CNBC talks about this all the time, publicly traded companies are manufacturing growth (i.e. AAPL) through stock buyback. Mark Yusko has a more colorful way of putting this into words in some of the Blockworks YouTube videos To be fair, publicly traded bitcoin mining companies are now using this same technique and many of them are no longer selling the bitcoins they mine and instead purchasing more through issuance of debt I like how Dylan describes our current cheap money policy, ZIRP/NIRP and how it has affected all markets by creating bubbles everywhere (i.e. real estate and tech/growth stocks, and cryptos) "Speculative manias like DOGE are driven by Fed monetary policy, which has perverted risk tolerance across all assets" - Dylan Leclair We have a unique opportunity right now that defi is still fairly unregulated, but the opportunities may not last
Only RedDuke understands it correctly The ultra mega super duper high yields are paid out by the crypto project through newly-minted crypto tokens It's a form of mining new coins through a process called yield farming. There are YT videos out there You provide liquidity, by being an automated market maker by supplying 2 tokens in equal $ value to a decentralized exchange (i.e. Spookyswap or TraderJoe) and the LP tokens, you then deposit (stake) on the crypto project's platform (i.e. Solidex or Snowy Owl) The more supporters, the more yield farmers, the lower the APR's. It's a game theory incentives mechanism. They are offering the high yields to the supporters to get them to support the project by providing liquidity
Oh I understand it correctly. It WILL end up BADLY. I don't give a hoot about their justification of yield farming and other made up process or word. If cryptos in general start to go down, even if just ever so slightly year over year, there is no fucking way they can generate 20%. I don't think all of them start out as ponzis. They have a "new" financial idea that is unsound but they give it a try. Once they realize the idea doesn't work in real life under all market conditions, they start to dip into their funs to pay off withdrawals, then the never ending cycle starts and voila! they are running a ponzi...
This cryptos financial ecosystem is not for everyone. There are levels of risks. Not all defi projects pay that much, look at AAVE for more subdued APY's The more you go out the risk curve, the higher the APY(/R)'s One thing that is clear is that there are many cryptos people that have quit their jobs at Wall Street and have made multi-generational wealth (i.e. Sam Bankman-Fried and his team at FTX) You should see some of the flex from Crypto Twitter people Look at this picture and ask yourself if that amount of Total Value Locked is all from retail crypto people? newsflash, wall street money has been playing here we can see them throwing millions at obscure crypto defi projects Look up Harry Yeh, billionaire HF manager, always on Bloomberg and his involvement in defi But I get it, you and your friends have a more sexy enjoyable money making endeavor wanking off to green and red dildos on the chartz