Stable coins vs Alt coins?

[QuarterMillionMan]

Just to be clear in disneysteve's $5000 example at 9.5%, the first step is that $5000 needs to be in USDC which is a stable coin. It is currently trading at $1 dollar = $1 in USDC stable coin. Step 2 would be to deposit those $5000 in USDC stable coins into a LEDN account in order to get the 9.5%. Also, to consider what if the value of this stable coin called USDC drops in value from $1 to let's say .90 cents, that 9.5% interest gets pretty much wiped out. At any rate I may buy $20,000 in USDC stable coin and make a 100% deposit to get that 9.5%.

[QuarterMillionMan]

Also, I already have more than half of a BTC so I might deposit the max of 0.5 BTC in LEDN to get 6.5%.

[disneysteve]

You name it. My best guess: maybe pooling money from a bunch of people & investing in new companies. If those investments are in the form of loans, interest rates would be anywhere from 6-15% (or more). If they hold equity or royalty positions, then Mr. FinTech gets a chunk of the company's profits...and if done well, those investments can see returns anywhere from 20% up to (and beyond) 200%.

Very interesting. So the next question is what risk is there to the investor? If they are lending out the money and a borrower defaults or they invest in a company that underperforms or goes under, they may not be able to maintain the interest payments. Is there also risk of losing principal?

Obviously there has to be some significant risk here or else we'd all dump our portfolios into these 9.5% interest accounts.

[QuarterMillionMan]

Not CDIC insured, which is the Canadian version of the FDIC. In other words, very, very risky (lol).

[QuarterMillionMan]

[james.hendrickson]

Whats going on here?

[QuarterMillionMan]

James these are the savings interest rates at crypto dot com. Make a deposit of any of these stable coins or alt coins for 3 months or more and at least $4000 or more and receive these interest rates. For instance if someone deposits Polkadot they would get 12.5% interest (see bottom table).

[QuarterMillionMan]

1) the longer the term the higher the interest rate
2) the bigger the deposit the higher the interest rate as well.

[james.hendrickson]

James these are the savings interest rates at crypto dot com. Make a deposit of any of these stable coins or alt coins for 3 months or more and at least $4000 or more and receive these interest rates. For instance if someone deposits Polkadot they would get 12.5% interest (see bottom table).

got it - that makes sense. I'm still kinda stuck on DisneySteve's question - how can these companies consistently generate 8% interest?

[Radshaw8]

I want to focus for a new coin. Is this will be a good idea to follow? What is your suggestion?

[james.hendrickson]

I want to focus for a new coin. Is this will be a good idea to follow? What is your suggestion?

That's like asking which stock someone should buy. Ha ha.

Question - which altcoins are you considering? That might help move the conversation forward.

[QuarterMillionMan]

I might buy $20,000 of Polkadot and deposit it all in order to make $2500 a year in interest payments. Of course I could lose it all but I'm willing to take that chance.

[QuarterMillionMan]

Today Polkadot is $29.48. Let's say in the future it doubles to $60, would the interest then be paid at $60, or vice versa if in the future Polkadot drops to $15 (half of that today), would the interest be paid at $15? Or will they pay the interest rate at $29.48 regardless of whether it drops in price or increases in price? Unlike a traditional savings account where a $20,000 deposit remains $20,000 plus the interest earned. I'll need to do more research.

[Captain Save]

Why would anyone invest in stable coins which are backed by fiat currency for example? Some stable coins are backed by commodities such as gold/silver. But isn't the whole point of cryptos to untether from fiats? Enlighten me please.

higher yield just for putting your money in these high yield stable coins plans ( whether it's a smart contract, or lending them out to centralized exchanges)

having stable coins is better if you're a frequent trader of crypto .. you incur less fees because you don't cash out.

[Captain Save]

got it - that makes sense. I'm still kinda stuck on DisneySteve's question - how can these companies consistently generate 8% interest?

The borrower pays those rates to get those loans... and why is the borrower paying such a high rate? .. because they're borrowing against other cryptos .. over collaterized loan ... they can avoid a tax event .. It's better to pay 9% interest on your insane crypto gains ..then incur a 40% tax hit... also most crypto borrowers being the wild west type that they are .. use those loans to double dip .. borrow stable coins on their BTC .. to use & invest in another coin. If both BTC & the 2nd coin goes up in price .. they have double the profits..

if btc goes down.. they get liquidated,...