic" argument. the fundamentals have been spelled out.

Ok, no offense intended, just seems like magic to me.

I am one of the ignorant no-coiners.

Happy thanksgiving!

[jacoavlu]

Ok, no offense intended, just seems like magic to me.

I am one of the ignorant no-coiners.

Happy thanksgiving!

no offense taken

the third and most famous of Arthur Clarke’s laws is: any sufficiently advanced technology is indistinguishable from magic

[ShredtheGnar]

Which is a safer way to get yield? Tax free state specific CEF which has an after tax yield of 6%. Or crypto interest account with an after tax yield of 5.45%. The CEF fund uses leverage of around 30% and has an ER = 1.6 but is trading at an 8% discount to NAV.

[jacoavlu]

Which is a safer way to get yield? Tax free state specific CEF which has an after tax yield of 6%. Or crypto interest account with an after tax yield of 5.45%. The CEF fund uses leverage of around 30% and has an ER = 1.6 but is trading at an 8% discount to NAV.

anyone would be guessing.

the state specific fund would probably me more risk of a near term mild to moderate drawdown / underperformance

stablecoin interest account would be more risk of some catastrophe of total loss / locked funds

[Brains428]

https://www.singlelunch.com/2021/07/31/is-usdc-another-tether/

An interesting article about USDC in comparison to Tether. TL-- but still recommend reading-- USDC is not as bad as tether, but still opaque in their treasury holdings. This was written in July...

I know- another piece of FUD- I just think it's important to understand that stablecoins aren't riskless. Yields are high to attract inflows.

(I don't hold stablecoins, FWIW. If I'm going to lose my dirty fiat in crypto, its going to be the old fashioned way with BTC going to near zero and panic selling).

[jacoavlu]

https://www.singlelunch.com/2021/07/...nother-tether/

An interesting article about USDC in comparison to Tether. TL-- but still recommend reading-- USDC is not as bad as tether, but still opaque in their treasury holdings. This was written in July...

I know- another piece of FUD- I just think it's important to understand that stablecoins aren't riskless. Yields are high to attract inflows.

(I don't hold stablecoins, FWIW. If I'm going to lose my dirty fiat in crypto, its going to be the old fashioned way with BTC going to near zero and panic selling).

tether recently had a pretty significant drawdown locally in india given some speculation about possible ban coming down from their gov. was trading at a discount for like half a day. of course there were folks happy to take the other side for the arb opportunity

[Brains428]

https://bitfinexed.medium.com/the-fidelity-stablecoin-that-does-what-so-called-stablecoin-issuers-claim-is-impossible-58148252a689

Here is an add on to the criticism of stablecoins in general (mostly pointed at Tether, but USDC is mentioned in the last paragraph). It's written by bitfinexed- which mostly focuses on Tether and the potential fraud around it. There is adult language in this article.

USDC allowed an audit of their funds in late 2020, but has simply had attestations of their backing this year.

[Nysoz]

So how safe/stable is this?

For the interest arbitrage how much is someone willing to borrow at a lower percent to put into this to earn 8-10% or whatever it is?

If one believes in this and has cash laying around then it seems like people are earning interest like this.

Would you borrow money at 1% to earn 10%? Borrow at 2%? Where does one draw the line?

[nycEMMD]

So how safe/stable is this?

For the interest arbitrage how much is someone willing to borrow at a lower percent to put into this to earn 8-10% or whatever it is?

If one believes in this and has cash laying around then it seems like people are earning interest like this.

Would you borrow money at 1% to earn 10%? Borrow at 2%? Where does one draw the line?

I have my emergency fund in GUSD, not locked, earning 8%. I wouldn’t borrow money to buy stable coins just to earn interest