How in the loving gods earth are you getting 10% to 30% interest rate without risk?
None of the stable coins have gone through a full thorough audit done by a reputable company, thus it's safe to assume they are not fully 1:1 backed and thus it's a ticking time bomb.
30% interest rate sounds like a pyramid scheme. If something sounds like a scam, then it probably is a scam, since it's crypto, then it's most certainly a scam
Not sure if you are someone who just wants to shit on stuff without ever learning, this is HN so 90% chance that's the case. But on the offchance you are actually curious:
Tokens should be viewed like stock. The team behind the token has a pool to fund their network / app. Different products in the decentralised finance space (DeFi) incentive usage by handing out their tokens (stock) to people who provide value to their product. In DeFi this is usually by becoming a liquidity provider (LP), providing your own assets to their protocol in return for a fee and incentives.
This makes logical sense for the team, because the most common metric for valuing an app is "total value locked" (TVL). The more TVL an app or network has, the more usage and value it has, which typically translates into increased value for their token.
You should take to heart that most people here are not just "shitting on stuff without ever learning", but have seen this story play out many times now.
Everything you described about LPs, TVL, and token value; you are just describing the mechanics of the ponzi scheme, not describing the way in which it isn't a ponzi scheme.
If you are getting "interest" over 20%, what you are doing is extracting that money (which isn't real until you turn it into fiat, btw) from the people in the future who lose money when the scheme inevitably crashes; they are transferring their future losses backward in time to you in the present.
That's fine as far as it goes, if you're aware of what's going on, ethically comfortable with it, and make sure to get out of the scheme early enough to not yourself be one of the people left without a chair when the music stops.
But from your comment, I think it seems like you aren't one of the people cynically taking advantage of the scheme, in which case, you are actually one of the marks.
It is simply not possible for a scheme that is above board to pay over 4x the prevailing global interest rate, without significant risk.
I’ve been in crypto for 13 years now, I’m sure any day now Bitcoin will hit 0 and you’ll be proven right, and all the yield farms and defi will collapse, sure sure.
You seem to act like you're the only one here who has been following this for a long time... But that's far from the case on this particular forum.
I didn't say anything about Bitcoin. But yes, all those yield farming schemes that are paying double digit "risk-free interest" will eventually crash out and leave some set of people in the red. It has happened over and over again, it's just that new tokens get set up and re-start the cycle.
It's impossible for smart contracts that are properly coded to enable anyone to pull the funds out. Nothing is 100% guaranteed but protocols like Uniswap have been around for years, their contracts have had many professional audits, and the reward for breaking them is billions of dollars, so the odds of a bug in an Uniswap pool is very low. Other protocols pay incentives to LP the Uniswap pools. Where you expect the failure to come is perplexing, but yes you know more than me.
What I'm describing is, literally, just what has happened with Luna and a lot of other yield-farming centric tokens that pay these outlandish "interest rates". Those "interest" payments are being extracted from future losses.
By the way, the point defi enthusiasts make about how that's just the same way interest in the "legacy" financial system works already is also true. The only difference is that the existing financial system takes its current interest payments out of future growth in real resources and productivity. And this is why double digit interest rates are extremely rare; because that rate of real growth is difficult or impossible to sustain for long.
But thus far, defi remains a closed purely financial loop, without creating any real non-financial growth, so it's all zero sum, just pitting current speculators against future ones.
Failure comes from the fact that the people don't give a flying fruit about some random tokens.
You can't pay the rent or utilities with them, you can't pay with them at the store or anywhere else.
Meaning unless you can convert your random tokens - that are not accepted almost anywhere in the real world - to good old USD/fiat, you virtually have nothing.
That's the failure, smart contracts do not ensure you get real USD dollars out off the system, the ones normal people accept as legal tender.
Casinos have existed for decades, and yet people still keep going there and losing all of their money there.
What gives?
You can downright reject anything crypto currency related because it fails basic economic theory. There has never been a financial instrument that gives risk free 10-30% yields. No economy has ever grown at that rate. If it is a company what real products or real services does it provide? Where's the value add?
Exactly, there isnt, it's a plain old pyramid scheme hiding behind mumbo jumbo jargon that only impresses the mentally challenged.
None of the stable coins have gone through a full thorough audit done by a reputable company, thus it's safe to assume they are not fully 1:1 backed and thus it's a ticking time bomb.
30% interest rate sounds like a pyramid scheme. If something sounds like a scam, then it probably is a scam, since it's crypto, then it's most certainly a scam