What's an Attractive Stable Coin Rate?

in LeoFinance4 months ago

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What's an Attractive Stable Coin Rate?

2021 saw the explosion of stable coins. They outpaces both Bitcoin and Ethereum volumes on the daily just take a look at where we are at today.

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Bitcoin 37.6 billion in volume
Ethereum 14.5 billion in volume
Tether 49.5 billion in volume

Just ONE stable coin Tether almost outpaces two of the largest cryptocurrencies.

From there we started to see an explosion in DeFi, Lending, loans and interest style accounts. These accounts often boost attractive 6%+ interest rates by simply parking your stablecoins in them.

HOWEVER THERE ARE RISKS WITH THESE

  1. Governments have been cracking down on many systems like this as it's a huge threat to the banking system. Yeah you know those banks that give you 0.05% interest on your hard earned money yet inflation is 5%+

  2. Governments will be looking at these systems closely and making them report earnings such as the recent case with Paypal. That means any wallets that transact to it are going to be tracked as well something I personally am not fond of.

  3. You're dumping your stable coins into a untrusted, unbacked system which poses higher risk of a cut and run with your crypto. For me personally I don't like having to give up my crypto out of my own wallet in order to earn on it.

So what is an attractive rate?

To me anything that beats inflation with very low risk to me is a good bet. That means you're building wealth and not losing your buy value. That's why in my opinion traditional investments are dead

Why HBD (Hive Dollar) Is Becoming More Attractive

What I love about the newest evolution of some DeFi platforms is the use of Delegation. I still hold the crypto in my wallet and simply delegate out the crypto and earn that DeFi platforms crypto token in exchange that has use cases. From that you still remain to have your tokens in your own wallet and thus more security and less risk of losing your assets if that site should go down.

Hive Dollar however currently offers a rather attractive 12% APR which can raise or lower depending on how witnesses vote on it. In a way this gives all owners of hive some flexibility to voting how they want the percent but it does feel a little limited. It's still an attractive rate when you think about it as the HBD should hold a rather stable $1 pegged value.

Would you take $10,000 sitting around in a bank earning you 0.05% or $50 a year and instead convert it into HBD and place it into savings earning you 12% or $1,200? Uh yeah seems pretty logical to me! While 12% does sound like a lot DeFi has truely ruined me as of late. Those 40% APRs+ are just so dreamy making my investments grow by 4x compared to something more stable. However it all comes down to risk tolerance. With a stablecoin the risk is minimal however DeFi you could end up losing more than what you're getting back.

*This article is for entertainment purposes only and is not investment advise.

Posted Using LeoFinance Beta

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I totally agree with the way you think about stabelcoins and traditional investments.

In my opinion however, HBD should be matching UST's 20% on Anchor.

The witnesses have the ability to do it at the click of a button.

Can you picture the good vibes stories and free promotions that Hive would receive from the mainstream crypto media?

Make it happen guys!

Posted Using LeoFinance Beta

That would be awesome the part I don't understand is what gives the HBD it's value that it's able to hold that price. As the APR increases doesn't that start to take away from the value of Hive itself? I don't know the inner workings of it all.

I was under the impression that it just changes how Hive's inflation is divvied out.

@taskmaster4450, you might be the man to help us out with this?

Posted Using LeoFinance Beta

Yay! 🤗
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