Gemini Earn
gemini.com
gemini.com
With fiat interest rates at record lows, why not borrow fiat instead and use it to buy crypto? Surely not all of the demand is coming from the unbanked?
EDIT: My question was answered while I was typing it up :)
I just had a look and compared Gemini's calculator of lending, compared to Zopa's (UK p2p lender) calculator and, for a £10k loan, you'd be paying ~£500 in interest at Zopa (~14% APR), where Gemini claims you'll be getting $1.7k in interest (based on $11k lent and Filecoin's ~7% interest).
My guess is Gemini's calculator is either purposefully or accidentally broken, or I'm missing something.
A very popular use is to do rate/basis arb. So I borrow a crypto at say 10% interest and then use that to sell a future or swap that has a rate higher than 10%. So borrow at 10%, short a future with a annualized percent basis of 20%, and capture a risk free spread of 10%.
Very sophisticated and institutional players are doing a lot of these kind of basis arb plays nowadays. It's pretty much free money. You need to be able to borrow though, as without leverage these rate arb strats don't yield compelling enough returns.
If you're a crypto trading firm and not making at least 100% annualized, you're fucking up. It's not usual for sophisticated players to be making a 1-2% return a day in crypto.
The wealth generation from crypto trading in the last two years is truly astonishing.
Also want to note is that most of these obscenely high return strategies are delta neutral: they are unaffected by the price of crypto going up or down. There are some funds out there who's returns are derived from crypto exposure, but those are the shitty ones.
The promise of crypto is very much alive!
The appreciation of Bitcoin has been so staggering that it also makes getting interest back on your deposits seem rather outdated.
You earn interest on top of the underlying appreciation. Doesn’t seem outdated to me.
Take it from someone who has operated in this space long enough to beware of interest rates on crypto, the money has to come from somewhere to cover the vig
Fractional reserve banking is the thing that is to be avoided and ultimately fails.
Ymmv. I am not a financial advisor blah blah
edit: this line sheds some light: "Gemini is partnering with vetted and accredited third party institutional-grade borrowers including Genesis Capital". So they are lending your money to accredited parties, not random people on the internet.
BTC lending on the other hand (which Gemini is offering) must be custodial, so there's pretty significant risk of loss if Gemini gets hacked, seized, or otherwise looted.
To answer someone else's question on this thread, over-collateralized lending solves the "I want to buy Ethereum but all I have is Ethereum" problem. Most people use it at a really simple mechanism for adjustable leverage, letting them increase their risk exposure without losing custody of their assets.
Given that these loans appear to be unsecured, the last thing I would want is for Gemini to approve someone with my money and have them skip town, metaphorically speaking.
It says interest compounds daily; keep in mind (US Residents) that every day is another line item you need to report to the IRS.
“ Unlike other opportunities to earn interest on your cryptocurrency, you can redeem your cryptocurrency at any time, with no penalties, and receive it at its current market value — plus the interest you’ve earned!”
YOUR AVAILABLE DIGITAL ASSETS WILL LEAVE GEMINI'S CUSTODY, AND YOU ACCEPT THE RISK OF LOSS ASSOCIATED WITH LOAN TRANSACTIONS, UP TO AND INCLUDING TOTAL LOSS OF YOUR AVAILABLE DIGITAL ASSETS. Gemini is not a depository institution, and the Program does not offer a depository account. Participating in the Program may put your Digital Assets at risk. Loans made through the Program are unsecured. You have exposure to Borrower credit risk, and Borrowers are not required to post collateral to you or to Gemini. Transactions in Digital Assets may carry added risk compared to lending of other types of assets because transactions in cryptocurrency are in many cases irreversible. Funds may not be recoverable in the event of errors or fraudulent activity.
FDIC is protection against the bank being insolvent.
SIPC does not protect customers against losses from the rise and fall in the market value of investments.
It does not protect if the asset invested in goes down in value.
FDIC is protection against the bank being insolvent.
SIPC does not protect customers against losses from the rise and fall in the market value of investments.
It does not protect if the asset invested in goes down in value.
FDIC is protection against the bank being insolvent.
SIPC does not protect customers against losses from the rise and fall in the market value of investments.
https://www.investopedia.com/terms/f/fractionalreservebankin...
It does not protect if the asset invested in goes down in value.
FDIC is protection against the bank being insolvent.
SIPC does not protect customers against losses from the rise and fall in the market value of investments.
If your broker lends out your stock to short sellers, it will always return your shares, even if the short seller gets margin called and doesn’t have the money to pay back their broker.
I’m not sure what you mean by “index fund”, but securities/stocks are protected by SIPC insurance, up to $500,000 per account. You will get your stocks back if a brokerage fails.
A savings or checking account is covered by FDIC. If your broker lends out your stock and can not recoup it, then you are also not protected by SIPC.
https://www.investopedia.com/terms/f/fractionalreservebankin...
This is not true. The broker would be in default to you. If that literally pushed the broker under, SIPC would be there to pick up the pieces.
Nexo
Blockfi
Crypto.com
And Celsius
All have the same inherent limitations for insurance coverage and clauses
At least the autonomous onchain services let you purchase smart contract insurance to reimburse community accepted unexpected behaviors like overflows.
Many popular exchanges have been offering staking for years.