Any other Stakers?

User232002

12% is a thoroughly average return in the crypto world. There are plenty of good projects out there with much higher returns; I've been staking one asset for 140% APY for the last 3 months. Also, staking DOT means you get paid your interest in DOT and as others have correctly pointed out that does expose you to the price changes in DOT. This can be a positive if you believe that DOT is currently under-priced as it essentially compounds your interest, but I'm not sure DOTs value proposition is legit. There have been plenty of Ethereum killers in the past and although I believe in a multi-chain future, we have to acknowledge that right now DOT is simply about potential as it has no projects that are currently live.

To the naysayers, if you aren't in the crypto world right now then the next 5 years is going to be a pretty painful one for you in terms of returns. You can very easily get 10% APY on USD stablecoins; that is an investment denoted entirely in dollars which has a level of risk lower than index investing. Pretty easy to get 30% if you look around and 100%+ if you know what you are doing. Way more if you were willing to take on slightly more risk.

On the topic of risk, Bitcoin has the best Sharpe ratio (risk adjusted returns) of any asset.

Thrugelmir

darren232002 said:

12% is a thoroughly average return in the crypto world. There are plenty of good projects out there with much higher returns; I've been staking one asset for 140% APY for the last 3 months. Also, staking DOT means you get paid your interest in DOT and as others have correctly pointed out that does expose you to the price changes in DOT. This can be a positive if you believe that DOT is currently under-priced as it essentially compounds your interest, but I'm not sure DOTs value proposition is legit. There have been plenty of Ethereum killers in the past and although I believe in a multi-chain future, we have to acknowledge that right now DOT is simply about potential as it has no projects that are currently live.

To the naysayers, if you aren't in the crypto world right now then the next 5 years is going to be a pretty painful one for you in terms of returns. You can very easily get 10% APY on USD stablecoins; that is an investment denoted entirely in dollars which has a level of risk lower than index investing. Pretty easy to get 30% if you look around and 100%+ if you know what you are doing. Way more if you were willing to take on slightly more risk.

On the topic of risk, Bitcoin has the best Sharpe ratio (risk adjusted returns) of any asset.

Every generation has to learn the hard way. Swimming in a ocean full of sharks will never be any different. 

User232002

Haha. I understand its easier to bury your head in the sand than actually try to understand how these returns are perfectly sustainable and come from legitimate use cases.

Voyager2002

darren232002 said:

Haha. I understand its easier to bury your head in the sand than actually try to understand how these returns are perfectly sustainable and come from legitimate use cases.

Sustainable they are not. The price of any coin rises because an increasin number of punters believe that it will go up and so rush to buy. At a certain point the pool of possible punters will be exhausted; further gains will be impossible; if punters decide to sell then the price will fall. This is completely different from equities, where the token represents an actual company creating wealth in the real world and paying investors a stream of dividends.

User232002

Voyager2002 said:

darren232002 said:

Haha. I understand its easier to bury your head in the sand than actually try to understand how these returns are perfectly sustainable and come from legitimate use cases.

Sustainable they are not. The price of any coin rises because an increasin number of punters believe that it will go up and so rush to buy. At a certain point the pool of possible punters will be exhausted; further gains will be impossible; if punters decide to sell then the price will fall. This is completely different from equities, where the token represents an actual company creating wealth in the real world and paying investors a stream of dividends.

Holy wow this is bad.

Firstly, Bitcoin is way past needing retail idiots to push its price up. Microstrategy bought $3B worth of BTC, Tesla $1.5B, Square $400m, Massmutual $100m, some hedge fund that I forget the name of $700m etc etc etc... JP Morgan / Citigroup stating clients should have 1-5% in BTC and throwing out price targets of $150k and $300k+. Blackrock (only $9T AUM) authorising two funds to invest in to BTC. The price isnt being driven by retail spending a couple of hundred on BTC, its being driven by institutions putting their treasuries in to BTC.

Secondly, the rates I'm getting are interest payable on a sum invested. Let me break it down so you can understand; you can put $10k in to an account right now and be paid 10% interest so that in one years time you will have $11k with zero exposure to any crypto asset or rising/falling price movements. I know you have no idea why you can be paid 10% interest and it be sustainable. I do, but thats on you to figure it out for yourself.

Flatulentoldgoat

Darren, do you mind sharing a bit more specifics? I assume that 140% isn't off some weird sh1tcoin. What exchange, too. And on the stable coins, I presume you refer to something like Tether.

Good to know these boards aren't populated sorely by luddites and technophobes.

Malthusian

darren232002 said:

Haha. I understand its easier to bury your head in the sand than actually try to understand how these returns are perfectly sustainable and come from legitimate use cases.

Paying 12% - 20% interest on imaginary tokens in more imaginary tokens is perfectly sustainable, it's just not particularly interesting.

It is sustainable in the sense that punters' money in == punters' money out. All that matters is whether you can sell your tokens for more real money (or money's worth) than you put in, not whether you've got 100 tokens or 112 tokens to sell. Your 100 tokens or 112 tokens will be chasing the same amount of real money.

User232002

Flatulentoldgoat said:

Darren, do you mind sharing a bit more specifics? I assume that 140% isn't off some weird sh1tcoin. What exchange, too. And on the stable coins, I presume you refer to something like Tether.

Good to know these boards aren't populated sorely by luddites and technophobes.

I don't want to go too much in to detail, partly because this is a play that you need to be more aware of for it to work and so I don't want anyone blindly copying it. For the staking @ 140%, I picked a project that I believed had value to grow and was under-priced in comparison to its nearest competitor. Its currently 5x'd in price since I bought it and still has some room to grow imo. As I have said, if you pick a bad token then your interest is essentially worthless but if you pick a good token then your interest compounds at an alarming rate. I've not sat down and calculated my true current interest rate, but you can imagine what it is if I'm being paid 100%+ on a token that has 5x'd in price. If you really go down the rabbit hole, you can get 2 or 300% if you are willing to provide liquidity, but again that might be a bit more advanced for beginners.

If you stake on an exchange, you will get a lower %. The exchanges stake your tokens on chain and get say 15% and then pass say 12% to you and keep 3%. I'm doing my staking directly with the protocols I want to be involved with. If you want to get involved in defi you will need to get a wallet, metamask probably, and learn how to use it. This is for adults though, so remember there is no central authority to save you if you mess up (ie. if you sent some tokens to the wrong address).

Yes, for the stablecoins it will be stuff like Tether. Generally tether offers one of the lower interest rates and something like USDC will offer the highest. USDC is pegged to the dollar and fully backed by accounts kept in reserves by a NY based company (Gemini) so it is effectively a dollar.

Malthusian said:

darren232002 said:

Haha. I understand its easier to bury your head in the sand than actually try to understand how these returns are perfectly sustainable and come from legitimate use cases.

Paying 12% - 20% interest on imaginary tokens in more imaginary tokens is perfectly sustainable, it's just not particularly interesting.

It is sustainable in the sense that punters' money in == punters' money out. All that matters is whether you can sell your tokens for more real money (or money's worth) than you put in, not whether you've got 100 tokens or 112 tokens to sell. Your 100 tokens or 112 tokens will be chasing the same amount of real money.

Again, I'll say this slowly so you understand. You can buy digital dollars, pegged to the value of a dollar and ALWAYS worth exactly $1. You can put these away and get 10%+ interest paid on it IN DOLLARS. You can cash it out at any time. The account is always denominated in dollars and if you use USDC is fully backed by actual dollar reserves in a NY based company. Zero exposure to 'imaginary tokens' or asset price swings. Do you understand now?

That said, I'd probably agree that the dollar is a sh*tcoin.

underground99

darren232002 said:

You can very easily get 10% APY on USD stablecoins; that is an investment denoted entirely in dollars which has a level of risk lower than index investing. Pretty easy to get 30% if you look around and 100%+ if you know what you are doing. Way more if you were willing to take on slightly more risk.

darren232002 said:

Haha. I understand its easier to bury your head in the sand than actually try to understand how these returns are perfectly sustainable and come from legitimate use cases.

A USD stablecoin should function like a dollar and hopefully is still worth a dollar in the future if the collateral backing it does still exist.  But if anyone can buy the coin for a dollar and it is still going to be worth a dollar at the end of the year, traditional investors would wonder why someone would let you park the dollar on that someone's exchange and come back later to definitely be given 'way more' than prorata two dollars a year, for only 'slightly more risk' than the opportunities that pay 10% a year or the diversified index investments that pay a lower and variable return with risk of loss.

It's understandable that someone running an exchange might want you to leave them with a supply of coins that you own but they could use, and pay you for it.  Maybe if I'm running a school sweet shop in the days before contactless cards, the shop needs a big pile of change to hold as a cash float otherwise it's not going to be able to run the lunchtime session and make £££. So if you can lend it the £10 of mixed coinage they may be happy to pay you back £10.10 and you make 10p as your cut for the day from 'staking' the sweet shop - a great annualised return.  Scaled up, someone developing a property or buying one before selling the old one might pay a huge APR for some short term finance as a bridging loan that they don't need to borrow for the whole year. Loan sharks have insane APRs but some people still use them.  So there's no shortage of people looking to let you 'park' cash with them, for an interest rate, for all kinds of reasons, and of course that can be the case when the 'cash' is in the form of crypto tokens.

The question is just whether the return is always going to be 'perfectly sustainable' and whether it's really true that you can definitely get your money back if things go south.

Malthusian

darren232002 said:

Flatulentoldgoat said:

e same amount of real money.

Again, I'll say this slowly so you understand. You can buy digital dollars, pegged to the value of a dollar and ALWAYS worth exactly $1. You can put these away and get 10%+ interest paid on it IN DOLLARS. You can cash it out at any time. The account is always denominated in dollars and if you use USDC is fully backed by actual dollar reserves in a NY based company. Zero exposure to 'imaginary tokens' or asset price swings. Do you understand now?

Providing that when I want to cash out, there are still enough people willing to hand over 1 real dollar (that I can use to pay my US taxes or settle a US debt) for every 1 of my digital dollars.

If some bro in New York takes in X amount of real dollars, there is no guarantee that he can generate enough returns that he will always have enough real dollars to pay everyone X + 10%pa when they want to cash out, after accounting for all his costs. Otherwise everyone would be investing in his bank, not just crypto bros.

Punters' money in == punters' money out.