Anyone using compound for savings 7.62% for US dollar coin [Crypto]
Anyone using compound for savings 7.62% for US dollar coin [Crypto]
Anyone using compound app for interest on their crypto, particularly US dollar coin? Seems like US dollar coin is yielding 7.62% right now at compound. You can buy say 10k of US dollar coin in Coinbase, then transfer to compound and earn 7.62%.
The only risks I see are to compound code failing and possibly a massive crypto crash where the borrowers collateral becomes illiquid or loses most value. Wondering if the 10k is liquid or there is a holding period? Also, using the etherium blockchain right now is expensive with miners fees I’ve seen from 80-400 dollars for a transaction. Anyone know a way around this?
The only risks I see are to compound code failing and possibly a massive crypto crash where the borrowers collateral becomes illiquid or loses most value. Wondering if the 10k is liquid or there is a holding period? Also, using the etherium blockchain right now is expensive with miners fees I’ve seen from 80-400 dollars for a transaction. Anyone know a way around this?
Re: Anyone using compound for savings 7.62% for US dollar coin
You’re on the wrong forum!
Re: Anyone using compound for savings 7.62% for US dollar coin
I don't dabble in this sort of thing, though lots of people do. However, regarding your question about the transaction fees, no there's no good way around Ethereum transaction fees. The only way to mitigate it is to use large amounts because the transaction fees are fixed and do not change based on the size of the transfer. Also you can wait until the gas fees are low, like it was 50 gwei earlier which was pretty good in today's environment (it is 100 gwei now, which is not too bad).
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
I haven't tried compound. I've done AAVE before.
Personally, I like the Cefi options better. They yield more, and I think they are less risky because you have someone to sue if they get hacked or something. They likely at least have insurance and profits that can cover some losses. On Defi, I'd have to be getting a lot more interest to take on that risk.
So personally I like BlockFi, Celsius, and Ledn better. To be fair, I haven't tried compound. But I assume it's similar to AAVE.
Personally, I like the Cefi options better. They yield more, and I think they are less risky because you have someone to sue if they get hacked or something. They likely at least have insurance and profits that can cover some losses. On Defi, I'd have to be getting a lot more interest to take on that risk.
So personally I like BlockFi, Celsius, and Ledn better. To be fair, I haven't tried compound. But I assume it's similar to AAVE.
Re: Anyone using compound for savings 7.62% for US dollar coin
"Avoid Bitcoin like the plague. Did I make myself clear?" - John Bogle
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
As Gadget wrote, the centralized options offer the better risk/reward. If you really know what you're doing there are some crazy high yields to be found in DeFi, but those options may not make you sleep well at night.....
Re: Anyone using compound for savings 7.62% for US dollar coin
This link may be helpful.
https://www.bogleheads.org/wiki/Boglehe ... philosophy
For comparison the Vanguard "junk bond" mutual fund has a 3.06% yield.
https://investor.vanguard.com/mutual-fu ... file/vweax
Anything that yields over 7% has a LOT of risk
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
I think in DeFi's current state it is really only for advanced users, at least for now. I found AAVE surprisingly easy to use, but I suppose I am somewhat tech savvier than the average person (although I am far from a technologist myself). For those who are less tech savvy, you should stick to CeFi like BlockFi/Ledn/Gemini Earn. Celsius too although I have not tried it. If you are not sure of what you are doing, you could easily mess something up with DeFi and lose all of your investment (sending to wrong address, etc.).Gadget wrote: ↑Sun May 16, 2021 9:04 pm I haven't tried compound. I've done AAVE before.
Personally, I like the Cefi options better. They yield more, and I think they are less risky because you have someone to sue if they get hacked or something. They likely at least have insurance and profits that can cover some losses. On Defi, I'd have to be getting a lot more interest to take on that risk.
So personally I like BlockFi, Celsius, and Ledn better. To be fair, I haven't tried compound. But I assume it's similar to AAVE.
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
This article is a nice summary of how DeFi works and the risks associated with it--bugs, backdoors, economic exploits. Not to mention user error (probably one of the more substantial risks). Arthur Hayes is one of the smartest folks in the crypto space. https://cryptohayes.medium.com/poor-woj ... 510dcd3baeam wrote: ↑Sun May 16, 2021 11:02 am Anyone using compound app for interest on their crypto, particularly US dollar coin? Seems like US dollar coin is yielding 7.62% right now at compound. You can buy say 10k of US dollar coin in Coinbase, then transfer to compound and earn 7.62%.
The only risks I see are to compound code failing and possibly a massive crypto crash where the borrowers collateral becomes illiquid or loses most value. Wondering if the 10k is liquid or there is a holding period? Also, using the etherium blockchain right now is expensive with miners fees I’ve seen from 80-400 dollars for a transaction. Anyone know a way around this?
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Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
So there’s no default risk from the borrower side? If the middleman is paying 7.62% interest to the depositor, then they’re obviously charging more than that to the borrower. Who is in such poor shape that they need to pay >8% interest to borrow crypto, what are they using it for? You can’t sell a borrowed asset to take advantage of its appreciation when you have to return that borrowed asset in kind (the exchange doesn’t pay interest in $, it pays in additional crypto). ELI5.
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
The way I understand it is that the borrower puts up collateral. The risk is that the collateral coin will crash and liquidity will dry up.TropikThunder wrote: ↑Mon May 17, 2021 12:35 pmSo there’s no default risk from the borrower side? If the middleman is paying 7.62% interest to the depositor, then they’re obviously charging more than that to the borrower. Who is in such poor shape that they need to pay >8% interest to borrow crypto, what are they using it for? You can’t sell a borrowed asset to take advantage of its appreciation when you have to return that borrowed asset in kind (the exchange doesn’t pay interest in $, it pays in additional crypto). ELI5.
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
You are missing the risks.am wrote: ↑Sun May 16, 2021 11:02 am Anyone using compound app for interest on their crypto, particularly US dollar coin? Seems like US dollar coin is yielding 7.62% right now at compound. You can buy say 10k of US dollar coin in Coinbase, then transfer to compound and earn 7.62%.
The only risks I see are to compound code failing and possibly a massive crypto crash where the borrowers collateral becomes illiquid or loses most value. Wondering if the 10k is liquid or there is a holding period? Also, using the etherium blockchain right now is expensive with miners fees I’ve seen from 80-400 dollars for a transaction. Anyone know a way around this?
There is no free lunch.
Educate YOURSELF, instead of telling us there is a low risk way to earn 7.62%. It won't be mainstream, because you won't find mainstream borrowers willing to borrow at 9%-10% so that you can make 7.62%.
The only people willing to borrow at 9%-10% are those who are using it to trade even more crypto, since they assume crypto only goes up (and always more than 10% a year, so they don't mind a loan at 10%)
A very niche group of users, not mainstream.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
Yes, collateral risk is the big one. Contract risk is the other one (a bug or exploit in the contract that allows someone to take your funds). Then user error is a risk as well, since transactions are not reversible.am wrote: ↑Mon May 17, 2021 2:01 pmThe way I understand it is that the borrower puts up collateral. The risk is that the collateral coin will crash and liquidity will dry up.TropikThunder wrote: ↑Mon May 17, 2021 12:35 pmSo there’s no default risk from the borrower side? If the middleman is paying 7.62% interest to the depositor, then they’re obviously charging more than that to the borrower. Who is in such poor shape that they need to pay >8% interest to borrow crypto, what are they using it for? You can’t sell a borrowed asset to take advantage of its appreciation when you have to return that borrowed asset in kind (the exchange doesn’t pay interest in $, it pays in additional crypto). ELI5.
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
I don't have a problem with people thinking these crypto loans are a good investment.
You can legitimately decide that the return is worth the risk. You can think that the risk is low enough to take a chance for that high return.
What people need to STOP doing is comparing these accounts to savings accounts.
The risk is not tiny. You can decide the risk is low enough and the return is high enough to take the chance. You may be right, you may be wrong about your calculation of risk.
But you are always 100% wrong when you infer that these investments are low-risk, even comparable to FDIC-insured savings accounts.
You don't move your safe money into these investments. You move your single-stock play money into these investments. The 7.62% should be compared to leveraged stocks, not a savings account.
You can legitimately decide that the return is worth the risk. You can think that the risk is low enough to take a chance for that high return.
What people need to STOP doing is comparing these accounts to savings accounts.
The risk is not tiny. You can decide the risk is low enough and the return is high enough to take the chance. You may be right, you may be wrong about your calculation of risk.
But you are always 100% wrong when you infer that these investments are low-risk, even comparable to FDIC-insured savings accounts.
You don't move your safe money into these investments. You move your single-stock play money into these investments. The 7.62% should be compared to leveraged stocks, not a savings account.
Last edited by HomerJ on Mon May 17, 2021 3:21 pm, edited 1 time in total.
"The best tools available to us are shovels, not scalpels. Don't get carried away." - vanBogle59
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
Some of the answers make me laugh, and remind me of this:
https://www.youtube.com/watch?v=AIHrUUT58mc
am, did you look into staking pools for non-Ethererum projects (ETH is almost pointless with the fees)? If you find a project you find promising, you can allocate some funds to it and place the tokens into a reputable pool, thus "subsidizing" your purchase somewhat. You can "harvest" the yield yearly and convert to USD.
Both staking and lending are very high risk, by simple fact that you are involved in the cryptosphere. Their risks are different in nature, though, and I prefer the idea of staking. In both cases, you should avoid pure yield-chasing and actually look into the underlying project, if that's not something you've already done.
https://www.youtube.com/watch?v=AIHrUUT58mc
am, did you look into staking pools for non-Ethererum projects (ETH is almost pointless with the fees)? If you find a project you find promising, you can allocate some funds to it and place the tokens into a reputable pool, thus "subsidizing" your purchase somewhat. You can "harvest" the yield yearly and convert to USD.
Both staking and lending are very high risk, by simple fact that you are involved in the cryptosphere. Their risks are different in nature, though, and I prefer the idea of staking. In both cases, you should avoid pure yield-chasing and actually look into the underlying project, if that's not something you've already done.
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Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
So they have some crypto coin, and they use their crypto as collateral to borrow ....... more crypto. And they’re willing to pay like 10% interest to do so. Got it.am wrote: ↑Mon May 17, 2021 2:01 pmThe way I understand it is that the borrower puts up collateral. The risk is that the collateral coin will crash and liquidity will dry up.TropikThunder wrote: ↑Mon May 17, 2021 12:35 pmSo there’s no default risk from the borrower side? If the middleman is paying 7.62% interest to the depositor, then they’re obviously charging more than that to the borrower. Who is in such poor shape that they need to pay >8% interest to borrow crypto, what are they using it for? You can’t sell a borrowed asset to take advantage of its appreciation when you have to return that borrowed asset in kind (the exchange doesn’t pay interest in $, it pays in additional crypto). ELI5.
Wait, still don’t got it. What are they doing with the crypto they borrow? Just holding it? That seems pretty silly. Every crypto thread is like this. Someone makes a claim, someone else asks a question, and the original claimant gives a pseudo-answer that at first appears to answer the question but it really doesn’t.
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Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
+1HomerJ wrote: ↑Mon May 17, 2021 2:54 pm But you are always 100% wrong when you infer that these investments are low-risk, even comparable to FDIC-insured savings accounts.
You don't move your safe money into these investments. You move your single-stock play money into these investments. The 7.62% should be compared to leveraged stocks, not a savings account.
There is a fundamental misunderstanding of “risk” in the crypto world.
I really don’t understand this recent influx of crypto speculators to this forum.
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
My guess is yes, many (most?) people are borrowing against their crypto to buy more crypto.TropikThunder wrote: ↑Mon May 17, 2021 3:16 pmSo they have some crypto coin, and they use their crypto as collateral to borrow ....... more crypto. And they’re willing to pay like 10% interest to do so. Got it.am wrote: ↑Mon May 17, 2021 2:01 pmThe way I understand it is that the borrower puts up collateral. The risk is that the collateral coin will crash and liquidity will dry up.TropikThunder wrote: ↑Mon May 17, 2021 12:35 pmSo there’s no default risk from the borrower side? If the middleman is paying 7.62% interest to the depositor, then they’re obviously charging more than that to the borrower. Who is in such poor shape that they need to pay >8% interest to borrow crypto, what are they using it for? You can’t sell a borrowed asset to take advantage of its appreciation when you have to return that borrowed asset in kind (the exchange doesn’t pay interest in $, it pays in additional crypto). ELI5.
Wait, still don’t got it. What are they doing with the crypto they borrow? Just holding it? That seems pretty silly. Every crypto thread is like this. Someone makes a claim, someone else asks a question, and the original claimant gives a pseudo-answer that at first appears to answer the question but it really doesn’t.
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
Your question has been answered quite a few times, so saying this is some sort of ignored or deflected point is just not true. I forgot who, but someone was repeatedly trying to raise awareness about possible uses of crypto loans. Going long is not the only possibility.TropikThunder wrote: ↑Mon May 17, 2021 3:16 pmSo they have some crypto coin, and they use their crypto as collateral to borrow ....... more crypto. And they’re willing to pay like 10% interest to do so. Got it.am wrote: ↑Mon May 17, 2021 2:01 pmThe way I understand it is that the borrower puts up collateral. The risk is that the collateral coin will crash and liquidity will dry up.TropikThunder wrote: ↑Mon May 17, 2021 12:35 pmSo there’s no default risk from the borrower side? If the middleman is paying 7.62% interest to the depositor, then they’re obviously charging more than that to the borrower. Who is in such poor shape that they need to pay >8% interest to borrow crypto, what are they using it for? You can’t sell a borrowed asset to take advantage of its appreciation when you have to return that borrowed asset in kind (the exchange doesn’t pay interest in $, it pays in additional crypto). ELI5.
Wait, still don’t got it. What are they doing with the crypto they borrow? Just holding it? That seems pretty silly. Every crypto thread is like this. Someone makes a claim, someone else asks a question, and the original claimant gives a pseudo-answer that at first appears to answer the question but it really doesn’t.
Crypto can be borrowed for shorting the borrowed coin. A simple article, from the Aave founder himself:
https://medium.com/aave/case-study-how- ... 36fb08ce3b
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
And those risks justify only 6.13% yield (which is what it is now at the time of my post)?am wrote: ↑Sun May 16, 2021 11:02 am The only risks I see are to compound code failing and possibly a massive crypto crash where the borrowers collateral becomes illiquid or loses most value. Wondering if the 10k is liquid or there is a holding period? Also, using the etherium blockchain right now is expensive with miners fees I’ve seen from 80-400 dollars for a transaction. Anyone know a way around this?
Turkey's 3 month bond is paying 17.56%, should I rush to buy it just because it is higher than the 1% I get from my FDIC insured checking account?
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
Just use AnchorUSD. No need to convert anything to stable coins and no fees to move in/out from your linked bank account.
Currently yield is 7.83%
Currently yield is 7.83%
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
I'd rather the likes of CHY (Calamos Convertible and High Income Fund) and its 7.9% recent forward yield. Regulated. Over that of unregulated where the likes of Elon can set aside $4Bn play money to pump and dump bitcoin prices to his advantage.
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
AerialWombat wrote: ↑Mon May 17, 2021 3:24 pm+1HomerJ wrote: ↑Mon May 17, 2021 2:54 pm But you are always 100% wrong when you infer that these investments are low-risk, even comparable to FDIC-insured savings accounts.
You don't move your safe money into these investments. You move your single-stock play money into these investments. The 7.62% should be compared to leveraged stocks, not a savings account.
There is a fundamental misunderstanding of “risk” in the crypto world.
I really don’t understand this recent influx of crypto speculators to this forum.
What's not to understand ? If volatile crypto"currency" is fundamentally a (thinly veiled ) pyramid scheme, then the scheme needs more "investors". What better forum than BH to turn up the fomo?
Disclaimer: I'm not very smart, and this is just my hypothesis.
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Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
That doesn't hold for USDC -- one wouldn't be shorting that.OohLaLa wrote: ↑Mon May 17, 2021 3:34 pm
Crypto can be borrowed for shorting the borrowed coin. A simple article, from the Aave founder himself:
https://medium.com/aave/case-study-how- ... 36fb08ce3b
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
I'm not using Compound for that, but I am earning APR via Algo, Cosmos, and Tezos.am wrote: ↑Sun May 16, 2021 11:02 am Anyone using compound app for interest on their crypto, particularly US dollar coin? Seems like US dollar coin is yielding 7.62% right now at compound. You can buy say 10k of US dollar coin in Coinbase, then transfer to compound and earn 7.62%.
The only risks I see are to compound code failing and possibly a massive crypto crash where the borrowers collateral becomes illiquid or loses most value. Wondering if the 10k is liquid or there is a holding period? Also, using the etherium blockchain right now is expensive with miners fees I’ve seen from 80-400 dollars for a transaction. Anyone know a way around this?
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
I view it as in the same league as single country local currency emerging market bonds to the sketchiest credit rating countries.
That sets the minimum floor for the kind of APR I'd want.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
Re: Anyone using compound for savings 7.62% for US dollar coin
Compound (COMP) is actually a separate crypto token from Bitcoin itself.
Global stocks, IG/HY bonds, gold & digital assets at market weights 75% / 19% / 6% || LMP: TIPS ladder
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
Speak for yourself, USDC is $1.01 right now... BRB while I short USDCSlowMovingInvestor wrote: ↑Mon May 17, 2021 4:43 pmThat doesn't hold for USDC -- one wouldn't be shorting that.OohLaLa wrote: ↑Mon May 17, 2021 3:34 pm
Crypto can be borrowed for shorting the borrowed coin. A simple article, from the Aave founder himself:
https://medium.com/aave/case-study-how- ... 36fb08ce3b
Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
I have been using Compound for 6 months with USDC. Note that not only does a depositor get the lending rate but also COMP. The lending rate is based on the lending/borrow ratio and is determined per block. The COMP total distribution is fixed per day and determined based on share of total usage.
There are many options. I use Aave, DyDx, Yearn, Idle, and others. Loanscan.io has historical rates, but I have noticed a few discrepancies. Maybe there is a better site to compare?
There are many options. I use Aave, DyDx, Yearn, Idle, and others. Loanscan.io has historical rates, but I have noticed a few discrepancies. Maybe there is a better site to compare?
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Re: Anyone using compound for savings 7.62% for US dollar coin [Crypto]
+1bi0hazard wrote: ↑Mon May 17, 2021 4:42 pmAerialWombat wrote: ↑Mon May 17, 2021 3:24 pm+1HomerJ wrote: ↑Mon May 17, 2021 2:54 pm But you are always 100% wrong when you infer that these investments are low-risk, even comparable to FDIC-insured savings accounts.
You don't move your safe money into these investments. You move your single-stock play money into these investments. The 7.62% should be compared to leveraged stocks, not a savings account.
There is a fundamental misunderstanding of “risk” in the crypto world.
I really don’t understand this recent influx of crypto speculators to this forum.
What's not to understand ? If volatile crypto"currency" is fundamentally a (thinly veiled ) pyramid scheme, then the scheme needs more "investors". What better forum than BH to turn up the fomo?
I have had friends try to sell me on MLM/Network Marketing/Pyramid Schemes. The talking points that some Cryptoheads are using here are eerily similar to what I have heard from folks selling pyramid schemes. It almost seems this is a creative marketing technique to find recruits.
I am not saying everyone posting about crypto is selling it. I get that some are in for the short term
Re: Anyone using compound for savings 7.62% for US dollar coin
So it would have Bogle's blessing then ?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
Re: Anyone using compound for savings 7.62% for US dollar coin
Not at all.
Just clarifying that COMP is not, in fact, actually BTC, though.
They have different functions.
Intro here:
https://www.youtube.com/watch?v=Pg2zd1bUB8g
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