I am starting to learn about stable coins. The concept seems too good to be true though. So I can set my money in USDC and it will collect 6-10% interest? Why aren’t more people doing this? I have about. Say I have
$40k sitting in a savings account as an emergency fund. I can move that to a stable coin and withdraw it whenever I want to? I understand their are risk involved but even if I moved $5k to a stable coin I’d make more than having $40k in a savings account. Can those with knowledge enlightening me please?
Dude not only did you give away the amount of money you have, you also mentioned which bank it is. That’s extremely risky. Please edit this post.
>Why aren’t more people doing this?
They either don’t know about it, don’t want to assume the smart contract risk in DeFi, or they are doing it and just don’t brag about it on the internet
Your right. I mean staking your USDC for 10% is clearly a no-brainer. Your spot on!
Where is usdc getting 6-10% interest on usd if it’s backed 1-1
The main risk is that none of it is really insured. If the company collapses or runs off with your money (regardless of how likely either is), you’re pretty much screwed
That’s nice, so you may make 2k-4k per year on this.
I can do this too but I am too intrigued by the possibility of coins going up that I don’t really use this method at all..
For example there was a new listing on binance alpine coin and I made 50% in 30 minutes, which takes 5-7 years normally. It’s also true that it was a small “test” sum :D.
Good luck!
Essentially, yea. Stablecoins pay high APR because it’s commonly borrowed and traded against. Biggest Risk being platform running away with your funds.
It’s also typically less liquid as you can’t really spend it directly and there are fees and delays involved in converting USDC to usd and vice versa.
You can try going halfies where you keep have of your salary or savings in USDC for the sweet returns and another half as ready cash.
Essentially the risk is lack of FDIC insurance. This can be mitigated by buying private insurance for 1-2% per year.
Others mitigate by spreading across platforms.
Fully agree more people should do it.
“Why aren’t more people doing this?”
You know the answer.
“The concept seems too good to be true though”
You spotted that.
“I can move that to a stable coin and withdraw it whenever I want to?”
Most seem to have a lock in period. Seem to recall that Bitconnect had a lock in period.
“I understand their are risk involved”
Yes your capital is at risk (surprise), also US Government appear to be in the process of ending this caper, or at the least heavily regulating it (for your protection one might assume).
One company got fined $100m just a few days ago, and another has stopped USA users from adding to holdings.
EDIT first source was behind paywall.
source = https://www.sec.gov/news/press-release/2022-26
I’d DYOR, big time before committing.
its less risky than staking a regular crypto that isn’t pegged to a dollar, but there still are risks.
stuff like Celcius, although look like a dApp they are really a centralized service, so thoughunlikely, they could liquidize and take off you’d be none the wiser till you try to connect to the site.
decentral options are just as risky as the entire protocol is usually open source (you’d be mad to use a decentral app that is not opensource) means that any dev that has a lack of morals could look and see a huge exploit that the dev team have not addressed.
there are pros and cons.
I for one find the least risk on places like Agave, where you are essentially putting your crypto (including stables) and allowing others to lend it, giving you an interest bearing version of what you have put up for collateral, its less than the usual you see (i.e agave has 2-3% on xDai) but seems like its less risky in the long run than stuff like celcius, and essentially, this action of lending borrowing your collateral, is basically what a bank does with your money when you give it to them, I just get some for myself too.
still wouldn’t stop an errant hacker coming along and finding an exploit to steal all the underlying value from the protocol though.
Because they are not educated about crypto much.
19.5% on UST