Coinbase IPO - anyone tempted?

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jeffh19
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Re: Coinbase IPO - anyone tempted?

Post by jeffh19 »

alpenglow wrote: Wed Apr 14, 2021 1:32 pm
surfstar wrote: Wed Apr 14, 2021 1:21 pm I thought one of the great ideals of crypto is that you don't deal with banks and their fees?

Is overpaying transaction fees to use a digital "coin" somehow better than using venmo/paypal/etc?

I don't understand this and continue to sit by dumbfounded while more people pour money into "the cloud". I'm 40 and embrace helpful technology, BTW.
I think there is a lot of speculation and hype. It also seems to be a boon to criminals and such.
That’s just not true, and is just FUD.

You have to be an absolute moron to use Bitcoin for criminal activity.

There is literally a public ledger or what money moves where that is tracked. I’ve heard many stories about people involved in tracking criminals down using it from several years ago. Cash is still king there.
jeffh19
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Re: Coinbase IPO - anyone tempted?

Post by jeffh19 »

Nope, they are just an alt coin casino that makes a ton of money in fees by getting people who don’t know any better to buy sell and trade sh...I mean “altcoins”

Not a good company. They always go down when people are desperate to buy or sell (usually sell conveniently), they don’t have much BTC on the balance sheet at all, I’ve heard people who after signing up get a metric ton of spam calls and emails etc.

I hope they do well because it will be a good mainstream look for Bitcoin but most anyone who knows anything about Bitcoin...you want to invest in Bitcoin the asset that has averaged 200x a year. Not some crappy crypto casino.

If you don’t want to get into dealing with buying Bitcoin, you can buy something called GBTC. It’s a closed end Bitcoin trust. Almost every brokerage has it available. They hold more BTC than any other entity in the world.
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alpenglow
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Re: Coinbase IPO - anyone tempted?

Post by alpenglow »

jeffh19 wrote: Thu Apr 15, 2021 1:23 am
alpenglow wrote: Wed Apr 14, 2021 1:32 pm
surfstar wrote: Wed Apr 14, 2021 1:21 pm I thought one of the great ideals of crypto is that you don't deal with banks and their fees?

Is overpaying transaction fees to use a digital "coin" somehow better than using venmo/paypal/etc?

I don't understand this and continue to sit by dumbfounded while more people pour money into "the cloud". I'm 40 and embrace helpful technology, BTW.
I think there is a lot of speculation and hype. It also seems to be a boon to criminals and such.
That’s just not true, and is just FUD.

You have to be an absolute moron to use Bitcoin for criminal activity.

There is literally a public ledger or what money moves where that is tracked. I’ve heard many stories about people involved in tracking criminals down using it from several years ago. Cash is still king there.
I stand corrected. Thank you.
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JonnyDVM
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Re: Coinbase IPO - anyone tempted?

Post by JonnyDVM »

New Providence wrote: Wed Apr 14, 2021 5:35 pm
rhoms33 wrote: Wed Apr 14, 2021 12:48 pm Vanguard came through and I got some at $381.

The valuation isn't extreme if you annualize 1Q results.

I expect they'll do big things.

Same here. Got 100 shares.
It just an opportunity to keep an eye on this space. No big deal.
Also in at what to me was a shockingly high open. Expected between $300-$350.
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SlowMovingInvestor
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

jeffh19 wrote: Thu Apr 15, 2021 1:23 am
alpenglow wrote: Wed Apr 14, 2021 1:32 pm
surfstar wrote: Wed Apr 14, 2021 1:21 pm I thought one of the great ideals of crypto is that you don't deal with banks and their fees?

Is overpaying transaction fees to use a digital "coin" somehow better than using venmo/paypal/etc?

I don't understand this and continue to sit by dumbfounded while more people pour money into "the cloud". I'm 40 and embrace helpful technology, BTW.
I think there is a lot of speculation and hype. It also seems to be a boon to criminals and such.
That’s just not true, and is just FUD.

You have to be an absolute moron to use Bitcoin for criminal activity.

There is literally a public ledger or what money moves where that is tracked.

Incorrect. Not all crypto tokens have public ledgers. ZeroCash and Monero do not, for instance.

And even for coins that have public ledgers, there are ways of getting around the ledger such as CoinJoin and other methods of laundering. [ Or using offshore exchanges to convert to cash]

I do think illicit usage of BTC is a small portion of legal trading these days, but BitCoin can and definitely is used by criminals, morons or not. And some other tokens such as Monero even more so.
SrGrumpy
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Re: Coinbase IPO - anyone tempted?

Post by SrGrumpy »

jeffh19 wrote: Thu Apr 15, 2021 1:30 am If you don’t want to get into dealing with buying Bitcoin, you can buy something called GBTC. It’s a closed end Bitcoin trust. Almost every brokerage has it available. They hold more BTC than any other entity in the world.
Very interesting, thanks.
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alpenglow
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Re: Coinbase IPO - anyone tempted?

Post by alpenglow »

SrGrumpy wrote: Thu Apr 15, 2021 9:21 am
jeffh19 wrote: Thu Apr 15, 2021 1:30 am If you don’t want to get into dealing with buying Bitcoin, you can buy something called GBTC. It’s a closed end Bitcoin trust. Almost every brokerage has it available. They hold more BTC than any other entity in the world.
Very interesting, thanks.
Also interestingly, it is trading at a discount of about 14%.
SlowMovingInvestor
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

alpenglow wrote: Thu Apr 15, 2021 10:04 am
SrGrumpy wrote: Thu Apr 15, 2021 9:21 am
jeffh19 wrote: Thu Apr 15, 2021 1:30 am If you don’t want to get into dealing with buying Bitcoin, you can buy something called GBTC. It’s a closed end Bitcoin trust. Almost every brokerage has it available. They hold more BTC than any other entity in the world.
Very interesting, thanks.
Also interestingly, it is trading at a discount of about 14%.
There's a lot of discussion of GBTC on previous threads. The issue is that it went from a premium of around 25% to this discount. The discount shouldn't increase further, but then I wouldn't have expected a discount in the first place.
Last edited by SlowMovingInvestor on Thu Apr 15, 2021 2:19 pm, edited 1 time in total.
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alpenglow
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Re: Coinbase IPO - anyone tempted?

Post by alpenglow »

SlowMovingInvestor wrote: Thu Apr 15, 2021 10:17 am
alpenglow wrote: Thu Apr 15, 2021 10:04 am
SrGrumpy wrote: Thu Apr 15, 2021 9:21 am
jeffh19 wrote: Thu Apr 15, 2021 1:30 am If you don’t want to get into dealing with buying Bitcoin, you can buy something called GBTC. It’s a closed end Bitcoin trust. Almost every brokerage has it available. They hold more BTC than any other entity in the world.
Very interesting, thanks.
Also interestingly, it is trading at a discount of about 14%.
There's a lot of discussion of GBTC on previous threads. The issue is that it went from a premium of around 25% to this discount. The discount shouldn't fall further, but then I wouldn't have expected a discount in the first place.
Here is the thread for reference:
viewtopic.php?t=341957

It sounds like, if/when GBTC becomes an ETF the discount should significantly narrow.
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Anon9001
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Re: Coinbase IPO - anyone tempted?

Post by Anon9001 »

Yesterdaysnews wrote: Tue Apr 13, 2021 3:25 pm I have to admit I’m tempted to nibble.... they are the leader in their industry and it doesn’t seem like crypto is going anywhere.
I feel UPRO is better than choosing individual stocks considering you are getting a guaranteed higher return in exchange for higher risk whereas with individual stocks if you choose badly you end up with higher risk and lower return than Market which is not appealing.
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Grt2bOutdoors
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Re: Coinbase IPO - anyone tempted?

Post by Grt2bOutdoors »

txhill wrote: Wed Apr 14, 2021 1:01 pm
ensign wrote: Wed Apr 14, 2021 12:47 pm
manuvns wrote: Tue Apr 13, 2021 5:58 pm I would buy it if it was $50 and not$250, 5x overpriced.
It’s 50x overpriced at $50.
Hot take for a company that made $800 million in profits last quarter...
But is it sustainable or just a flash in the pan? An $85 billion market cap for a business that may become either heavily regulated or shut down once everyone finds out crypto is a form of tulips - they bloom now but when the bloom falls off what will you have? History sure does rhyme. Twenty two years ago we had a similar experience with all these “great” technology and companies going public at ridiculous valuations and it seems people forgot that lesson.
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Grt2bOutdoors
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Re: Coinbase IPO - anyone tempted?

Post by Grt2bOutdoors »

rhoms33 wrote: Wed Apr 14, 2021 12:48 pm Vanguard came through and I got some at $381.

The valuation isn't extreme if you annualize 1Q results.

I expect they'll do big things.
Rookie mistake to “annualized” one quarter of profits - that’s how the snake oil salesman snooker people.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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HomerJ
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Re: Coinbase IPO - anyone tempted?

Post by HomerJ »

Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.

This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
Last edited by HomerJ on Thu Apr 15, 2021 10:50 am, edited 2 times in total.
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rhoms33
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Re: Coinbase IPO - anyone tempted?

Post by rhoms33 »

Grt2bOutdoors wrote: Thu Apr 15, 2021 10:36 am
rhoms33 wrote: Wed Apr 14, 2021 12:48 pm Vanguard came through and I got some at $381.

The valuation isn't extreme if you annualize 1Q results.

I expect they'll do big things.
Rookie mistake to “annualized” one quarter of profits - that’s how the snake oil salesman snooker people.
Reminding myself to revisit this post in 1 year :sharebeer
Grt2bOutdoors
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Re: Coinbase IPO - anyone tempted?

Post by Grt2bOutdoors »

ohboy! wrote: Wed Apr 14, 2021 1:59 pm
surfstar wrote: Wed Apr 14, 2021 1:48 pm
ohboy! wrote: Wed Apr 14, 2021 1:38 pm
surfstar wrote: Wed Apr 14, 2021 1:21 pm I thought one of the great ideals of crypto is that you don't deal with banks and their fees?

Is overpaying transaction fees to use a digital "coin" somehow better than using venmo/paypal/etc?

I don't understand this and continue to sit by dumbfounded while more people pour money into "the cloud". I'm 40 and embrace helpful technology, BTW.
If you sit by you will continue to be dumbfounded. Jump in and try it, the water is warm. I'm not saying buy Coinbase, but I'd definitely suggest looking into decentralized finance, automated market makers, liquidity provider, liquidity mining, yield farming, collateralized lending, DAO, etc.
That sounds like a bunch of buzz-words - just like a consultant might spew to a client in order to justify their cost. i.e. no value added. *shrug*
If I ever find a personal use case, perhaps I'll understand the case for crypto. For now, it doesn't provide me with anything more than a feeling; FOMO.
Those aren't buzzwords friend. Those are words to describe new markets and financial instruments, with billions of dollars of value. The thing about blockchain and crypto is that it is all completely transparent. There is no fudging the numbers. Eventually you will realize that it's a great opportunity for everyone. A bank is not needed, an exchange is not needed. Without the intermediary you get a bigger yield and get services at a lower cost.

An automated market maker, like Uniswap, is an open-sourced program running on the blockchain that allows anyone to provide liquidity for any trading pairs and collect trading fees. It never goes down, needs no customer support, and is completely permissionless. It does the same volume of Coinbase, which looks to be valued today around $100B. Now imagine the same thing deployed as lending platform.
People trust the banking system. People don’t trust a server with a bunch of zeros and ones floating around - they want to see tangible results of their labor on a second by second basis, not some limited group of people hyping something. Don’t think for a second that the financial system will be replaced by an unregulated Wild West ledger system where you don’t know who you are transacting with and with murky legal protections at best.
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Grt2bOutdoors
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Re: Coinbase IPO - anyone tempted?

Post by Grt2bOutdoors »

rhoms33 wrote: Thu Apr 15, 2021 10:48 am
Grt2bOutdoors wrote: Thu Apr 15, 2021 10:36 am
rhoms33 wrote: Wed Apr 14, 2021 12:48 pm Vanguard came through and I got some at $381.

The valuation isn't extreme if you annualize 1Q results.

I expect they'll do big things.
Rookie mistake to “annualized” one quarter of profits - that’s how the snake oil salesman snooker people.
Reminding myself to revisit this post in 1 year :sharebeer
Yes, I’ll join you for that beer and the subsequent years afterwards. If the stock is included in VTSAX I will be a part owner as well.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: Coinbase IPO - anyone tempted?

Post by Grt2bOutdoors »

HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.

This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
And look where Bernie is now, not here.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Prahasaurus
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
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IRS-Gman
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Re: Coinbase IPO - anyone tempted?

Post by IRS-Gman »

Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
I imagine steps 1 and 5 will become more streamlined as direct on-ramp features are integrated into crypto wallets and bypass Centralized Exchanges all together. The less friction, the better.

Layer 2 integrations, EIP 1159, and ultimately ETH2 will significantly bring down those gas fees. I'm very bullish on the future of Ethereum.
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xraygoggles
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Re: Coinbase IPO - anyone tempted?

Post by xraygoggles »

Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Simplicity is the key to brilliance - Vti & chill.
SrGrumpy
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Re: Coinbase IPO - anyone tempted?

Post by SrGrumpy »

Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm I'm no longer going to debate crypto on Bogleheads
Ignore the naysayers. I'm sure a lot of people here appreciate your enthusiasm and expertise (even if I don't quite understand it all).
occambogle
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Re: Coinbase IPO - anyone tempted?

Post by occambogle »

SrGrumpy wrote: Thu Apr 15, 2021 1:05 pm
Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm I'm no longer going to debate crypto on Bogleheads
Ignore the naysayers. I'm sure a lot of people here appreciate your enthusiasm and expertise (even if I don't quite understand it all).
+1 I appreciate your posts and enjoy reading them.
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Re: Coinbase IPO - anyone tempted?

Post by Nathan Drake »

Anything getting 10% interest rates is certainly not “safe”...there’s a reason why banks offer a pittance in comparison, because you are guaranteed your money back and it’s backed by the US government
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GR8FUL-D
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Re: Coinbase IPO - anyone tempted?

Post by GR8FUL-D »

Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
Thx for the above post Prahasaurus, I know you've received more than a little push-back from crypto-skeptics, however there are people on this site that appreciate and have learned from your posts. Thx to you and a few others on this site, I finally began to research crypto & blockchain, created a coinbase account, and via coinbase pro started buying 60% btc, 30% ether, and 10% uni, sushi, (and a few other gamble-gamble coins) for approx. 1% of net worth. If I lose it all it won't a life changing event.

Next I want to learn how to begin earning interest on crypto; I'm willing to invest another 1%, but learning how to lend & earn interest on crypto appears to be more complex than simple buy and hold, so it's baby steps for me. Even your "simple" steps 1 thru 5 above are confusing to me atm. If you (or others reading this) have links to additional sites or videos that explain how to earn interests on crypto holdings, I'd appreciate links.

One thing I'm still unclear about:

Can you lend crypto & earn interest without triggering a taxable event due to IRS rulings related to selling crypto or exchanging one crypto for another? If the interest you earn is paid in USD, clearly that is earned interest you must pay tax on; however, if the interest you earn is paid in crypto, do you have to pay taxes on interest earned, or do you only have to pay tax once you sell or exchange the crypto for fiat or other cryptocurrency?
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jason2459
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Re: Coinbase IPO - anyone tempted?

Post by jason2459 »

Interest/rewards/air drops are taxable AFAIK
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SlowMovingInvestor
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Re: Coinbase IPO - anyone tempted?

Post by SlowMovingInvestor »

xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
There is definitely smart contract risk in any DeFi -- in the sense that there may be a bug in the Smart contract that allows someone to drain your money, such as the Ether DAO attack a few years ago. Or even less extreme cases where smaller 'bugs' could be used for arbitrage opportunities (*) that cost you.

I would say there is counterparty risk if the collateral can't be liquidated quickly enough in a downturn, or if the formulae used for liquidation are flawed (ultimately they're based on formulae and simulations, and those can fail -- see LTCM or 2008, for instance). You can call this either counterparty risk or just another form of smart contract risk -- either way, it's a risk.


(*) Note that updating Smart Contracts can sometimes be a hassle -- and I've read there are even bots that scan for proposed updates to smart contracts, then try and push through transactions (with higher offered gas fees to front run the change) to exploit bugs in the old contract before update.
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

IRS-Gman wrote: Thu Apr 15, 2021 12:38 pm
Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
I imagine steps 1 and 5 will become more streamlined as direct on-ramp features are integrated into crypto wallets and bypass Centralized Exchanges all together. The less friction, the better.

Layer 2 integrations, EIP 1159, and ultimately ETH2 will significantly bring down those gas fees. I'm very bullish on the future of Ethereum.
I agree, but it's actually quite easy and straightforward after you've done it a few times. It sounds much more complex than it is. But based on your full comment I believe you already know that... When I sell on Coinbase (if I use Coinbase), and I don't plan on buying anything else, I simply convert to USDC right away and put my cash at Aave until I need it. I never need to involve my bank. The process from selling, converting from USD to USDC, sending to my Metamask, then putting on Aave, takes about 10-15 minutes max. Just a few clicks. And of course no KYC, nobody asking me why I'm sending my money, no "X working days," etc. Just night and day better than dealing with my bank.
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

xraygoggles wrote: Thu Apr 15, 2021 12:53 pm
Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is. This is new technology, there are risks! Not counterparty risk, as borrowers need to over collateralize. But smart contract risk without a doubt. Aave has a safety module that can be used to compensate should a hack occur, but it's doubtful it would pay back all your funds. Fortunately, Aave is fully open source, it has never been hacked, I view it as incredibly safe. But 100%? No.

I actually have all of my Aave tokens staked at Aave in their safety module. That means I'm earning 7% on all of my Aave tokens, paid in Aave (that's the best part, as I believe Aave is massively undervalued). But the down side is that should a hack occur, my funds will be used to compensate users (up to 30%).

I have 6 figures at Aave in USDC. I am not worried at all. But the risk is not zero. By the way, there are 7.5 billion USD locked in Aave smart contracts now, as I write this. Aave is a little over a year old...
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Re: Coinbase IPO - anyone tempted?

Post by xraygoggles »

Prahasaurus wrote: Thu Apr 15, 2021 2:19 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm
Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is. This is new technology, there are risks! Not counterparty risk, as borrowers need to over collateralize. But smart contract risk without a doubt. Aave has a safety module that can be used to compensate should a hack occur, but it's doubtful it would pay back all your funds. Fortunately, Aave is fully open source, it has never been hacked, I view it as incredibly safe. But 100%? No.

I actually have all of my Aave tokens staked at Aave in their safety module. That means I'm earning 7% on all of my Aave tokens, paid in Aave (that's the best part, as I believe Aave is massively undervalued). But the down side is that should a hack occur, my funds will be used to compensate users (up to 30%).

I have 6 figures at Aave in USDC. I am not worried at all. But the risk is not zero. By the way, there are 7.5 billion USD locked in Aave smart contracts now, as I write this. Aave is a little over a year old...
Thank you sir. :beer

Also, please don't stop with the crypto posts - you have intelligent, rational, well-thought out posts that I tend to learn a lot from.
Simplicity is the key to brilliance - Vti & chill.
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

GR8FUL-D wrote: Thu Apr 15, 2021 1:16 pm
Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
Thx for the above post Prahasaurus, I know you've received more than a little push-back from crypto-skeptics, however there are people on this site that appreciate and have learned from your posts. Thx to you and a few others on this site, I finally began to research crypto & blockchain, created a coinbase account, and via coinbase pro started buying 60% btc, 30% ether, and 10% uni, sushi, (and a few other gamble-gamble coins) for approx. 1% of net worth. If I lose it all it won't a life changing event.

Next I want to learn how to begin earning interest on crypto; I'm willing to invest another 1%, but learning how to lend & earn interest on crypto appears to be more complex than simple buy and hold, so it's baby steps for me. Even your "simple" steps 1 thru 5 above are confusing to me atm. If you (or others reading this) have links to additional sites or videos that explain how to earn interests on crypto holdings, I'd appreciate links.

One thing I'm still unclear about:

Can you lend crypto & earn interest without triggering a taxable event due to IRS rulings related to selling crypto or exchanging one crypto for another? If the interest you earn is paid in USD, clearly that is earned interest you must pay tax on; however, if the interest you earn is paid in crypto, do you have to pay taxes on interest earned, or do you only have to pay tax once you sell or exchange the crypto for fiat or other cryptocurrency?
I think 1% of net worth is smart. Start small, learn to use these protocols, get your hands dirty, then you can better understand the entire space, determine your comfort level, etc.

Learn to use Metamask. Use it with a hardware wallet. There are tons of videos on YouTube about this. Study them carefully. If you are going to be hacked, 99% of the time it will be user error. It's not complex, but you need to start slowly and learn. No shame in going slow.

Tax in crypto is a complex topic, country specific, etc. Typically when you transfer one coin to another, it's a taxable event. Lending at Aave is not a taxable event (your USDC is not traded for anything). But of course the interest you earn on your USDC is taxable, just as if it were in a bank account. That's fairly simple. It gets quite complex when you do more complex transactions, e.g. "wrapping" BTC to renBTC, etc. But that is beyond the scope of this post.

There are programs that can manage your taxes for you. You only need to enter crypto addresses under your control, e.g. a wallet address. The nice thing about blockchain is it's all open for everyone to see. Makes tax prep fairly straightforward with the right software.
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

xraygoggles wrote: Thu Apr 15, 2021 2:30 pm
Prahasaurus wrote: Thu Apr 15, 2021 2:19 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm
Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am

There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is. This is new technology, there are risks! Not counterparty risk, as borrowers need to over collateralize. But smart contract risk without a doubt. Aave has a safety module that can be used to compensate should a hack occur, but it's doubtful it would pay back all your funds. Fortunately, Aave is fully open source, it has never been hacked, I view it as incredibly safe. But 100%? No.

I actually have all of my Aave tokens staked at Aave in their safety module. That means I'm earning 7% on all of my Aave tokens, paid in Aave (that's the best part, as I believe Aave is massively undervalued). But the down side is that should a hack occur, my funds will be used to compensate users (up to 30%).

I have 6 figures at Aave in USDC. I am not worried at all. But the risk is not zero. By the way, there are 7.5 billion USD locked in Aave smart contracts now, as I write this. Aave is a little over a year old...
Thank you sir. :beer

Also, please don't stop with the crypto posts - you have intelligent, rational, well-thought out posts that I tend to learn a lot from.
That's very kind. I will continue to post on occasion, but I won't be engaging in any further debates on the efficacy of crypto. As I said, it's just not a good use of my time.
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Re: Coinbase IPO - anyone tempted?

Post by HomerJ »

xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is risk. There is definitely a chance of losing some money, maybe even all your money, that does not exist with a bank.
Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
It's not just like your bank at all. I WANT the bank to do the paperwork and due diligence, and check credit history of people borrowing from the bank, partly using my money that I deposited with the bank. The bankers aren't loaning money out at 13%, and keeping 12.95% of it because they are evil. They don't make those loans because those are risky loans, with a high chance of default.

AAVE is nothing like a bank. It's a purely margin investing. The borrowers are all speculators, putting down 130% collateral in crypto-currency, so they can bet 230% on crypto-currency.

When the next bitcoin crash comes, many of those borrowers are going to lose a lot of money. Some of the lenders may get hurt too, if the crash is fast enough and sudden enough. As more and more people borrow on margin, the bigger the snowball effect will be when the crash comes, and the faster the crash will be, as margin calls cause more selling, causing prices to drop faster, causing more margin calls.

There is no risk-free 10%.

AAVE is in a good position. They won't lose any money. You, the lender, might... But not AAVE...

Seems more evil than normal banks to me. If normal banks could loan your money out and lose YOUR MONEY by making bad loans, and you couldn't do anything about it, that seems WORSE than the current system. Why is AAVE such a great replacement?

(and let's not mention that if a normal bank is robbed, you personally are made whole; if AAVE somehow gets robbed, you will lose it all, and too bad).
Last edited by HomerJ on Thu Apr 15, 2021 3:06 pm, edited 2 times in total.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: Coinbase IPO - anyone tempted?

Post by Prahasaurus »

HomerJ wrote: Thu Apr 15, 2021 2:34 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is risk. There is definitely a chance of losing some money, maybe even all your money, that does not exist with a bank.
Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
It's not just like your bank at all. I WANT the bank to do the paperwork and due diligence, and check credit history of people borrowing from the bank, partly using my money that I deposited with the bank. The bankers aren't loaning money out at 13%, and keeping 12.95% of it because they are evil. They don't make those loans because they are bad loans...

AAVE is nothing like a bank. It's a purely margin investing. The borrowers are all speculators, putting down 130% collateral in crypto-currency, so they can bet 230% on crypto-currency.

When the next bitcoin crash comes, many of those borrowers are going to lose a lot of money. Some of the lenders may get hurt too, if the crash is fast enough and sudden enough. As more and more people borrow on margin, the bigger the snowball effect will be when the crash comes, and the faster the crash will be, as margin calls cause more selling, causing prices to drop faster, causing more margin calls.

There is no risk-free 10%.
Actually, right now it's 14.93%.... :-) Actual rates are here: https://aave.com

But it's a variable rate, and it will fall if the market cools a bit. As I said, I'm averaging around 8-10% on my dollar deposits at Aave (USDC), and that average rate has been fairly consistent over the past 4-5 months or so. By the way, with Aave, it updates your Metamask with your principal plus interest in real time. So you can watch your balance grow every second, you don't even need to be on Aave's site for this. It's quite nice.

But these relatively high interest rates will likely fall over time, as more people deposit. Again, it's supply and demand. It won't fall to .1%, but perhaps in some years (months?) we'll see a 4-5% rate. Who knows. I only know as an early adopter I am enjoying double digit interest income on dollar deposits.

Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
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Re: Coinbase IPO - anyone tempted?

Post by HomerJ »

Prahasaurus wrote: Thu Apr 15, 2021 2:57 pm
HomerJ wrote: Thu Apr 15, 2021 2:34 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is risk. There is definitely a chance of losing some money, maybe even all your money, that does not exist with a bank.
Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
It's not just like your bank at all. I WANT the bank to do the paperwork and due diligence, and check credit history of people borrowing from the bank, partly using my money that I deposited with the bank. The bankers aren't loaning money out at 13%, and keeping 12.95% of it because they are evil. They don't make those loans because they are bad loans...

AAVE is nothing like a bank. It's a purely margin investing. The borrowers are all speculators, putting down 130% collateral in crypto-currency, so they can bet 230% on crypto-currency.

When the next bitcoin crash comes, many of those borrowers are going to lose a lot of money. Some of the lenders may get hurt too, if the crash is fast enough and sudden enough. As more and more people borrow on margin, the bigger the snowball effect will be when the crash comes, and the faster the crash will be, as margin calls cause more selling, causing prices to drop faster, causing more margin calls.

There is no risk-free 10%.
Actually, right now it's 14.93%.... :-) Actual rates are here: https://aave.com

But it's a variable rate, and it will fall if the market cools a bit. As I said, I'm averaging around 8-10% on my dollar deposits at Aave (USDC), and that average rate has been fairly consistent over the past 4-5 months or so. By the way, with Aave, it updates your Metamask with your principal plus interest in real time. So you can watch your balance grow every second, you don't even need to be on Aave's site for this. It's quite nice.

But these relatively high interest rates will likely fall over time, as more people deposit. Again, it's supply and demand. It won't fall to .1%, but perhaps in some years (months?) we'll see a 4-5% rate. Who knows. I only know as an early adopter I am enjoying double digit interest income on dollar deposits.

Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
I thought you were going to stop wasting your (our) time.

Junk bonds pay out double-digit returns too... for a while... until something bad happens, and you lose money.

40% dollar deposits at AAVE is RISKIER than 60% stocks. I believe you though that you're not joking.

A lot of people are likely to be hurt. You are pushing a dangerous investment strategy.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: Coinbase IPO - anyone tempted?

Post by txhill »

Prahasaurus wrote: Thu Apr 15, 2021 2:57 pm Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
What's your opinion of BlockFi? I like how smart contracts eliminate counterparty risk, but all it takes is an error in the code and any assets locked in the contract could be lost. I tend to think a centralized lending service like BlockFi might actually be less risky for the time being until DeFi develops a bit further.

I also think that DeFi will take the place of fixed income assets eventually. But I'm not sure we're there quite yet...
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Re: Coinbase IPO - anyone tempted?

Post by HomerJ »

txhill wrote: Thu Apr 15, 2021 3:32 pmI like how smart contracts eliminate counterparty risk, but all it takes is an error in the code and any assets locked in the contract could be lost.
So they don't eliminate counterparty risk.

Or I guess they just replace that risk with another one that could be even worse (although maybe less likely?? But too soon to know if that's true yet).
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
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Re: Coinbase IPO - anyone tempted?

Post by surfstar »

Prahasaurus wrote: Thu Apr 15, 2021 2:57 pm
Actually, right now it's 14.93%.... :-) Actual rates are here: https://aave.com

Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
You're probably too young, but there's this thing called radio - you can hear advertisements for "investments" that "guarantee" 10 or 15% returns.
All you have to do is call. I mean its guaranteed! They told me so! They only invest in high-qualify commercial real estate - fool proof!

The stuff you propose sounds the same. It just keeps going up - what could go wrong?
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Blister
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Re: Coinbase IPO - anyone tempted?

Post by Blister »

Bought a half a share today. Hope I can sleep tonight.
Everthing works out in the end. If it doesn't then its not the end.
txhill
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Re: Coinbase IPO - anyone tempted?

Post by txhill »

HomerJ wrote: Thu Apr 15, 2021 3:41 pm
txhill wrote: Thu Apr 15, 2021 3:32 pmI like how smart contracts eliminate counterparty risk, but all it takes is an error in the code and any assets locked in the contract could be lost.
So they don't eliminate counterparty risk.

Or I guess they just replace that risk with another one that could be even worse (although maybe less likely?? But too soon to know if that's true yet).
Yes you're right about the latter. DeFi actually does eliminate counterparty risk, or at least the types of smart contracts that I've seen. In order to borrow, you have to put up collateral into the smart contract. So if the value of collateral drops or borrowed amounts are not repaid, then the smart contract automatically liquidates the collateral in favor of the lender. No need for credit ratings or anything like that.

That said, the smart contract has to function perfectly. So there is a programmatic risk--I think there have been some instances in past years where a bug in the smart contract caused funds locked in the contract to become permanently inaccessible.

Once those glitches are hammered out though, then DeFi will be a really interesting space. Eliminates all the fees associated with middlemen.

I should add--the reason why I think DeFi will eventually replace at least some portion of fixed-income assets in portfolios is because middlemen costs are eliminated, as well as counterparty risk. Even T-Bills have counterparty risk--we just assume it to be low because the U.S. doesn't default on its own debts. But DeFi in theory eliminates that risk entirely.
SrGrumpy
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Re: Coinbase IPO - anyone tempted?

Post by SrGrumpy »

Blister wrote: Thu Apr 15, 2021 3:44 pm Bought a half a share today. Hope I can sleep tonight.
Careful. You might get canceled by the BH police.
Grt2bOutdoors
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Re: Coinbase IPO - anyone tempted?

Post by Grt2bOutdoors »

GR8FUL-D wrote: Thu Apr 15, 2021 1:16 pm
Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm
HomerJ wrote: Thu Apr 15, 2021 10:46 am
Prahasaurus wrote: Wed Apr 14, 2021 11:11 pmI also think Coinbase will transform themselves into a major player in finance and banking. They can offer 10% variable interest rates now in dollars (USDC) if they start to partner with decentralized players like Aave. I think more and more Americans would be quite interested to earn 10% on their dollar deposits.
There is no free lunch.

You are showing that you don't really understand how finance works if you think they can magically pay out 10% with no risk.

I mean seriously... You've done a good job of presenting yourself as an crypto-expert, but you seem to have missed Econ 101, so I'm not sure how much of an expert you really are.


This is all hugely dangerous if the average American starts putting their savings in these kind of investments. Madoff promised those kind of numbers too.
I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
Thx for the above post Prahasaurus, I know you've received more than a little push-back from crypto-skeptics, however there are people on this site that appreciate and have learned from your posts. Thx to you and a few others on this site, I finally began to research crypto & blockchain, created a coinbase account, and via coinbase pro started buying 60% btc, 30% ether, and 10% uni, sushi, (and a few other gamble-gamble coins) for approx. 1% of net worth. If I lose it all it won't a life changing event.

Next I want to learn how to begin earning interest on crypto; I'm willing to invest another 1%, but learning how to lend & earn interest on crypto appears to be more complex than simple buy and hold, so it's baby steps for me. Even your "simple" steps 1 thru 5 above are confusing to me atm. If you (or others reading this) have links to additional sites or videos that explain how to earn interests on crypto holdings, I'd appreciate links.

One thing I'm still unclear about:

Can you lend crypto & earn interest without triggering a taxable event due to IRS rulings related to selling crypto or exchanging one crypto for another? If the interest you earn is paid in USD, clearly that is earned interest you must pay tax on; however, if the interest you earn is paid in crypto, do you have to pay taxes on interest earned, or do you only have to pay tax once you sell or exchange the crypto for fiat or other cryptocurrency?
Look at how the IRS views crypto - sale of an asset that generates a gain or loss. Not interest. https://www.forbes.com/sites/robertwood ... fa083275b9
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: Coinbase IPO - anyone tempted?

Post by Grt2bOutdoors »

txhill wrote: Thu Apr 15, 2021 3:46 pm
HomerJ wrote: Thu Apr 15, 2021 3:41 pm
txhill wrote: Thu Apr 15, 2021 3:32 pmI like how smart contracts eliminate counterparty risk, but all it takes is an error in the code and any assets locked in the contract could be lost.
So they don't eliminate counterparty risk.

Or I guess they just replace that risk with another one that could be even worse (although maybe less likely?? But too soon to know if that's true yet).
Yes you're right about the latter. DeFi actually does eliminate counterparty risk, or at least the types of smart contracts that I've seen. In order to borrow, you have to put up collateral into the smart contract. So if the value of collateral drops or borrowed amounts are not repaid, then the smart contract automatically liquidates the collateral in favor of the lender. No need for credit ratings or anything like that.

That said, the smart contract has to function perfectly. So there is a programmatic risk--I think there have been some instances in past years where a bug in the smart contract caused funds locked in the contract to become permanently inaccessible.

Once those glitches are hammered out though, then DeFi will be a really interesting space. Eliminates all the fees associated with middlemen.

I should add--the reason why I think DeFi will eventually replace at least some portion of fixed-income assets in portfolios is because middlemen costs are eliminated, as well as counterparty risk. Even T-Bills have counterparty risk--we just assume it to be low because the U.S. doesn't default on its own debts. But DeFi in theory eliminates that risk entirely.
Use a centralized clearing house or securities industry financial market utility which is regulated by the Federal Reserve, SEC and FDIC and that would eliminate the risk entirely, however remote. They exist and they are well financed.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
IHateCasinos
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Re: Coinbase IPO - anyone tempted?

Post by IHateCasinos »

Prahasaurus wrote: Thu Apr 15, 2021 2:33 pm
xraygoggles wrote: Thu Apr 15, 2021 2:30 pm
Prahasaurus wrote: Thu Apr 15, 2021 2:19 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm
Prahasaurus wrote: Thu Apr 15, 2021 12:04 pm

I don't really know how to respond to this, which I view as a clear ad hominem attack. But whatever, I've said I'm no longer going to debate crypto on Bogleheads, it's a total waste of my time. I won't bother here. I've tried numerous times to explain how simple supply and demand dictate borrowing and lending rates on Aave, but to no avail. So I really do give up. Enjoy your .1% interest on dollar deposits!

And as a reminder to those who want to earn more on their USD:

1 - Transfer USD to Coinbase. You can link your bank so these transactions are instantaneous and free.
2 - Convert to USDC. Coinbase guarantees a 1:1 conversion always from USD to USDC and back.
3 - Send to Aave (use their Matic platform to avoid high gas fees, or use Ethereum Mainnet if you have more than 10k USD or so). Note: you will need a basic understanding of how to use MetaMask. My suggestion is always do this with a hardware wallet like a Trezor.
4 - Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
5 - If you want your money back, simply take it off Aave, send it back to Coinbase (should take about 5 minutes for the transaction to complete), then send back to your bank. That might take a day or so, not sure. But the issue will be Coinbase or your bank.
Thank you sir. :beer

Also, please don't stop with the crypto posts - you have intelligent, rational, well-thought out posts that I tend to learn a lot from.
That's very kind. I will continue to post on occasion, but I won't be engaging in any further debates on the efficacy of crypto. As I said, it's just not a good use of my time.
Please continue with your posts - I do enjoy learning about Crypto. and within bogleheads. I have done a small investment in it and will soon move to metamask etc. Even Jim Bianco has becomed learned on it!
But i do agree, this isnt the forum to introduce ppl to crypto. but for others who have been trying to learn about what DEFI can bring to us (outside of BH.org), thats where your knowledge is useful.
The old, worn narrative lumping all crypto into one single generalization, is a tell-tale sign. [insert whichever one WS and cnbc is pushing today].
Im well versed in this time its different, and it might not be, but DEFI- is a very compelling argument esp after what the Fed did in the last year.

BTW it was only a month ago i learned that there is NO Federal nor Reserve in the "Federal Reserve". I was shocked for almost 2 whole days!! I honestly never knew that. I Wikipedia'd the hell out of it, and it still aint Federal nor Reserve.

M
tim1999
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Re: Coinbase IPO - anyone tempted?

Post by tim1999 »

I am actually surprised Coinbase stock went down today. I had thought there would be a massive amount of retail investor FOMO propelling it upward.
zzzquil
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Re: Coinbase IPO - anyone tempted?

Post by zzzquil »

The heck is going on with doge?
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JonnyDVM
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Re: Coinbase IPO - anyone tempted?

Post by JonnyDVM »

zzzquil wrote: Thu Apr 15, 2021 8:44 pm The heck is going on with doge?
Just totally illogical. It was created as joke and there’s no cap on the number that can be made. Yet it’s value is spiraling upwards. How does that make any sense ???! I don’t understand this world.
I’d trade it all for a little more | -C Montgomery Burns
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JonnyDVM
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Re: Coinbase IPO - anyone tempted?

Post by JonnyDVM »

Prahasaurus wrote: Thu Apr 15, 2021 2:57 pm
HomerJ wrote: Thu Apr 15, 2021 2:34 pm
xraygoggles wrote: Thu Apr 15, 2021 12:53 pm Serious question: is there counterparty or smart contract risk keeping your $ on Aave? I have a small allocation of USDC there, but I'm wary of putting large sums (6 figures, for example).
Of course there is risk. There is definitely a chance of losing some money, maybe even all your money, that does not exist with a bank.
Start earning variable rates of around 8-10% on average. Right now the rate is 13%, as many are looking to borrow USDC and are willing to pay me for the privilege. Supply and demand. Just like at your bank, but in that case they make sure you receive crumbs. Not at Aave.
It's not just like your bank at all. I WANT the bank to do the paperwork and due diligence, and check credit history of people borrowing from the bank, partly using my money that I deposited with the bank. The bankers aren't loaning money out at 13%, and keeping 12.95% of it because they are evil. They don't make those loans because they are bad loans...

AAVE is nothing like a bank. It's a purely margin investing. The borrowers are all speculators, putting down 130% collateral in crypto-currency, so they can bet 230% on crypto-currency.

When the next bitcoin crash comes, many of those borrowers are going to lose a lot of money. Some of the lenders may get hurt too, if the crash is fast enough and sudden enough. As more and more people borrow on margin, the bigger the snowball effect will be when the crash comes, and the faster the crash will be, as margin calls cause more selling, causing prices to drop faster, causing more margin calls.

There is no risk-free 10%.
Actually, right now it's 14.93%.... :-) Actual rates are here: https://aave.com

But it's a variable rate, and it will fall if the market cools a bit. As I said, I'm averaging around 8-10% on my dollar deposits at Aave (USDC), and that average rate has been fairly consistent over the past 4-5 months or so. By the way, with Aave, it updates your Metamask with your principal plus interest in real time. So you can watch your balance grow every second, you don't even need to be on Aave's site for this. It's quite nice.

But these relatively high interest rates will likely fall over time, as more people deposit. Again, it's supply and demand. It won't fall to .1%, but perhaps in some years (months?) we'll see a 4-5% rate. Who knows. I only know as an early adopter I am enjoying double digit interest income on dollar deposits.

Perhaps one day the standard Bogleheads portfolio will be 60% stocks, 40% dollar deposits at Aave. Not even joking!
As someone who is getting a kick out of playing musical chairs with this, to park six figures into AAVE would be insanity. The risk is palpably high. It is the exact opposite of safe.
I’d trade it all for a little more | -C Montgomery Burns
000
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Re: Coinbase IPO - anyone tempted?

Post by 000 »

tim1999 wrote: Thu Apr 15, 2021 8:33 pm I am actually surprised Coinbase stock went down today. I had thought there would be a massive amount of retail investor FOMO propelling it upward.
Top's in?
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jason2459
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Re: Coinbase IPO - anyone tempted?

Post by jason2459 »

tim1999 wrote: Thu Apr 15, 2021 8:33 pm I am actually surprised Coinbase stock went down today. I had thought there would be a massive amount of retail investor FOMO propelling it upward.
Lots of employees talking there profit. :moneybag
"In the short run, the stock market is a voting machine; in the long run, it is a weighing machine" ~Benjamin Graham
cogito
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Re: Coinbase IPO - anyone tempted?

Post by cogito »

I've gotta be honest, I was not tempted at all, but losing 40B in value in two days has made this a lot more tempting to nibble at than it was before.
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