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0 pointsrunarberg3y ago0 comments

Yeah, that still doesn’t make sense. If that were to be sustainable you would have charge higher interest on the loans then you give to savings. That means a customer has the potential of getting a loan in an alien currency which they’d have to sell to USD, and then buy some more of that alien currency to pay it back with much higher interest then if they would have just gone to a bank/credit union/loan agency.

These DeFi yields must be funded in other ways than just loans.

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tyrfing3y ago

> If that were to be sustainable you would have charge higher interest on the loans then you give to savings.

Which is exactly how protocols like Compound work, although 'governance tokens' are also issued simply for using the system.

> These DeFi yields must be funded in other ways than just loans.

Which? DeFi stands for Decentralized Finance, which pretty much means the rules are easily available - as long as you talk about a specific example, not spherical cows.

runarbergOP3y ago

I’m sorry but I’m still confused. Who are the people taking these inconvenient, unoptimal and expensive loans, when they can get better and cheaper loans through traditional means? Something doesn’t smell right.

Also ‘governance tokens’? This smells like another term for “money from new users entering the system”. Which is precisely how Ponzi schemes work.

EDIT: I went on a little scouting mission on google (well DDG actually) to find out if I could borrow some USDT on the Compound and how much it would cost me. But I mostly came across articles explaining how you could make money by doing the opposite (buying Tether and lending it), and numerous dashboards with all sorts of hard to understand data with the prices of various cryptocurrencies and some rates I couldn’t understand. I suspect that the only people borrowing USDT are actually also speculators that are invested in the cryptocurrency market (perhaps they are trying to short it).

tyrfing3y ago

> Who are the people taking these inconvenient, unoptimal and expensive loans, when they can get better and cheaper loans through traditional means?

USDC is at 2.3% APR, USDT 3.78%. I think you'll find that most people cannot obtain unsecured loans that low, and the forms of collateral a bank will accept are much more limited. The biggest reason is also the reason why people like Elon Musk have massive loans: avoiding taxes on realized gains.

https://compound.finance/markets

> Also ‘governance tokens’? This smells like another term for “money from new users entering the system”. Which is precisely how Ponzi schemes work.

Sure, just like how "startups" are actually Ponzi schemes with early investors preying on the later ones. Same people owning it, too!

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tyrfing3y ago

> If that were to be sustainable you would have charge higher interest on the loans then you give to savings.

Which is exactly how protocols like Compound work, although 'governance tokens' are also issued simply for using the system.

> These DeFi yields must be funded in other ways than just loans.

Which? DeFi stands for Decentralized Finance, which pretty much means the rules are easily available - as long as you talk about a specific example, not spherical cows.

runarbergOP3y ago

Also ‘governance tokens’? This smells like another term for “money from new users entering the system”. Which is precisely how Ponzi schemes work.

tyrfing3y ago

> Who are the people taking these inconvenient, unoptimal and expensive loans, when they can get better and cheaper loans through traditional means?

https://compound.finance/markets

> Also ‘governance tokens’? This smells like another term for “money from new users entering the system”. Which is precisely how Ponzi schemes work.

Sure, just like how "startups" are actually Ponzi schemes with early investors preying on the later ones. Same people owning it, too!

2 more replies

j / k navigate · click thread line to collapse