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Comment by dmihal | Hacker News Reader

Do you consider earning interest to be speculation?

I can put stablecoins (crypto dollars) in a lending protocol like Aave and earn ~10% APY. Compare that to my savings account, which pays out 0.25% APY.

Or how about the stablecoins themselves? MakerDAO creates the Dai stablecoin, backed by crypto-native assets like ETH & BTC.

I have a number of friends in Argentina who are surviving hyper-inflation by keeping their wealth in stablecoins.

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Earning 10% "riskfree" isn't speculation, it's a Ponzi. What serious borrower needs to pay 10% to access credit? So then, who are the borrowers who are paying this interest? As they say on Reddit: !remindme 1 year.

Arbitragers gladly pay 10% of their risk-free income to lenders to execute an arbitrage opportunity.

> What serious borrower needs to pay 10% to access credit?

People who can make more than 10% trading?

Lending protocols aren't doing anything different than what banks do: allocating inactive capital to those who can make use of that capital and are willing to pay for it.

Interest rates are high because of A: market volatility, professional traders can easily make more than 10%, and B: information asymmetry, large capital pools haven't allocated to these pools.

If you can reliably make more than 10% trading, you can borrow from a bank. Or Goldman Sachs. Or whoever. The current interest rate is practically 0. Anyone who is borrowing at 10% is either (a) not very bright or (b) more likely, doing something risky with their money that reputable moneymakers won't touch... probably involving the blockchain. So yeah, Ponzi.

It is super anomalous financial behavior to seek out the highest cost funding though.

It's not a ponzi.

Lookup what a ponzi scheme is.

That 10% isn't remotely risk-free. All the combined lending/defi/erc20 smart contracts are held together by paper clips and rubber bands. The popular ones have been stable so far but there is a proven history of hacks and exploits in crypto in general.

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